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"United Raked In 5.2 Billion In Fees Last Year"  
User currently offlineVC10er From United States of America, joined Feb 2007, 2948 posts, RR: 10
Posted (2 years 2 months 4 weeks 1 day 9 hours ago) and read 10741 times:
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I just read this on line in a New York Daily News (a newspaper I wouldn't ever touch) which picked up the piece from ideaworkscompany.com.

United leads the global pack which includes AA, Southwest, Delta, Qantas and even TAM, all of which top the list, but United is far ahead at $5.2 Billion. (I don't know if E+ counts)

Airlines say they impose these fees or offer more for more to offset the price of fuel. What the article doesn't say is IF this $5.2 billion did cover rising fuel costs? Or did plus even added to gross earnings for last year.

Also, I learned that airlines do not pay taxes on these revenues. So if you pay $25 for an extra bag checked, 100% of that goes direct into the airlines purse.

My first question is: did these fees cover the rising cost of fuel? Or are they a genus way to lump additional fortune on top of already good earnings at UA? And will they be rolled back one day? Or will they charge us $5 more if we can see the engine from our window and keep going?


The world is missing love, let's use our flights to spread it!
46 replies: All unread, showing first 25:
 
User currently offlineSTT757 From United States of America, joined Mar 2000, 16885 posts, RR: 51
Reply 1, posted (2 years 2 months 4 weeks 1 day 9 hours ago) and read 10728 times:

Quoting VC10er (Thread starter):
And will they be rolled back one day?

At this point not unless pro-consumer politicians like Senator Schumer can get something passed. Without some sort of regulation businesses will always push the envelopes as to what they can get out of consumers.

Back in the day I remember flying PeoplExpress and thinking how tacky it was they charged for check luggage, and their fee was only $3.00!.........



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineDeltaMD90 From United States of America, joined Apr 2008, 7931 posts, RR: 52
Reply 2, posted (2 years 2 months 4 weeks 1 day 8 hours ago) and read 10540 times:

There is finally some stability and profit in the US airline industry (mostly) across the board. I'm glad it's like that, hopefully, it will stay around this level


Ironically I have never flown a Delta MD-90 :)
User currently offlineSonomaFlyer From United States of America, joined Apr 2010, 1851 posts, RR: 0
Reply 3, posted (2 years 2 months 4 weeks 1 day 7 hours ago) and read 10434 times:
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As long as they identify how much these fees are for various services, Washington isn't going to be able to change what is occurring in the industry. Remember folks, we brought this upon ourselves with a total focus on the least cost no matter what. AA tried to give more leg room in coach and keep fees a tad higher for it and that idea bombed. Airlines which have tried a more all business class approach also bombed. Attempts to differentiate with a higher cost product have almost universally failed (i.e. better food/more choices, more meal services on shorter flights etc).

The airline industry is what we the consumer demanded; a seat on a plane from point a to point b. Any notion that you should get anything else other than that is absurd.

Welcome to flying.


User currently offlinecruiseshipcrew From United States of America, joined Aug 2008, 207 posts, RR: 1
Reply 4, posted (2 years 2 months 4 weeks 1 day 4 hours ago) and read 10180 times:

I'm all for checked luggage fees and I'm glad to see they are playing a large role in bringing the airline's finances back!


facebook sn jetboy787
User currently offlineLV From United States of America, joined Jun 2001, 2007 posts, RR: 0
Reply 5, posted (2 years 2 months 4 weeks 1 day 4 hours ago) and read 10116 times:

So I guess that makes the bag tossers the most profitable employees in the company

User currently offlinerotating14 From United States of America, joined Jan 2012, 685 posts, RR: 0
Reply 6, posted (2 years 2 months 4 weeks 1 day 4 hours ago) and read 9948 times:

What did airlines do before they implemented fees to cover everything. Granted the price of fuel with inflation over time has contributed to higher fuel costs but to make $5.2 billion for charging seems lime a lot, and I love flying United.

User currently offlineLoneStarMike From United States of America, joined Jul 2000, 3857 posts, RR: 34
Reply 7, posted (2 years 2 months 4 weeks 1 day 4 hours ago) and read 9901 times:

Quoting VC10er (Thread starter):
Also, I learned that airlines do not pay taxes on these revenues

That's the part I don't like. If a company earns revenue, it should be taxed, whether it's revenue from fares, or revenue from fees.

If I have a job and earn a salary, then I have to pay income tax based on my salary. Wouldn't it be nice if I told my employer to fire me, and then re-hire me as a "consultant?" Then I could just charge my employer a "consultancy fee" and never pay income tax again.

If UA had to pay taxes on that 5.2 billion in fees they collected, that would have amounted to an additional 390 million in taxes.

Of course there will be those who say - "But the airlines would just pass those taxes on to the customer." I'm fine with that.

When the airlines started charging all these fees, they likened it to someone going to a restaurant and ordering items off an ala carte menu. Well, guess what? When you go to a restaurant and order two items off the menu, you pay taxes on those two items. If you order five items off the menu, you pay taxes on those five items. (At least that's how it works in my state.) Why should restaurant customers be treated any differently from airline customers?

And for the record, I'm not just picking on UA here. I think it should apply to every airline.

LoneStarMike


User currently offlineVC10er From United States of America, joined Feb 2007, 2948 posts, RR: 10
Reply 8, posted (2 years 2 months 4 weeks 1 day 3 hours ago) and read 9480 times:
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I am very happy when corporations make a lot of money, and today with pressure for CSR (corp social responsibility) companies who do make a lot of money are giving back to our communities. Aside from the wonderful and tasteful way UA helped the grieving from the Colorado massicare. One way UA can burnish their image is to take a X millions of the $5.2 billion and help our troops, schools, kids etc.

But these surcharges clearly unearthed an amazing revenue stream like, my last short flight from EWR to RIC (under 500 miles) United gave me the mileage booster option of $45 for + 1500 miles. I did it for the first time. It felt like a deal. But really did how much of my $45 was spent to defray extra fuel costs for my E145, 50 minute flight, and how much did it add to United's impressive numbers.

It also says: for all the UA complaints for over a year, that United had so, so many millions of fliers that just a fraction of these folks there was actually a huge amount of pax willing to pay extra for something like priority boarding! People must not dislike United as one would think by reading A.net. United was almost double with 5.2 than #2 Delta. Why? Does UA offer more options? Do they charge more for the extra thing? It's 25 hubs all over the world or sheer size? Or, is their actually a UA preference?

Quoting STT757 (Reply 1):

I didn't go to the link, I just read the news article. It sort of implies that their are 2 different mainstream fliers: the "I don't care about anything other than price" and have no expectations of good service or leg room, And another group who will seek a fair price but want non-stops and some bells and are willing to pay for E+ and others. If I was flying economy to London (for example) wouldnt think twice to pay my way up to E+.



The world is missing love, let's use our flights to spread it!
User currently offlineBlatantEcho From United States of America, joined Sep 2000, 1917 posts, RR: 1
Reply 9, posted (2 years 2 months 4 weeks 1 day 2 hours ago) and read 9327 times:

I think threads like this show a stunning lack of basic business sense or basic understanding of corporate taxation.

In short:
- A la carte pricing like this is a lot more fair to 'consumers' as it lets them buy what they want and no more.

- Of course a company pays taxes on its profits. What the airlines do not have to do is charge FAA taxes, airport taxes, security taxes, accessibility taxes, emission taxes, on top of baggage fees.

Airlines will pay plenty of taxes on whatever their taxable income is, no matter what the source...



These are some very basic concepts about how life works guys, it's scary what passes as facts on the Internet sometimes...



They're not handing trophies out today
User currently offlineflybyguy From United States of America, joined Jun 2004, 1801 posts, RR: 1
Reply 10, posted (2 years 2 months 4 weeks 1 day 2 hours ago) and read 9211 times:

Quoting BlatantEcho (Reply 9):
In short:
- A la carte pricing like this is a lot more fair to 'consumers' as it lets them buy what they want and no more.

Is that really the case? Will we come to a point when the base airfares return to the late 90's rates with ala carte pricing? I thought the whole idea behind ala carte pricing was to make it harder for the consumer to compare the total cost of air travel between airlines. Internet travel sites like Kayak, Priceline, and Expedia have made it pretty hard for airlines to keep base fares high when the consumer can find the lowest fare carrier on any route in seconds.



"Are you a pretender... or a thoroughbred?!" - Professor Matt Miller
User currently offlineTx2fl From United States of America, joined May 2010, 24 posts, RR: 0
Reply 11, posted (2 years 2 months 4 weeks 1 day 2 hours ago) and read 9110 times:

Quoting cruiseshipcrew (Reply 4):
Quoting cruiseshipcrew (Reply 4):
The airline industry is what we the consumer demanded; a seat on a plane from point a to point b. Any notion that you should get anything else other than that is absurd.

THIS!! ^^^^^^ Can I get an AMEN! What else can you get in 2012 for the same price that you paid in 1992 give or take 25.00. I remember my parents paying over 500.00 R/T to get me to Puerto Rico from Texas for a school trip. It's still less than 500.00 from Texas. When I hear the general public complaining I want to ask them what they do for a living. If they are with a business that sells a product or service, I'd like to ask them for the 1992 price. Especially the ones in Real Estate or Car Sales.


User currently offlineVC10er From United States of America, joined Feb 2007, 2948 posts, RR: 10
Reply 12, posted (2 years 2 months 4 weeks 1 day 1 hour ago) and read 8881 times:
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Quoting BlatantEcho (Reply 9):

All I want to say is the article I read in a NY paper simply said that airlines do not pay taxes on these surcharges/fees and that surprised me. Then again it's the Daily News and not a respected rag. But they did site the source as a company that specializes in the airline sector. Your points are illuminating but we're not included in the article. I am an admitted aviation enthusiast, but no expert by any means. The points you mention wouldn't have dawned on me. So thank you.

I am a senior executive in a design firm (LANDOR) a division of a 70,000 person, very global company and there is NO charge paid by a client that goes untaxed if it is revenue, it's taxed. What loopholes our CFO and tax attorneys have around the world is thankfully not my job.



The world is missing love, let's use our flights to spread it!
User currently offlinewindy95 From United States of America, joined Dec 2008, 2739 posts, RR: 8
Reply 13, posted (2 years 2 months 4 weeks 1 day ago) and read 8547 times:

Quoting VC10er (Thread starter):
Or are they a genus way to lump additional fortune on top of already good earnings at UA?



This money is not lumped on top of already good earning. Without it they would of had billion's in losses

Quoting VC10er (Thread starter):
My first question is: did these fees cover the rising cost of fuel?



Yes. They made a profit of $1.3B in 2011. But without the billions that they "raked" in from these fee's they would of had a large loss.

Quoting VC10er (Reply 8):
One way UA can burnish their image is to take a X millions of the $5.2 billion and help our troops, schools, kids etc.



No they can pay their employees and shareholders.

Quoting VC10er (Reply 8):
United gave me the mileage booster option of $45 for + 1500 miles. I did it for the first time. It felt like a deal. But really did how much of my $45 was spent to defray extra fuel costs for my E145, 50 minute flight, and how much did it add to United's impressive numbers.



United payed $2.8B more on fuel in 2011 than the previous year. So yes a large chunk went to pay for extra fuel cost's

Quoting flybyguy (Reply 10):
I thought the whole idea behind ala carte pricing was to make it harder for the consumer to compare the total cost of air travel between airlines.



No it was to get what you pay for. Have to large heavy bags and you are going to pay more. Pretty simple.

Quoting rotating14 (Reply 6):
What did airlines do before they implemented fees to cover everything.

Have huge losses...

Quoting rotating14 (Reply 6):
but to make $5.2 billion for charging seems lime a lot,

They did not make $5.2B it just added to their total operating revenue of some $37B. The made $1.3B out of that total revenue. So no it is not a lot.



OMG-Obama Must Go
User currently offlinesimairlinenet From United States of America, joined Oct 2005, 917 posts, RR: 2
Reply 14, posted (2 years 2 months 4 weeks 23 hours ago) and read 8276 times:

Quoting VC10er (Thread starter):
Also, I learned that airlines do not pay taxes on these revenues. So if you pay $25 for an extra bag checked, 100% of that goes direct into the airlines purse.

To be clear--the airline is paying tax on this revenue. U.S. airlines can currently claim to be double-taxed on their fares. If a ticket costs $100 to the customer, then some of this is going to the government taxes/fees, and then the airline is being taxed with corporate income tax.

Airlines are still paying taxes on these revenues on the end, just not the upfront tax.


User currently offlineAeroWesty From United States of America, joined Oct 2004, 20751 posts, RR: 62
Reply 15, posted (2 years 2 months 4 weeks 22 hours ago) and read 8077 times:

Quoting VC10er (Thread starter):
Or are they a genus way to lump additional fortune on top of already good earnings at UA? And will they be rolled back one day?

One of the things that came out in the Q&A during the earnings conference call was that some of what used to be accounted for as passenger revenue is now shown as ancillary revenue, pushing that piece of the pie higher. Items such as First Class upgrades, a growing piece of UA's revenue, could be a part of that number.



International Homo of Mystery
User currently offlinespacecadet From United States of America, joined Sep 2001, 3630 posts, RR: 12
Reply 16, posted (2 years 2 months 4 weeks 22 hours ago) and read 8030 times:

Quoting rotating14 (Reply 6):
What did airlines do before they implemented fees to cover everything.

They charged higher fares.

I guess I don't have a problem morally with a-la-carte pricing if it means I end up paying the same amount as I used to anyway. What I have a problem with is the hassle of it, and the lack of truth in advertising. Why can't I specify up front that I want the full package, including checked bags, a meal, a movie, whatever else they want to charge for, and just pay once and be done? Why do I need to be constantly whipping out my credit card? And why can't I know in advance how much a trip is *really* going to cost me?

So fine - some passengers just want to get from point A to point B with *no* frills, so let them do that. I want everything. Let me pay for everything. Tell me what it's going to cost me and let me pay it. Why is that difficult? I *want* to pay all these "fees". I just want to do it once and have it be overwith. And I want to be able to compare the total cost of my flight - including the fees - with other airlines without having to maintain an Excel spreadsheet. I suspect this is the *real* reason for the fees, so airlines can advertise lower fares than most people will actually pay, without being able to directly compare against other airlines. *That's* deceptive.

Quoting simairlinenet (Reply 14):
If a ticket costs $100 to the customer, then some of this is going to the government taxes/fees, and then the airline is being taxed with corporate income tax.

I would be very curious to know how much corporate tax UA pays. Many corporations pay zero. (I should know, I own one of them.)

It's certainly not the case that any corporation is ever directly "double taxed". If a corporation can't find enough deductions to basically wipe out their overall corporate tax on earnings, then they need a better accountant.



I'm tired of being a wanna-be league bowler. I wanna be a league bowler!
User currently offlineLoneStarMike From United States of America, joined Jul 2000, 3857 posts, RR: 34
Reply 17, posted (2 years 2 months 4 weeks 21 hours ago) and read 7843 times:

Obviously people have different opinions on this issue.

Here's another (older) article which asks the question:

Should Airline Fees Be Taxed?

I think the 4th guy who responded made a good point

Quote:
The federal airline ticket tax (and segment fee) is the principal source of funding for the Aviation Trust Fund. That fund was created by Congress to pay for the costs of the U.S. air traffic control (ATC) system and to provide funding for the federal Airport Improvement Program (AIP), which provides grants for airport capital improvement projects. ATC is the primary user of these monies.

The ticket tax is a percentage of the ticket price, however defined. Even before the ancillary-charge controversy, this so-called user-tax bore little relationship to use of either airport or ATC infrastructure. In terms of the ATC system, a large airliner like a Boeing 777 uses the identical ATC services as a small regional jet. Yet the ticket tax revenue generated by a 777 flight is many times that of the RJ.

The issue of ancillary charges makes this bizarre user tax even more ridiculous. Consider only a single type of airliner, say the Airbus A320, used by high-fare legacy carriers and low-cost carriers, alike. If United charges a bundled $300 fare that includes carry-on bags, a minimal snack, pillows and blankets, etc., it will pay $22.50 per passenger via the 7.5% ticket tax. But if Spirit charges $150 for a flight of the same length but includes $70 in ancillary fees, Spirit will pay just $11.25 per passenger. But Spirit will receive exactly the same ATC services for that flight.

LoneStarMike


User currently offlineslcdeltarumd11 From United States of America, joined Jan 2004, 3559 posts, RR: 0
Reply 18, posted (2 years 2 months 4 weeks 21 hours ago) and read 7731 times:

That almost seems too high doesnt it? regardless of the exact number.............
Lets remember this the next time people try to say most people are elites and no one pays bag fees 

[Edited 2012-07-28 20:11:40]

User currently offlineetoile From United States of America, joined Jun 2009, 115 posts, RR: 0
Reply 19, posted (2 years 2 months 4 weeks 21 hours ago) and read 7707 times:

Quoting spacecadet (Reply 17):
I would be very curious to know how much corporate tax UA pays.

Not a lot and not for the forseeable future. They have a $10B NOL carryforward. http://www.sec.gov/Archives/edgar/da...000119312512073010/d260625d10k.htm


User currently offlinerunzel From Australia, joined Dec 2011, 26 posts, RR: 0
Reply 20, posted (2 years 2 months 4 weeks 20 hours ago) and read 7467 times:

The discussion the original post has generated is interesting, shows a cross-section of views on this segment of airline pricing. But has the actual figure of billions $5.2 been verified? It seems inordinately high. Conversely it indicates indisputably the high number of UA pax prepared to request and pay for 'exttras'. If the figure has already been verified and exists herein, please forgive my inability to find it.

User currently offlineN505FX From United States of America, joined Aug 2008, 281 posts, RR: 0
Reply 21, posted (2 years 2 months 4 weeks 19 hours ago) and read 7219 times:

Quoting STT757 (Reply 1):
At this point not unless pro-consumer politicians like Senator Schumer can get something passed. Without some sort of regulation businesses will always push the envelopes as to what they can get out of consumers.

Try this one on for size, how about not taxing airlines 2X what tobacco gets taxed, and then maybe companies will stop using the tools necessary to make a profit!


User currently offlineetoile From United States of America, joined Jun 2009, 115 posts, RR: 0
Reply 22, posted (2 years 2 months 4 weeks 19 hours ago) and read 7212 times:

Quoting runzel (Reply 21):
The discussion the original post has generated is interesting, shows a cross-section of views on this segment of airline pricing. But has the actual figure of billions $5.2 been verified? It seems inordinately high. Conversely it indicates indisputably the high number of UA pax prepared to request and pay for 'exttras'. If the figure has already been verified and exists herein, please forgive my inability to find it.

The study doesn't specifically state its source data. But it says the ancillary revenue is $36 per passenger, which seems plausible. http://www.ideaworkscompany.com/wp-c...se-70-Ancillary-Revenue-Top-10.pdf

Quoting spacecadet (Reply 17):
What I have a problem with is the hassle of it, and the lack of truth in advertising.

The airlines tell you they are going to charge ancillary fees. Assume you are an average passenger and just add $36 to each UA quote you get.


User currently offlinespink From United States of America, joined Aug 2005, 318 posts, RR: 1
Reply 23, posted (2 years 2 months 4 weeks 19 hours ago) and read 7112 times:

Quoting N505FX (Reply 22):
Try this one on for size, how about not taxing airlines 2X what tobacco gets taxed, and then maybe companies will stop using the tools necessary to make a profit!

Probably a better solution is to move from a ticket tax to a per flight hour fee. As has been previously pointed out, the ticket tax fee currently impact higher fares more than lower fares and doesn't take into account non-ticket fees. With the current system, two identical planes flying the same route, requiring the same ATC/airport resources can pay a significant difference in fees, upwards of multiple the per plane fee.

So why not just move to a direct usage based fee on a per plane per hour rate.


User currently offlineRWA380 From United States of America, joined Feb 2005, 3373 posts, RR: 5
Reply 24, posted (2 years 2 months 4 weeks 11 hours ago) and read 5977 times:

Quoting VC10er (Thread starter):

Also, I learned that airlines do not pay taxes on these revenues. So if you pay $25 for an extra bag checked, 100% of that goes direct into the airlines purse

Nope, sorry, income earned is money charged for a good or service, and must be reported by the airlines as revenue to the IRS, It would be a criminal offense to hide assets or positive cash flow from the government.



AA AC AQ AS BD BN CO CS DL EA EZ HA HP KL KN MP MW NK NW OO OZ PA PS QX RC RH RW SA TG TW UA US VS WA WC WN
25 aztrainer : VC, I read the same thing, but the person buying the ticket is not paying taxes as these are fee's. If they rolled the fee's into the price of the ti
26 Post contains links VC10er : Ok, I finally figured out how to get this from my Blackberry. Never had to do that before. Below is the link I read and it has the email address I in
27 glbltrvlr : That's what United hopes for as it boosts their revenue by 10% or more by leg. But you paid .03/mile for miles that most sources value at .01/mile. U
28 rcair1 : I think this is what we have. Sometimes I do the no frills, sometimes, "some" frills. It is really that hard? I find that if you are on the airlines
29 VC10er : Agreed, I know the house always wins! But for all the mile boosters I've seen this seemed reasonable vs the booster deals offered on a long haul wher
30 gigneil : Airlines are already the most taxed industry in America, with practically no limits on what the government can do to them. They pay nearly 40% of eac
31 RDH3E : Second quarter UA paid $1M in income taxes according to their earnings release.
32 gigneil : Income taxes vs other forms of taxation are very different for corporations. NS
33 Post contains images OB1504 : Airfares won't return to the late '90s rates because of inflation. Not only that, but there are now regulations in place that require airlines to dis
34 etoile : The airlines also use a lot of government services and benefits: airports, ATC, TSA, counterterrorism services, the occassional fighter escort, guara
35 gigneil : Almost all of those are ADDITIONAL taxes. NS
36 N505FX : The airlines also use a lot of government services and benefits: airports, ATC, TSA, counterterrorism services, the occassional fighter escort, guaran
37 exFWAOONW : And the retirees.
38 Post contains links etoile : Where are you getting your 40% from? I can't find anything in here http://www.sec.gov/Archives/edgar/da...000119312512073010/d260625d10k.htm that add
39 strfyr51 : After the airlines abandoned the FULL fare mantra for the seemingly "Low Cost Carrier" route (which was he biggest marketing SCAM in recent memory) t
40 Post contains links windy95 : I believe he is talking total taxes and fee's for the airline and the customer together equals about 40% of the airfare. When you toss in landing fee
41 etoile : I'm not following. In Reply 35 Gigneil refers to all of the ancillary fees and charges (your "landing fee's, ticket tax, segment fee's, facilities fe
42 windy95 : Cannot speak for him but the total tax rate which is including total taxes that the airline and the customer both pay for a flight almost 40% of your
43 saab2000 : This. I don't know why some folks like to sit like vultures and talk about the next airline to die but then complain that they're charging too much w
44 strfyr51 : I think United charges and Pays the State, local and federal taxes on EVEY ticket ,every gallon of jet fuel or gasoline it buys airport landing fees
45 etoile : Fuel tax is less than a nickel a gallon and how much property does an airline own that is subject to property tax. I can't get to 40%, even including
46 RDH3E : It's .2444. FET (federal excise tax) is 4.44/4.43 cents. Then there is a "refundable" 20 cents. But don't forget the underground storage tank fees an
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