At the outset, major airways were not charging fees for baggage. This has since changed over the past few years as travelers now have to dig deeper into their pockets to cover this added cost. The logic behind this amendment as stated by the airlines was high fuel prices. Ever since, the airlines have amassed an estimated $12.6 billion in baggage fees. This in turn airline baggage fees has allowed major airways known as legal carriers to remain competitive with low-cost airways in terms of ticket pricing.
However, the bigger picture is that the price of every airline ticket is inclusive of a 7.7% federal tax. These tax revenues meant to fund the air-transportation system and the Federal Aviation Administration operations have since failed to reach the projected amounts needed for these maintenances in the past 8 out of 11years. When this occurs, Congress is able to increase its financial support towards covering the FAA’s budget as this was seen in the fiscal year of 2009 and 2010 where Congress arrogated further funding at an estimated $1 billion.
As airways maintained low airline ticket prices by the transference of the 12.5 billion to baggage fees, they saved approximately $966 million in federal taxes payable if they had augmented the ticket prices by that particular amount. This century and especially the first 13 years have been particularly challenging for major airways. First, the September 11th, 2001 terrorist attacks led to the grounding of flights for some time and the alarmed public became more wary of taking long flights. The fuel costs had also almost double by 2008, thus increasing the distribution of operating revenue that it used up from the 11% in 2001 to 36% in 2011. What followed next was the profound recession that tremendously made matters worse.
Over 51 cargo and passenger airways became bankrupt, legal carriers began merging so as to withstand competition from the low-cost airlines, and airlines increased efficiency in managing its fleets that airliners with vacant seats were now an the exception and not the rule. Regardless of the challenges, the airlines pressed on and managed to regain its foothold in this year’s second quarter.
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