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Posts with tag Hotels.com

Are the airlines' extra fees cheating the U.S. out of tax dollars?

Filed under: Budgets, Debt, Tax, Transportation, Travel, Recession


The airlines might have found a tax loophole, and you're it. The travel consultancy firm T2 recently published a worrisome blog post that is gaining traction. The airlines' extra fees, it says, aren't just costing consumers more. They're also enabling the airlines to dodge tax to our government.

Until a few months ago, checking a bag was considered a service that came with the base fare that you paid when you bought your plane ticket. That was taxed at a rate of 7.5%. But now many airlines are charging up to $50 for each bag each way, and because it's not part of the base fare, that fee isn't subject to tax. T2 says that cash belongs to the airlines, free and clear.

So a carrier like United, T2 writer Timothy O'Neil-Dunne calculates, would be cheating Uncle Sam out of tax income of $7.5 million for each $100 million it makes on extra fees. Given that United recently surmised that it stood to make $700 million on its extra fees, that's a lot of cash that won't be going to our schools, our roads, our veterans programs, and our elaborate Wall Street bailouts. Not only do consumers get screwed by these extra fees, they get screwed out of the greater good of tax revenue.

Where can the downturn work to your advantage? It's Vegas, baby!

Filed under: Bargains, Extracurriculars, Transportation, Travel


What happens in Vegas may stay there, but these days, the problem is how to get there in the first place.

McCarran Airport, Vegas' major entry point, reported its biggest year-on-year drop since after 9/11. And Southwest Airlines, the rare profitable airline which recently said it wouldn't need to tighten its flight schedule, reversed course and said 13 flights, or about 5% of its Las Vegas seats, would be eliminated starting in January. Considering Southwest is one of the most reliable feeder of tourist traffic to the Strip, that's quite a blow.

To further put it in perspective, as of Sept. 2, Vegas had 81 flights from U.S. Airways daily. A year ago, it had 141.

The pain, though, is mostly for hoteliers and airlines. Tourists are starting to see a real benefit to the growing malaise. On Tuesday, Arthur Frommer wrote about seeing an ad for a two-night Planet Hollywood package for $149 per person that came with either $100 back or two free show tickets. When he called to book, he told the receptionist it was still too expensive. And just like that, he was offered the same deal for two people at $249 total. That's desperation.

Earlier this summer, casinos were low-balling tourists with archaic rates like $33 to $55 a room. Even now, prices on the Strip are sliding southward (the Sahara for $24, the Tropicana, $46, both quoted through a Hotels.com promotion) and rooms off the Strip are so low (like $20 at the Plaza Hotel off Fremont Street), they're virtually tragic.