Hauptli noted that taxing baggage fees at the 7.5 percent rate paid on airline tickets would have generated more than $260 million in 2012, and taxing all ancillary fees would have produced hundreds of millions of dollars more. With air carriers are aggressively shifting the airline pricing model away from utilizing ticket prices to generate revenue to a greater reliance on ancillary fees, the amount of revenues lost because of the existing tax loophole will likely grow in the future. 

According to data released by the Department of Transportation in late June, U.S. passenger airlines collected a total of $800 million in baggage fees in the first quarter of 2013. Airlines collected almost $3.5 billion from baggage fees in 2012 more than the amount Congress approved for federal grants to all airports through the Airport Improvement Program in FY 2013. 

Additionally, information about these substantial fees is not fully disclosed through all ticket distribution channels used by consumers, which makes it difficult for travelers to compare the total costs of flights from different carriers. Concern about this practice has been highlighted by the Government Accountability Office and is now the subject of a DOT rulemaking expected to be completed later this month. The fact that the carriers will not fully disclose voluntarily all of the fees they impose to travelers searching for fares is troubling.