Senators fight airlines over carry-on baggage fees

NEW YORK (CNNMoney.com) -- Senate Democrats are taking aim at carry-on baggage fees after Spirit Airlines became the first U.S. carrier to propose charging passengers to store luggage in overhead bins.

On Wednesday, Sen. Charles Schumer, D-N.Y., introduced a bill that would amend the tax code to eliminate a loophole that he and four other Senators say allows airlines to avoid taxes on certain fees.

"This latest fee crosses the line and is a slap in the face to travelers," Schumer said in a statement. "Our legislation will rein in the airlines and keep air travelers from being gouged every time they board a plane."

That effort comes one day after two other Senators put forward a bill that would change how the Federal Aviation Administration regulates carry-on baggage fees.

All the legislators were motivated by Spirit Airlines announcing a plan to charge passengers up to $45 to stow luggage in overhead bins, making it the first airline to charge for carry-on bags.

Spirit argues that the fee, which applies to flights booked for Aug. 1 or later, is part of a strategy to make boarding an aircraft faster and easier. The low-cost airline, which has advertised 1 cent ticket prices on some short-haul routes, said it plans to offset the increase by reducing fees for checked luggage and some fares.

"This is a free market and consumers are free to make their own choices," said Ben Baldanza, Spirit's chief executive, in a statement. "Spirit is all about giving customers options to choose what they want to pay for without subsidizing the choices of others."

Sen. Robert Menendez, D-N.J., countered: "It seems that air carriers are crossing a line that will end of pricing middle class families right out of being able to fly, and that's not right. While airlines have a right to set prices, families should have the right to bring a change of clothes with them and not be gouged for it."

As a result, he, Schumer and the bill's other co-authors called on the U.S. Treasury Department to close a loophole they say gives airlines preferential tax treatment for fees on services that are not deemed "reasonably necessary" for air transportation.

Under current laws, airlines pay a 7.5 cent tax for every dollar they collect in fares, but no tax is imposed on fees collected for "non-essential" services.

The Block Airlines' Gratuitous Fees Act, or BAG Fees Act, would require that carry-on bags be considered essential and taxed at the same rate as fares.

Meanwhile, the bill introduced Tuesday, the Free of Fees for Carry-On Act, is based on pending legislation to reauthorize funding for the Federal Aviation Administration.

That bill would prohibit fees for carry-on bags that meet existing standards for weight and size. It would also require carriers to make detailed information about the fees available to passengers in advance.

The goal is to ensure that passengers are not penalized for bringing items such as medication, food and laptop computers onboard, the senators said.

"These are personal items that airline passengers should not be charged to keep with them in the cabin," Sen. Robert Menendez, D-N.J., said in a statement.

"So far one airline has announced their intention to make fees for carry-on bags a reality," he added. "We cannot allow these flood gates to open."