WASHINGTON, Dec 4 (Reuters) - The head of a U.S. Senate

panel harshly criticized rising airline fees for luggage and

seat assignments, saying carriers are looking for new ways to

extract more money from passengers.

Senator Richard Blumenthal, who chairs the Permanent

Subcommittee on Investigations, is convening a hearing Wednesday

titled "The Sky's the Limit -- New Revelations About Airline

Fees" with American Airlines ( AAL ), United Airlines

Delta Air Lines, Spirit Airlines ( SAVEQ ) and Frontier

executives testifying.

"Airlines these days view their customers as little more

than walking piggy banks to be shaken down for every possible

dime," Blumenthal said in prepared remarks.

A report released by Blumenthal last week disclosed the five

airlines collectively earned $12.4 billion in revenue from seat

fees between 2018 and 2023.

Blumenthal's panel spent a year investigating, finding

carriers are increasingly using algorithms to set fees and said

some carriers may be avoiding federal transportation excise

taxes by labeling some charges as nontaxable fees.

Carriers are working on customer-specific pricing "to

discriminate against passengers, and to raise fares and fees for

consumers the airline believes will pay more," Blumenthal said.

Airlines say the fees are transparent and they need to offer

consumers choices while they face rising costs.

American Airlines ( AAL ) vice chair Stephen Johnson will tell

senators legacy carriers need to "appeal to the most

budget-conscious customers ... The intense competition in the

industry required us to design our product offerings very

deliberately."

Delta executive Peter Carter said in written testimony the

airline's goal is "to provide options and value for every

customer... Fee practices that erode the trust and loyalty of

our customers are not in our best interests."

Blumenthal's committee found budget carriers Frontier and

Spirit paid $26 million to gate agents and others between 2022

and 2023 to catch passengers not paying for bag fees or having

oversized items.

Frontier personnel can earn $10 for each bag passengers must

check at the gate, the report said. Frontier CEO Barry Biffle

defended the practice, telling Reuters passengers who were

trying to evade paying were shoplifting.

Earlier this year, airlines sued to block the U.S.

Transportation Department's new rule on upfront fee disclosure,

while carriers in 2018 successfully lobbied against bipartisan

legislation to mandate "reasonable and proportional" baggage and

change fees.