Turbulence ahead as airline fees are probed
Why are airlines raking in record profits? Maybe it’s the fees.
Airline add-ons, which cover ‘‘optional’’ services for everything from reserving a seat to changing a ticket, used to be included in the cost of most every fare. But over time, airlines began separating them from base fares. They sometimes neglect to mention that detail, helping them earn money but frustrating customers, critics say.
George DelMonte didn’t know about change fees when he bought tickets from Sanford, Fla., to Allentown, Pa., to visit his grandkids. When he had to reschedule, he easily canceled his hotel with no penalties. But not his Allegiant Air tickets.
‘‘They charged me $300 to change my tickets,’’ says DelMonte, a retired teacher. The airline left him with a credit of just $142, which will expire in a few months.
‘‘Airfares are outlandish, fliers are charged for everything, and comfort is a thing of the past,’’ he says. ‘‘How can that be allowed?’’
The US Senate is wondering the same thing. It has launched an inquiry that could reshape aviation policy. The goal: to determine whether current rules go far enough to protect consumers.
‘‘These additional fees are separate from base fares for flights and have been a boon to the airlines, raising billions of dollars of revenue for them,’’ says Senator John D. Rockefeller IV, Democrat of West Virginia and chairman of the Senate Committee on Commerce, Science and Transportation, which is investigating the matter.
In letters to major airlines, he has asked for detailed information that could offer valuable insights into an industry that’s having the best year in the history of modern aviation. For example, the Senate wants to know how much airlines earn from checked baggage, advance seat selection fees, preferred seat fees, and trip insurance. Some of this is already reported to the Transportation Department, but not in detail.
The Senate also wants to know if airlines let passengers access the information maintained about them and, if necessary, correct it. It has also asked airlines if they share or sell data, and if so, to whom.
Fees “are contributing to record airline industry profits at a time when consumers’ travel budgets remain strapped due to the sluggish economic recovery,’’ says Sally Greenberg, executive director of the National Consumers League. ‘‘To make matters worse, many of these fees are poorly disclosed, and the sale of travel insurance and the coverage it provides is deceptively advertised.’’
Data privacy advocate Edward Hasbrouck called the inquiry ‘‘an important step.’’
‘‘It’s the first time anyone in Congress has publicly acknowledged, or expressed interest in, addressing the absence of any federal law protecting air travelers’ privacy,’’ he says.
Airlines insist they can vindicate their business model. Domestic carriers are committed to ensuring customers know the price of the ticket before they buy, says Victoria Day, spokeswoman for Airlines for America, a trade organization. They’ve also pledged to protect their customers’ privacy.
What’s more, the a la carte pricing model used by most carriers works, giving customers choices and keeping fares low, Day says.
‘‘Charging customers for services they value and are willing to pay for — which is common in multiple industries globally — has also enabled airlines to provide consumers the ultimate choice and control over what they purchase,’’ she says.
Responses to the committee are due Sept. 5. Insiders say that the information will be reviewed and could be used for legislation that might be attached to the Federal Aviation Administration reauthorization bill, which is expected next year. It would contrast sharply with the so-called Airfare Transparency Act passed by the House of Representatives, which would allow airlines to disclose taxes and fees separately from the fares they quote. If signed into law, critics say, it would give airlines a license to make money by deceiving customers.
The Senate will soon have enough information to lay the groundwork for a noisy battle between legislative forces that believe the airline industry should operate free of consumer regulations and those who think air carriers are shamelessly fleecing passengers.
You’ll want to put some popcorn in the microwave for this one.
Christopher Elliott, National Geographic Traveler’s reader advocate, runs a consumer advocate website at elliott.org.