Transportation department taps brakes on proposed regulation requiring disclosure of airline fees

The U.S. Transportation Department surprised the travel world last month by suspending the creation of an important new consumer-protection regulation.

At issue was a Supplemental Notice of Proposed Rulemaking — a precursor to creating a federal regulation — ordered in the waning days of the Obama administration. Basically, it’s a request for comment published in the Federal Register when the government has made a change to a regulation that’s under consideration.

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These notices are usually only of interest to consumer advocates, policymakers and special interest groups, but this one was a little different. The proposed rule would require airlines and ticket agents to clearly disclose to consumers all customer-specific fee information, including charges for a first and second checked bag and a carry-on bag, wherever fare and schedule information is provided to consumers. It also would mandate that the baggage fee information be disclosed, adjacent to the fare, at the first point in a search process where a fare is listed in connection with a specific flight itinerary.

These extra fees, sometimes revealed only at the last minute, are an enduring cause of aggravation for air travelers — and an abundant source of revenue for the airline industry. So, when the business-friendly Trump administration came to power, the airline industry lobbied hard to kill the supplemental rulemaking.

When the rulemaking was suspended in March, the airline industry couldn’t stop applauding. Nicholas Calio, chief executive of the industry trade group Airlines for America, called the decision “a common-sense measure reinforcing that the airline industry is capable of making the decisions that best serve our customers, our employees and the communities we serve.”

How did the suspension serve passengers? The organization didn’t respond to my request for an explanation.

Supporters of the proposed rule were dismayed by the regulatory freeze. “The Department of Transportation must live up to its mandate on consumer protection and ensure consumers have access to all the information they need to make a purchasing decision,” said Steve Shur, president of Travel Tech, a trade group that represents the major online travel agencies. “We urge the Trump administration to take the necessary steps to protect consumers.”

In a letter to Transportation Secretary Elaine Chao, the Business Travel Coalition (BTC), which represents corporate travel managers, lamented the setback. Airline arguments that the government should stay out of their business only serve the industry, not the consumers the government is supposed to protect, said Kevin Mitchell, the BTC’s chairman. “Consumers need and have a right to complete and accurate flight information to prevent them from being misled,” he wrote.

There’s a history here. For the past few years, airlines have “unbundled” — separated the cost of certain items from the price of your ticket — services such as carry-on luggage and seat assignments from their fares to increase their revenue without, on the surface, increasing their ticket prices, according to Joseph Schofer, a professor of civil and environmental engineering at Northwestern University.

Airlines argued that the move benefited passengers because it allowed them to only pay for what they used, but there were two problems with that argument. First, airfares didn’t immediately fall after unbundling, suggesting that airlines were actually just adding the fees to their ticket prices. Second, it turns out most of the optional fees, particularly for the first checked bag, were not so optional for most air travelers.

That’s where the new regulation would come in. “The value of the regulation is that consumers are informed up front what their costs will be,” Schofer said. “Reasonable? Seems like it. Fair? I think so.”

The good news for travelers is that though the supplemental rulemaking has been suspended, it is not off the table. “The proposed rule is still under careful review,” said Caitlin Harvey, a DOT spokeswoman.

Maybe the DOT knows that moving forward with the rulemaking — one of the most ambitious and comprehensive airline protection regulations in years — is the right thing to do. Simply put, regulations haven’t kept up with airline fees. A decade ago, passengers could assume that their ticket included a seat assignment or the ability to carry on a bag. Now, thanks to the airline industry, ticket prices are confusing — and, usually, higher than people expect.

If the new rule flies, you’ll benefit down the line by getting a clearer cost of your ticket before you push the buy button. Until then, you should assume that your airfare will cost more than the listed price.

32 thoughts on “Transportation department taps brakes on proposed regulation requiring disclosure of airline fees

  1. “Second, it turns out most of the optional fees, particularly for the first checked bag, were not so optional for most air travelers.”

    Really? Around 820 million passengers boarded flights on US carriers last year. Those airlines generated just over $4 billion in baggage fees. That’s a bit over $5 per passenger. Given that the typical baggage fee is $25, that means that, AT MOST, 1/5 of passengers paid a baggage fee. Since some fees were higher, and some paid more than one fee, the actual % of passengers who paid a baggage fee is well BELOW 20%. That’s a long way from “most air travelers.”

  2. I think most booking sites now do make it fairly clear that the fares shown may not be all inclusive, there are so many variables (status with an airline, holder of an affinity card or other credit card that provides airline benefits, class of fare purchased, for example) that it would be totally misleading to assume everyone must pay for bags, seat selection, etc. I see links that are right above/adjacent to/below either the quoted price or the shopping cart icon (depending on the site) that then lets me determine what my final cost would be. Isn’t that just what the rule is trying to get done, and isn’t it already being done?

  3. People don’t pay the checked luggage by bringing in giant carry ons that slow down boarding and unloading.

    Advertised fares and the most prominent price on a site should include 1 checked bag. In fine print they can then offer a discount for 0 checked bags or higher fares tho include 2 checked or seat selection.

    It would be nice to get some carry ons back into the cargo bay where they belong.

  4. “The U.S. Transportation Department surprised the travel world last month by suspending the creation of an important new consumer-protection regulation.”

    Really, you’re surprised that under trump regulations that benefit consumers and probably cost airlines more would be put ‘on hold’ or reversed?

    “Nicholas Calio, chief executive of the industry trade group Airlines for America, called the decision “a common-sense measure reinforcing that the airline industry is capable of making the decisions that best serve our customers, our employees and the communities we serve.””

    HAHAHA, seriously? Arilines make decisions that best serve their customers and employees? Since when? Airlines make decisions that serve their boardmembers, shareholders and maybe top elite passengers.

  5. Is that domestic flights only? International flights, even on “domestic” carriers usually include one checked bag w/o an extra fee.

    Does that include Southwest that also doesn’t charge an extra fee for a checked bag?

    Also, many passengers get around the checked bag fee by paying in other ways (like using an airline’s credit card with a yearly fee) or they cram everything into the carry-on, and even if its a bit ‘oversized’, if they get it to the gate and then get it ‘gate checked’ for free.

    Finally, many passengers, who may have previously been fine checking a bag, will now make do with a carry on, that causes boarding to be longer (and sometimes more contentious).

    Basically, the vast majority of passengers fly with luggage, and the airlines sought to profit off that. some have found ways to avoid paying, but that doesn’t change the fact that traveling with a bag isn’t really an “option” for most people.

  6. Domestic and international flights, but only domestic carriers (didn’t have the baggage fee info for int’l carriers). Wouldn’t move the number much, though, since int’l carriers are only about 11% of passengers. It does include Southwest, so if you take them out (even though some of their pax did pay baggage fees, must be overlimit or overweight), you’re at about $6 per passenger, or, at most, one in four passengers.

  7. Given that only a minority of pax check bags (and not all pax who check bags pay baggage fees), it makes more sense for the quoted fare to not include baggage fees, but the bag fees be readily available.

  8. You left off the option of multiple people packing into a single bag.

    When my parents flew prior to the bag billing, they’d each check a medium sized bag they could carry. After the bag billing began, they’d check a single, large, heavy bag with both their accoutrements.

  9. Besides @Hanope and @James points, you also don’t account for the passengers whose status or credit cards entitle them to free bags (who represent a small share of discrete air travelers, but a large share of air travelers on a given flight).

  10. Booking sites use GDS, and airlines don’t generally publish their fees to GDS, and when they do, it’s not in any standard consistent way that booking sites can make use of the information. The DOT was proposing a rule which would change this.

    Airlines are opposed because airlines don’t want you to be able to compare their all-inclusive pricing on an apples-to-apples basis with other airlines.

  11. Not sure how I left them out, I was talking about how many paid the baggage fee, not how many were checking bags.

  12. You include them in the denominator but not the numerator, yet many of them check bags (and they ‘paid’ in various types of indirect ways for the privilege to do so).

    The question of just how “optional” the fee is is really about how elastic the demand is. To answer that, you need to examine the total number of bags (or better yet, the total cumulative weight of all bags) checked at various price points all the way back to the free bag days. And there’s a case to also include ‘free’ gate-checked bags (since those still require baggage handling and those bags must be checked because there isn’t space in the cabin for them).

  13. It would be best if you (or any other passenger) could quote the fare that is most relevant to you (or them) for the itinerary you (or they) are searching.

    The DOT proposed a rule to make this possible, but of course the airlines don’t want you to be able to compare apples-to-apples pricing easily (or at all in the case of fees which they can change after purchase).

  14. That rule would really be a pain in the neck for the consumer, though. Right now, I go to Kayak, I enter the flight I want, I see prices. Should I also have to enter “I will be checking one bag, have status with Delta, a United credit card” and so on in order to see my flight quote?

  15. As soon as you state that elasticity of demand is >0, then the fee has become “optional.”

  16. Who said you would HAVE to?
    You would have ACCESS to better information if you entered more information about your circumstances.

  17. That’s silly. Even modern sewage, running water, and electricity have elasticity > 0, but those are classic examples of “inelastic” goods.

  18. I already have access to that information. The price shown is the price I pay. If I want more stuff, I can certainly buy more stuff.

    If any TA wanted to display “price including one bag, if you don’t have status,” it would be trivially easy to do so. You could assign an intern to pull together those fees in the course of an afternoon.

    If regulators are really concerned about fees, how about requiring hotels to include any mandatory resort fees in their quoted rates? That’s orders of magnitude more egregious than anything the airlines are doing.

  19. If any TA wanted to display “price including one bag, if you don’t have status,” it would be trivially easy to do so

    No, they can’t do it because that price is — intentionally — NOT currently published anywhere the TA can programmatically access it from and it can change at any moment w/o notice to the TA. Most fees (other than baggage) can even change after you complete your purchase.

    Hotels are subject to FCC rules and state and local consumer protection laws.

    Airlines are subject to none of these things by special exemption under the Airline Deregulation Act. They answer to the FAA/DOT, and only to the FAA/DOT,.

  20. “it can change at any moment w/o notice to the TA”

    So, ASTA spends $50 a day on Mechanical Turk to update that information, and blasts out an update to the membership should there be a change (which doesn’t happen very often at all).

    As to your comment on the bodies with regulatory authority, it’s unclear what that has to do with anything. Rather than wasting time on this regulation, consumer advocates should be focusing their efforts on ones that are actually worthwhile pursuing (i.e. resort “fees”).

  21. Something can be “inelastic” and still “optional.” If you’re going to try to change the terminology, you need to be consistent.

  22. The phrase in the article was “not so optional.” Elasticity is how we quantify exactly how optional something is.

  23. The implication of that sentence was that they weren’t optional. Clearly, they were, since the substantial majority of passengers don’t pay them.

  24. Some airlines have several dozens of fees. And, then ASTA gets sued by passengers who book during the window between a change by an airline and the time Mechanical Turk publishes it…

    Consumer advocates can’t expect anything from the FTC and from the DOT at the same time? They have to choose one or the other? Actually, the FTC was already on consumer advocates’ side on resort fees and issued warnings a few years ago to the hotel industry that they believe the practice is probably illegal. But the industry has won some court cases and there’s probably nothing more the FTC can do without Congress. Good luck with that.

  25. Not the way I read it. “Not so optional” is another way of saying “a little bit optional”

  26. Yes, airlines have dozens or more fees. Most of those I, you, nor anyone else on this forum will ever pay. The DOT approach should be one of showing prices with the most common fees added. So yes have a ticket priced with one bag included. Do we need to see the charge for antlers, fresh fish in dry ice, canoes, rifles, ammo, un tanned hides (all valid fees on Alaska)? No because even though there are several passengers that pay those fees, it is still not “Common” on that airline. I don’t see where any other airline publishes those fees specifically. And that is where this rule becomes so difficult. Where do “reasonable fees” end and ” exceptionally rare fees” begin?

  27. The rule as proposed would only have addressed 4 types of common fees, as you advocate, so antlers fees would be exempt ;) But they did invite comments on the general question you raise (where do the basic fees end and the exceptionally rare fees begin?)

    Under the proposed rule, airlines and ticket agents would be required to disclose fees for certain basic, additional services associated with airline tickets at all points of sale. The proposal defines these services as first checked bag, second checked bag, one carry-on item, and advance seat assignment.

  28. Well said. As soon as I saw the heads of the US carriers meeting with Trump I knew any proposed consumer protection was kaput and that the Middle East parade of carriers flooding the market would stop. It’s like his promise to help coal miners. ” Hey,brasher than pay to retrain you in an emerging fiekd, we are going to stick you back down into those antiquated mines! Yeah!!!”. Some consumer protection!

  29. I believe this also affects ruling that families flying with children must be seated together as well. Wasn’t this also part of the bill?

  30. Except for those of us who have to travel with medical equipment and can’t chance checking it. Please remember that not everyone is as able bodied as you.
    I do take issue, however, with those that refuse to put anything under the seat in front of them and take up valuable bin space with purses, laptops, coats, etc. Flight attendants should be insisting they do. That’s the only way to stop this selfish practice.

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