New rules for airline fees are a partial victory for travelers

If airfares confuse you as much as they confuse me, then I have some good news: Several new rules are going to make it easier to calculate the total cost of a ticket.


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Starting Jan. 26, a new U.S. Transportation Department rule will require airlines to include all taxes and fees in their advertised fares. Other provisions of the rule — banning post-purchase price increases and allowing passengers to hold certain reservations without payment or to cancel them without penalty for 24 hours after booking — will take effect Jan. 24.

The DOT is also requiring airlines to disclose baggage fees when passengers buy a ticket, mandating that the same baggage allowances and fees apply throughout a journey, and stipulating that those fees be shown on electronic ticket confirmations.

The airline industry, which fought many of these requirements during the rulemaking process, isn’t quietly complying.

In June, Allegiant Air and Spirit Airlines tried to block several of the new rules, including the 24-hour grace period and some of the fee disclosure requirements. The airlines charged the government with trying to re-regulate them and limiting their right to free speech.

The matter remains tied up in the U.S. Court of Appeals for the District of Columbia. And in November, several airline industry organizations, including Airlines for America, which represents the domestic air carriers, filed a join request to postpone a rule that would require the same baggage rules to apply throughout an entire itinerary that departs from or ends in the United States. It also asked for a stay on a rule that makes them tell the passenger what baggage rules apply at the time of purchase and in the e-ticket receipt for itineraries to or from the United States.

The industry’s stated reasons for these objections are not political but technical. It says that the systems aren’t yet in place to offer such disclosure. “Critical sources of information needed to comply with these rules do not yet exist,” says Steve Lott, a spokesman for Airlines for America. “This extension would give carriers essential time to overcome fundamental changes in baggage rules that require substantial investment and re-engineering of carrier reservations, check-in and baggage information systems, in addition to retraining of airline employees.”

An extension might also allow airlines to continue earning more money from baggage fees until 2013. Even a small rule change could interfere with a revenue stream that has by most accounts allowed the industry to remain profitable in recent years.

The DOT hasn’t made a decision on the extension yet. But some believe that regardless of how it rules, the government needs to do more. Sen. Robert Menendez (D-N.J.) is pushing for even more disclosure from airlines. As the holiday travel season began, he and nine other senators called for “airfare transparency” that goes beyond the current rules.

In a letter to Transportation Secretary Ray LaHood, Menendez said airlines should not only make all fees available at the time of purchase but also keep information about fees up to date and make it possible for consumers to compare fares and fees at all points of sale.

The problem is that airlines continue to remove fees from their fares — a process called unbundling. For example, the first checked bag, a confirmed seat reservation, even the ability to carry a bag onto the plane all used to be included in a base fare but now might not be. Breaking them out leads to confusion and ultimately to customers paying more than they thought they would.

“If consumers are expected to pay fees for services that have historically been included in the base fare, then at the very least, they should be informed of all of the fees and their cost before they purchase the ticket,” Menendez wrote.

And so here we are at the beginning of 2012, with fare shopping not as confusing as it was a year ago, but with a long way to go before it’s truly consumer-friendly. Air travelers are entitled to know how much their ticket will cost before they push the “buy” button, and the airline industry’s claims that it has been committed to full transparency have lacked credibility in the past, critics say.

Until now, airlines have claimed that their baggage fees are simple and that normal travelers can easily figure them out. But it turns out that the system isn’t that straightforward, even for the airlines that run it. All the exceptions and reservation rules make it kind of complex, actually.

Isn’t it a little ironic that the airlines, even with their billions of dollars in collected baggage fees and state-of-the-art computer systems, are having some trouble telling passengers how much their ticket will cost when they add a checked bag to the price?

In a perfect world — perfect for air travelers, that is — the DOT would hold firm on its new rules, the courts would dismiss the lawsuit by Allegiant and Spirit and the government would create ironclad new rules that would make it clear to us exactly how much we’re paying for a ticket.

But we don’t live in a perfect world. The airline industry’s claims about technology difficulties may have some merit. A court could side with the discount airlines trying to block the new rules. And the DOT, reluctant to draw criticism from the right about overregulation, may step back in an election year.

It’s a partial victory for passengers. Just a year ago, airlines were deceiving their customers — duping them into spending 20 to 30 percent more on their tickets, thanks to surprise fees.

At least they aren’t doing that anymore.

26 thoughts on “New rules for airline fees are a partial victory for travelers

  1. The “free speech” argument is Dead On Arrival.  There are several highly-taxed industries where the final price (possibly minus sales tax) is disclosed in all advertising, pricing info, etc.

    Cigarettes and Liquor (everything but sales tax.)
    Gasoline (everything)

    And I’m guessing there is a law mandating this; I doubt gas stations voluntarily display the total price on their signs.

  2. Chris– You’re spot on about most things above except for a big, glaring error: Airlines have anything but “state of the art” computer systems. Add to that the requirement that the fees work interline – across more than one ancient, inflexible IT system – and you have a pretty big IT mess. That being said, I’m of the opinion that they should have figured this out before implementing said fees, but airlines rarely work like that…

    1. I think we need to clarify this a bit further. While it is true that the main guts of airlines passenger service systems are archaic, they actually do work quite well (especially for those who know how to use them).

      The general public does not interface with these systems directly. Consumers normally deal with internet shopping engines powered by ITAsoftware QPX, Amadeus Meta Pricer, Sabre ATSE, Travelport e-Pricing, Expedia Best Fare Search, etc. These are modern and sophisticated systems that use data from the old “archaic” systems.

      Most of the problems you encounter nowadays is due to the move to a self-service distribution model. Eliminating the skilled travel agent from the process required the passenger to gain some of the lost knowledge travel agents contributed to the buying process.

  3. This is fine, but why not include car rental agencies with their associated government fees and taxes as well? The total bill on the last car I rented literally had more in taxes and fees than base rate.

    While they’re at it, please do something about including those hotel resort fees and occupancy taxes in the rate as well.

  4. I like the idea of a total price being displayed but it will probably lead to more unbundling of fees since these were excluded.

  5. DOT has probably hit a good balance between allowing unclear pricing on the one hand, and appeasing freeloaders pushing for requiring one “free” checked bag on the other. I do not know if the time allowed for implementation is sufficient or not.

  6. I don’t understand why unbundling is profitable.  Think about it… if you charge $25 for a checked bag and then $300 for an airline ticket, the customer may pay $300 for the ticket and pack lightly, just use a carry-on.  If the airline charged $325 for a bundled fare and the customer did not check a bag, then the airline would be making $25 on nothing.

    How does this remotely make business sense to the airlines?

    1. …or they charged $325 with free bags…and then, rather than raise fares, charged $325 plus $25 for a bag.

      Just a matter of perspective.

  7. If airlines let people check 1 bag for free, they would be able to turn their planes around faster and avoid ugly confrontations about bin space.

    Just sayin’

    1. You’d be surprised. I have to end up gate checking my bag, along with other fare paying passengers, on Southwest and Jetblue many times because the overheads are full. (Airline employee, traveling standby…usually boarding last.)

      But I do agree that allowing one checked bag is a good idea… unfortunately, they will probably lower the weight limit, recouping the lost checked bag fee in the form of an overweight bag fee.  BTW…Spirit has already dropped the threshold for determining overweight bags from 50lbs to 40lbs.

        1. Not really.  It is amazing how much your bag weighs, then a weeks worth of clothes, shoes, gifts, misc, it adds up very fast.

      1. In most of the rest of the world, the standard for determining overweight bags is 20 kg/44 lbs.  So while 40 lbs. does seem a little light, we here in the U.S. of A have been getting a pretty good deal to date.

  8. While I agree the airline industry needs to be watched more, I’m a bit dubious that we are entrusting our government to do it.  This feels like we’re asking the fox to guard the chicken coop.

  9. This isn’t going to help people completely.  A fare with taxes and fees from SFO to JFK on nonstop flights are different than a connecting flight from SFO to JFK.  So there is no way to completely put the actual cost without knowing the actual flights.  So it will be interesting to see what prices show up in their advertising.  I am sure those who ‘fought’ for this weren’t aware of all the parameters that make up a total price.  

  10. So how is an airline going to do that accurately?  I understand the need to do this – but lets use my local airline airport – Ontario, Califorina.  If I fly from ONT-EWR I can do 2 stops or 3, on United.  Or 2 stops or 3 on American.  So if American offers a $199 fare plus tax for a total of about $274 with fees – thats for the 1 stop fare – 2 stops is $283, or $284, or $288 depending on what airport you fly into and out of for the Passenger Facility Fee. . . .

    More impossible execution for good ideas that seem simple in concept but are rarely so in execution. . . .

  11. my god, just re-regulate the industry as a whole. that’s what they’re trying to do, piece by piece.

    baggage rules really aren’t that hard! everyone knows that taxes are added after a price–that happens in restaurants, too!
    if people can’t figure out that some airlines charge for bags (and there are only 2 i can think of who DON’T for a 1st bag), then i am frightened that they can even get out of bed or drive 2 ton vehicles on the highway.

    1. if you regulate then it will become like a public utility with guaranteed profits and bloated staffing leading to much much higher prices

  12. Every “Tax” that we are being scammed with by various bureaucracies should be clearly shown, in BOLD letters/numbers for all to see. The airlines & all large corporations are only following in the steps of self-serving, incompitent bureaucracies in doing as little as possible while charging as much as possible.

    1. You can’t do that without knowing ALL the airports you will be traveling through.  That is how silly this is on our end and people like Charlie Leocha who has pushed for this doesn’t know the business, as we can easily see in his articles. 

  13. What have the candidates of upcoming elections have to say about this? Haven’t they enjoyed perks from the airlines, just asking!

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