Just how hidden are the travel industry’s so-called hidden fees?
Fair question, given that the Transportation Department just weighed in on the topic. In late April, the agency issued a final ruling affecting how airfares are advertised and displayed. The move could have a ripple effect across the entire travel industry.
Are fees completely concealed, such as the $25 “early check-in” fee Julie Sturgeon had to pay recently when she arrived at an Ocala, Fla., hotel?
“No mention of the charge on the hotel’s site,” says Sturgeon, an Indianapolis-based travel agent. “When I checked in, the receptionist just said it was hotel policy.”
Or are they only partially hidden, such as the one Karen Kinnane had to shell out when she scored an upgrade to first class on her flight from Paris to Newark last month?
“When I checked my luggage at the counter, Continental whacked me for 30 euros for a fee to leave Paris by first class,” says Kinnane, a Shartlesville, Pa., antiques dealer. “It’s a French government tax. Didn’t see that one coming.”
The answer matters. According to the latest DOT ruling, airline Web sites must “prominently disclose” information on all optional service fees starting in August. Airlines will also have to include all government taxes and fees in every advertised price.
But the government isn’t done addressing fees. It has promised a supplemental ruling later this year that could require, among other things, that fees be displayed at all points of sale.
Victoria Day, a spokeswoman for the Air Transport Association, an industry trade group, said that airlines are “committed to being fully transparent” and that carriers want their customers to know exactly what they’re buying.
Talk with airline passengers, and you’re left with a different impression. Trying to find a flight from Washington to Marseille, France, on the United Airlines site, Barbara Kreykenbohm of Falls Church, Va., was quoted a fare of $827. But on the final booking screen, the price had jumped to $942, including numerous taxes and government fees.
I asked United about the price jump. “Just like retailers and merchants across industries, we show customers a base price and a final price, which includes taxes and charges, enabling them to see clearly how much of their ticket price is paid to governmental entities,” said Charles Hobart, an airline spokesman. “At any time during the booking path, customers may click for details on the total cost of the ticket.”
Under the new rules, United will have to quote a single price that includes taxes and charges.
Jim Davidson, chief executive of the travel technology company Farelogix and one of the most outspoken opponents of the new disclosure rules, says that regulations are unnecessary. “I’m convinced that innovation, consumer demand and market forces are already in play to address matters of fee disclosure,” he told me. “The only real risk is the concept of legislating how airlines must sell their products and how consumers must buy them.”
I feel conflicted by what’s happening. As a consumer advocate, I think passengers are entitled to know the true cost of their air transportation as soon as possible. But if other industries, from auto manufacturers to restaurants, may quote a pretax price, then it doesn’t seem fair for the government to single out airlines.
I also wonder whether these “hidden” fees were all that hidden in the first place.
To find out, I clicked on the American Airlines site, AA.com, to get a price for a round-trip ticket from Orlando to Dallas in two weeks. The least expensive available flight in the “Economy Super Saver” category cost $312, but it wasn’t immediately clear whether that was one-way or round-trip. Moving to the next screen, I found options for my return flight: The least expensive was $835. Ouch. The third screen generated a subtotal — $1,148 — and then added taxes for a grand total of $1,179.
The final screen offered travel insurance and a branded credit card but only hinted that checked-baggage fees “may” apply. Only by opening a pop-up window did I learn that I would have to fork over $25 each way for the first checked bag and $35 each way for the second. There’s no way to automatically factor that into the price of the ticket for an inclusive fare. If I want to buy something else, such as a meal, there’s no place on the booking screen for that, either.
Most airline passengers I speak with feel that a ticket price should include a few basic items, such as checking at least one bag and reserving a seat. But increasingly, airlines are separating those items from the base fare. The new fares look lower, but they’re not. Once you add up all the extras, you’re probably paying more than you did when the prices were bundled.
But are these fees “hidden” from passengers? Strictly speaking, no. They’re hard to find — maddeningly so. Impossible, if you’re booking through a travel agency. They’ll still be hard to find under the new rules, although carriers won’t be able to make their tickets look cheaper by stripping away fees and taxes. There’s no question that the airline industry is profiting from the resulting confusion. But no, they’re not hidden.
Still, that doesn’t make the current system right, and it doesn’t make the new way much better. Airlines have some of the most sophisticated reservations systems, particularly American Airlines, which has rolled out new technology called Direct Connect. If they’re committed to transparency, then why can’t they show us a price right now that includes everything?
The way this plays out could affect other parts of the travel industry. If regulation fails — if, for example, the DOT rules that the new Web site disclosures are sufficient — then I expect to hear more from hotel guests like Sturgeon, who feel ambushed by a surcharge.
Like it or not, the rest of the travel industry takes its cues from airlines. The new regulations are a step in the right direction, but you’d better have your calculator ready the next time you book a flight. You’ll still need it.