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Dirty Hidden Fees That Cost You Money

For many of us, unexpected and unannounced airline fees no longer have the bite they once had. New rules from the Department of Transportation (DOT)—requiring all-up fare displays of anything that isn't truly optional—pretty much eliminated those maddening mandatory fees that airlines failed to include in their featured prices.

But a few deeply hidden airline fees can still hit some of you, a problem that recently updated DOT rules could solve. And hotels and rental car companies, not subject to those DOT rules, still slap travelers with hidden fees with impunity.

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The new DOT airfare "Guidance" states, in part, that "If a vendor chooses to make available information regarding the amount of taxes and/or fees that are included in the full fare, the disclosure must accurately distinguish between taxes and government fees on the one hand and carrier-imposed fees on the other. In addition, with respect to information about carrier-imposed fees included in the full fare, such disclosure must accurately represent the actual cost of the item for which the charge is assessed and must not otherwise be deceptive."

The targets here are those many airlines that still split their true fares into phony low-ball base fares plus equally phony charges carved out as fuel, security, and such. Even though you can buy a ticket without ever seeing these charges broken down, according to the new rules, when airlines disclose them to the public, they must be reasonable.

Currently, many such fees are not reasonable. I spotted an economy round-trip Los Angeles–to-Frankfurt fare on a European line for $877, shown as $324 base fare and $553 in taxes, fees, and charges. For an identical trip, a U.S. line's fare was also $877, shown as a $716 base plus additional taxes and fees of $146. That $146 represented the genuine government fees and taxes, so the difference of $407 was the first line's fuel surcharge—and other charges it kept for itself. Clearly, surcharges of $407 on a base fare of $324 would not pass DOT's "reasonable" standard.

This issue isn't just about accounting and advertising; these fees—sometimes upwards of $500 each way—do hurt some of you. Here's how:

  • Travelers flying on so-called free companion tickets, twofers and such, must generally pay whatever fuel surcharge an airline imposes. Similarly, most airlines based outside the U.S. add fuel surcharges to free frequent-flyer award trips, and some operators of promotional tour packages that include supposedly free or discounted airfares say that "travelers must pay all taxes and fees, including fuel surcharges."
  • Some travel agencies may not receive commission income on the phony fees.
  • Some corporate travel discounts may apply to base fares but not surcharges.
  • Some government agencies may lose potential fare-based tax revenues.

Presumably, airlines that currently break their fares down into a low base plus surcharges will face some pressure to improve their behavior. We will be anxiously waiting to see how they respond to the DOT's latest requirements.

Beyond airlines, hotels are the worst culprits. Many hotels and resorts routinely add hidden resort, housekeeping, and similar fees that, if mandatory, should be included in base rates. Hotels freely carve out as many fees as they wish, typically hiding them until the final purchase—and often until you actually show up at the hotel. Moreover, hotels generally do not inform online travel agencies such as Expedia and Priceline of these fees, so the agencies cannot display all-up prices.

Rental-car companies, too, typically add a laundry list of fees they collect but keep for themselves. But at least the OTAs can and do display all-up fee-inclusive rates for rental cars.

The new DOT rulings are due, in part, to the efforts of Ben Edelman, a Harvard Business School faculty member and attorney, whose filings with DOT helped to get the ball rolling. He has an ongoing interest in hotel as well as airline fees. We will both continue our investigations of these deceptions and would like to hear from travelers who have been blindsided by hidden mandatory airline and hotel fees. Contact Edelman at www.benedelman.com/mail. My email is shown.

 

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