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Airline Fees: Up, Down, or Sideways?

Have the airlines become too arrogant about steadily increasing their fees? Some prominent consumer advocates are starting to think so. Specifically, they believe that some fees, although nominally “optional,” have become so high as to exceed any standard of reasonability and have reached the level of consumer abuse.

Ticket-fee changes—especially Delta’s international fee up to $400, along with fees almost as high on other lines—appear to be the proximate targets. Although domestic fares and fees, including ticket change fees, have long been fully deregulated, the Department of Transportation (DOT) still has statutory authority over fees on international tickets. Specifically, existing legislation calls for international fees to be “reasonable.” Industry mavens say the true cost of a ticket change is something less than $50, and that $400 therefore doesn’t come even close to meeting the “reasonable” standard. Last year, the DOT refused to act on a consumer activist’s formal complaint about international fees, so the road to change would be for someone to petition a court to require that the DOT enforce the existing law.

Challenging the other fees would be more difficult. Whenever someone proposes to curb some airline excess, airlines whine that they’re being unfairly targeted for re-regulation, over-regulated, and over-taxed—and that other industries are not similarly afflicted. That, of course, is an extremely disingenuous position: The two most important recent consumer-protection regulations and requirements were both put in place in responses to egregious consumer abuses:

  • Airlines brought truth-in-price-advertising rules on themselves in response to widespread “drip pricing” scams: Instead of advertising the real fare, they arbitrarily split up the actual fare into a phony lowball base fare, which they featured, and a separate “fuel surcharge” or “airline-imposed fee,” which they left out of the fares they initially posted only to add them back later.
  • Airlines brought tarmac delay penalties on themselves by holding passengers on the tarmac for up to eight hours with no food, no water, no air conditioning, and no functioning toilets.

In these and other cases, the DOT gave the airlines plenty of time to correct the abuses on their own, and acted only when the airlines kept on misleading and abusing their customers.

As to “excessive” taxation and fees, that’s nonsense. Virtually all of the existing fees the airlines complain about as excessive go to funding airports, air-traffic control, and other government aviation services—comparable to the functions that railroads, for example, pay for themselves.

Some consumer advocates are thinking about targeting other abusive fees, as well. Fees on the radar screen are for online booking, bag checking, and such. I’m not sure the folks I’ve been talking to are going to take any specific action, and I can’t predict the outcome, but the consumer resentment is clear—and the ferment is growing.

In a fee development that actually happened, American Airlines announced a change in its bundled fare structure. Last year, American (the old one) announced an intriguing initiative about ticket change fees: A series of fare levels that “bundle” some options, previously charged separately. Initially, the “Choice Essentials” package provided one no-charge checked bag, priority boarding, and no-fee ticket exchange for $68 round trip over the lowest base fare. That was obviously an attractive proposition for anyone likely to want to change a ticket, especially since it added only $18 to the total cost for anyone who wanted to check one bag. Maybe too attractive. Recently, American adjusted the bundle pricing so that the Choice Essential increment dropped to $58 round-trip, but without the no-charge ticket-exchange provision. Now, for a no-fee exchange, you have to opt for the higher “Choice Plus” level, at $160 round trip. That level also includes a no-charge checked bag, priority boarding, 50 percent bonus frequent flyer miles, and (big deal) one “free” drink.

Up till now, no other big airline has copied American’s bundles. But American’s new system could eventually look better to them: Don’t be surprised to see some copycats.

Ed Perkins on Travel is copyright (c) 2014 Tribune Media Services, Inc.

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