Fighting hidden, or “junk”, fees has been one of the big issues the Biden administration has been fighting. On 24 April, the US Department of Transportation (USDOT) announced the final rules on fare transparency, which airlines are now challenging in court.
1. The Junk Fee Prevention Act
Airlines are just one part of the so-called Junk Fee Prevention Act, which targets businesses like banks, entertainment providers and even television, phone and internet services for hidden or undisclosed fees, such as unfair subscription cancellation fees.
For airlines specifically, the new rules require carriers and ticket agents to tell consumers upfront what fees they charge for a first or second checked bag, a carry-on bag and for cancelling or changing a reservation. The aim is to help consumers avoid unneeded or unexpected fees that can increase quickly and add significant cost to what may, at first, look like a less expensive ticket.
DOT’s new rule will save passengers over half a billion dollars a year in unnecessary or unexpected fees by holding airlines accountable for being transparent with their customers.
Pete Buttigieg, US Transportation Secretary
The rule requires airlines and ticket agents to display critical extra service fees upfront clearly, conspicuously and accurately. Each critical extra fee must be individually disclosed the first time that fare and schedule information is provided on the airline’s online platform and cannot be displayed through a hyperlink. For consumers shopping for flights offline, airlines and ticket agencies must disclose these fees when they provide a fare quote.
Moreover, to help consumers figure out whether they want to purchase a critical extra service, the rule requires airlines and ticket agents to explain the airline’s baggage, change and cancellation policies before ticket purchase. For each type of baggage, airlines and ticket agents must spell out the weight and dimension limitations that they impose. Airlines and ticket agents must also describe any prohibitions or restrictions on changing or cancelling a flight, along with policies related to differences in fare when switching to a more or less expensive flight.
One of the common ways airlines have been unnecessarily charging customers is by leaving the impression that, on top of their ticket, they need to purchase a seat. From now on, prior to offering seat selection for purchase, they must provide the following notice: “A seat is included in your fare. You are not required to purchase a seat assignment to travel. If you decide to purchase a ticket and do not select a seat prior to purchase, a seat will be provided to you without additional charge when you travel.”
The final rule also puts an end to the bait-and-switch tactics some airlines use to disguise the true cost of discounted flights. Prior to the rule, some airlines were offering deceptive discounts that consumers may have believed applied to the full fare that was being advertised but only applied to a small portion of the ticket price. The new rule prohibits airlines from advertising a promotional discount off a low base fare that does not include all mandatory carrier-imposed fees.
2. Lawsuit
Arguing that seeing fee transparency would confuse customers and that “DOT’s attempt to regulate private business operations in a thriving marketplace is beyond its authority”, several major airlines are challenging the rule in court.
The lawsuit was filed by American Airlines, Delta Air Lines, United Airlines, JetBlue Airways, Hawaiian Airlines and Alaska Airlines, together with umbrella organisation Airlines for America. Curiously, Business Insider points out, Southwest Airlines, which gives passengers 2 free checked-in bags and does not charge change or cancellation fees, is not part of the suit.
Reacting to the lawsuit, the DOT has said it plans to “vigorously defend (…) these common-sense protections”.
