United States lawmakers remain locked in a battle with airlines over price transparency and the rise of junk fees, which are being used, senators say, as a way of “exploiting passengers”.
Bids to reinforce and protect consumer rights in the US aviation sector have so far included a bill, signed into law this year by Biden, requiring airlines to refund passengers for cancelled flights; and the introduction of the Junk Fee Prevention Act, which forces carriers and ticket agents to tell consumers about certain fees upfront – a move that caused a suite of airlines to sue the government.
Fees have “no basis in cost”
The latest salvo in the standoff has seen Senator Richard Blumenthal, Chair of the US Senate Permanent Subcommittee on Investigations (PSI) release insider information on poor airline practices and call some of America’s biggest airlines to order.
“Our investigation has exposed new details about airlines exploiting passengers with sky high junk fees,” said Blumenthal. “This report pulls back the curtain on tactics like dynamic pricing that burden travelers and boost airline revenue. I will be asking airlines to justify these practices when they testify on December 4th before my Permanent Subcommittee on Investigations. As we head into the Thanksgiving weekend, we regret that travelers will be charged millions of dollars in fees that have no basis in cost to the airlines but simply fatten their bottom lines.”
Passengers pay millions in fees that have no basis in actual costs.
— Richard Blumenthal (@SenBlumenthal) November 26, 2024
Unacceptable. These fees are just being charged to fatten airline’s bottom line. I’ll be asking airlines to justify these practices when they testify before my subcommittee next week.
From false baggage charges to tax avoidance
The dodgy tactics revealed by the Subcommittee’s investigation into American Airlines, Delta Air Lines, Frontier Airlines, Spirit Airlines and United Airlines range from incentivising airport agents to refuse passengers based on their baggage, to tax avoidance. Key findings published in a press release named and shamed the carriers as follows:
- Frontier and Spirit were found to be paying gate agents to tell passengers they need to pay extra for their luggage or lose their flight.
- American, Delta, United, Frontier, and Spirit are all charging so-called “ancillary fees” that bear no relation to the cost of the underlying service, and, worse, in remarkably bad business practice, all told the Subcommittee “that, in the regular course of their business, they do not track or maintain cost information with sufficient granularity to know how much it costs to provide each underlying service.”
- In fact, fees are being set by algorithms that use customer data as a basis for pricing, meaning that prices constantly change and are not standard for each passenger.
- The airlines are all charging seat fees that did not even exist two decades ago and yet raked in $12.4 billion between 2018 and 2023.
- Frontier, Spirit, and United “appear to avoid the federally mandated transportation excise tax by labeling portions of their charges as nontaxable fees.”
“Just another holiday talking point”
Senior executives from all five carriers are due to give testimony at a hearing on 4 December 2024, but defensive responses to the 55-page report have already started coming in.
“Frontier works every day to increase consumers’ access to affordable air travel and to ensure that it provides the best possible value to its customers,” Frontier said, while Spirit insisted it is “transparent about our products and pricing, our airport policies ensure Guests are treated fairly and equally, and we comply with all tax laws and regulations.”
Airlines for America, a trade body fronting the largest US airlines went further, dismissing the report as “just another holiday travel talking point,” and accusing the Subcommittee of failing “to understand the value the highly competitive U.S. airline industry brings to customers and employees.”
