Major U.S. airlines – but not Southwest – are suing to over the Department of Transportation’s new fee disclosure rules, that also require prompt refund when the airline doesn’t provide the promised service. American, Delta, United, JetBlue, Hawaiian and Alaska Airlines have filed suit.
Southwest benefits when other airlines highlight their fees. They do not charge for checked bags and do not (currently) separately charge for seat assignments.
Under new DOT requirements, airlines and ticket agents will have to fully disclose all fees for baggage, changes, and cancellations upfront at first instance of displaying itineraries and fares. Airlines will also have to automatically and promptly refund passengers in cash or their original payment method when services like checked baggage and Wi-Fi are not delivered as promised.
The rule applies to U.S. and foreign airlines selling air travel in the United States. When passenger information is included in the search, fee information will have to take account of specifics like frequent flyer status, military status and fare class.
Very Little Benefit, And You Can’t Opt Out Of The Clutter
For the most part airlines already disclose fees fairly well. This isn’t going to bring much new information to consumers, and it will add a new layer of complexity to fare search. For most passengers, at best it’s additional clutter on the screen likely to fade into the background, like terms and conditions that nobody reads.
Consumers are not even permitted to opt out of these fee displays (!) – unless the airline first gets certification from the customer that no one on the reservation will travel with a carry-on bag or first or second checked bag. You can’t even save this as a preference in your customer profile since it’s specific to each given trip.
Fees Are Already Well-Disclosed (Usually)
I used to think that fees were well-disclosed and most of the time they are. First checked bag fees have been in place for 16 years and everyone knows to expect them. They’re on airline websites, easily accessible. Most of the time there are no surprises! But I was shocked this year when JetBlue quietly raised bag fees twice this year without telling anyone, or even anyone noticing for a couple of weeks, while this rule was pending. Maybe the rule should apply only to JetBlue.
There are a few other edge cases where airlines do a bad job disclosing fees. For instance, I’ve documented the way that American Airlines sells refundable business flexible fares that entail a $500 refund fee that almost no one knows about until they go to request a refund.
Prepare To Wait Longer On Hold When You Call An Airline
Each call to reservations that involves searching for flights will take a little longer as reservations agents read out required fee information. As each call takes longer, telephone hold times will get worse – by the way, DOT does not assume that airlines will add call center agents to address this (or else that would have driven up costs of the regulation).
We’re Stuck With Seeing Only The Fees The Government Has Chosen, Even As Fees Change
The government has picked and chosen which fees matter, fixing those in place even as what fees airlines charge change. DOT has decided that consumers are supposed to know about bag fees and change fees, but not all fees. It leaves out some of the more confusing fees, for instance it doesn’t require disclosure of fees for oversize or overweight fees, where policies vary by airline.
And rules tend to remain fixed even as fees being charged change – basic economy fares for instance were largely a non-issue the last time that DOT looked at this. United and Delta are both talking about greater unbundling of their premium products.
A Major Issue Is Whether Benefits Of The Rule Outweigh Costs
In promulgating a rule under its broad power to ensure a safe and efficient air transportation system, it matters whether they’re addressing an actual problem and it also matters whether the benefits of the rule outweigh its costs.
DOT claims that the rule will “save [consumers] over half a billion dollars every year that they are currently overpaying in airline fees.” That is simply not true.
- DOT says that consumers go on a search for fees when buying tickets, but having those fees included up front in search saves them time.
- According to DOT, that is almost the entire source of the savings (“time savings benefits are expected to range from $365 million to $484 million annually”).
- There will be some savings from forcing airlines to refund check bag fees when bags are significantly delayed. And maybe someone is paying for seats not realizing that they won’t be forced to stand if they do not do it (although an advance seat assignment reduces your changes of being bumped off a flight).
- Meanwhile DOT estimates that the rule will cost airlines “$239 million to $331 million annually.”
They needed to manufacture a consumer benefit larger than the cost of compliance in order to justify the rule, but they do not even back out the consumer cost of having to wade through extra information, further complicating the process of buying tickets.
In ordering refunds for services not provided, DOT makes a lot of sense. In deciding what information every consumer has to see before buying a ticket, when it’s rarely surprise or hard to find information to begin with, DOT goes too far in commoditizing the air travel market. We want airlines competing on a wide variety of things, not forcing displays to focus on a narrow range: fare, schedule and fees.
Better would be making information on seat width and pitch available, quality of wifi (bandwidth and latency for instance), meal service etc. Instead we’re forced into a shoebox where only seat and bag fees matter.
If we’re talking disclosure – how about requiring airlines to put their tariffs/fare rules online? It’s crazy that people buy tickets and are bound by terms that they have not read – and can’t read even if they wanted to.
In the old days, tariffs could be “inspected” by any member of the public at airline ticket offices upon request. Allowing access to the tariffs/ fare rules online would be the modern equivalent.
Agree that this is mostly a waste of time, except the requirement that airlines must refund fees for services not delivered. Your bag doesn’t arrive with you, the WiFi doesn’t work, you lose your preferred seat you paid for, they put you on a different flight or different class of service that would have cost less to purchase AT THE TIME YOU MADE YOUR PURCHASE, instant refund. (None of this you paid for Business, but we’re only refunding the difference to full fare economy.)
I’m ambivalent on displaying checked bag fees; Google Flights does this already, and as an elite I basically know which flights I get free bags.
Anyone searching for airline tickets at this point knows to assume they are non-refundable by default, so a general non-refundable/non-changeable statement, and a you can find out the change fee if you need to is fine.
The fees are a trick .
Fees for services not rendered should absolutely, positively be refunded.
For the privilege of paying curated fees for a premium experience, please consider Delta.
Even though the upfront disclosure of all these fees is silly, I’m all for anything that makes airlines’ existence more difficult. They make the flying experience evermore worse and expensive for the public, so let them feel the pain of what they’ve caused in the first place with all these fees.
Election year Kabuki theater, pretending like they are doing something, when really they are solving a non problem, and introducing lots of unintended consequences that will result in these rules causing more harm than good.
Gary Leff writes: “For most passengers, at best it’s additional clutter on the screen likely to fade into the background, like terms and conditions that nobody reads.” Accordingly, the airlines might add, “We hope to keep our valued passengers ignorant of our terms and conditions, but the U.S. Department of Transportation mandates we inform you in advance of our sneaky and obscure methods we use to maximize our profits by screwing you.”
I’m on the DOT’s side with the refunds. This actually will eliminate the need to call the airline for a delayed or canceled flight. These airlines are bitter that they’re going to have to pay for their incompetence and abysmal service. They get away with so much.
I don’t mind shuffling through more clutter if it means I’m protected when the airlines mess up.
OMG! What radical proposals! Even non-US airlines have to refund your fare upon cancellation! It’ll bring down the whole industry!
What nonsense businesses the airlines are. As someone who had to deal with Air Canada for a year to get a refund during COVID, it’s about damned time the timid government actually protected us from these crooks.
I’m a sophisticated consumer that has wasted hours trying to parse complicated fare rules that weren’t designed to be human interpretable. I often field questions from friends about prices of many of the above situations.
These rules are excellent steps.
Your screen will be cluttered with fees, hahaha that’s hardly a reason not to display them!
Interesting internal headline: We’re Stuck With Seeing Only The Fees The Government Has Chosen, Even As Fees Change
Hmm… Is that worse than what we have now, where we’re stuck with not seeing any fees?
Timely efund of payment for services not rendered is 100% needed and enforceable.
Takes them 3 seconds to take your money but 8-12 weeks to return it, after first having to prove non delivery.
Among the many other reasons the airlines need to be kicked in the ‘nads is — Not having enough agents to answer the phone and hiding behind “unusual call volume.”
8 years of “unusual” call volume? Really?
That is now “usual”, ain’t it?
I think the airlines are right: scam fees should absolutely be hidden until late in the booking process. People don’t want transparency. For that matter we should expand this to other areas. Just think how great it would be if you don’t know about mystery amount add-on fees at the supermarket until you’re checking out. Fun times for everyone!
More information is always better than less, but legislation of this sort would be more helpful if it targeted the lodging and entertainment industries. At least with airlines, there’s almost always a way to pay the price you first see, even if it means no refunds, no seat selection, and no belongings bigger than a personal item.
Seth
Total guvmint over reach. How dare this be mandated. Buyer beware, even if the buyer has no way to find out what he’s buying into. Yee and haw
Arguing against transparency to protect big businesses that the taxpayers just bailed out (again) a few years ago. It is astonishing how a certain set of people always find a way to argue against their own self interests.
Airlines hiding fees until the end of the booking process is almost over. Thank you, Democrats.
I have no issues with disclosing all fees and taxes UP FRONT! I wish that either the states or the federal government would ban all junk fees for all hotels, ticket agents, car rentals, transportation fees, etc. Give me the bottom line and let me make an informed decision. This “shuck ‘n jive” is easily seen in hotel reservation sites where the room rate versus the actual costs are disguised to imply a cheaper rate than what is reality.
Looks like a good idea to me.
Hotels and the entertainment businesses should be happy that they are not regulated like the airlines.
Perhaps they should be looking over their shoulders.
These companies spend lots of money training us to accept whatever they want us to accept. Then, that darn government steps up and throws a monkey wrench into their best laid plans!
I see both sides of the argument — I feel like a potential compromise solution would be to have a clearly visible logo or text that you can click on that opens up a pop up or drop down menu with all the fees listed.
How about a compromise approach?
The issue with clutter is real, but we don’t really need to clutter the screen to provide the information. Rather, require a single item: “Fees: $min to $max”. The more details it has the more these values will converge. And it’s an expandable item that gives the details if the passenger wants to. And things like sorting by cost will be based on $ticket + $min, not just on $ticket. You don’t get to the top of the ranking with a low rate and mandatory fees.