WASHINGTON – As Transportation Department officials debate to force airlines to include fees for bags and seat assignments in fares, they already have hundreds of comments to consider.
Transportation Secretary Anthony Foxx announced Tuesday the department would conduct a rule-making to “explore” a requirement for all-in-one pricing that includes fees for baggage, seat assignment, change and cancellation of tickets.
The goal would be to reduce piecemeal pricing for ancillary fees, which the industry calls unbundling, because it frustrates travelers by making it tougher to compare fares.
But the department already collected more than 750 comments for a rule-making posted in May 2014 governing ancillary fees.
“This will be a step backwards from two earlier rule-makings,” said Charlie Leocha, president of Travelers United, a consumer advocacy group. “If DOT is planning on starting from scratch, it will be an enormous retreat from overall airline pricing transparency.”
Airlines contend that Congress deregulated the industry in 1978 and the department should allow competition without dictating how to market fares. For example, Southwest Airlines promotes its lack of bag fees, but other airlines charge a variety of fees depending on loyalty and other factors.
“Airlines have different business models and must be allowed to continue offering optional services in a manner that makes sense for both their customers and their business,” said Nicholas Calio, CEO of Airlines for America, a trade group that represents most of the large carriers.
The debate promises to remain contentious. In the 2014 rulemaking, travelers said the growth of fees and proliferation of choices has made buying tickets too difficult. For example, last year airlines collected $3.8 billion in bag fees and $3 billion in change and cancellation fees.
“The airlines are difficult enough to navigate with the different boarding, seating, baggage, meals, by nickel-and-diming of the consumers, it will be almost impossible to find a flight and compare the final price,” said Joan Horn of Walkersville, Md.
“Displaying all fees as part of the ticket price levels the playing field and makes it much easier for consumers to compare apples to apples,” said Matthew Kirkland of Watkinsville, Ga.
In addition, the department was studying in 2014 whether to force airlines to charge the fees at the same time as the airfare, under a policy called “transactability.”
The U.S. Travel Association said nearly half (45%) of the 1,031 travelers surveyed found it difficult to budget for travel because of fees and that one-fourth faced a fee at the airport they didn’t anticipate.
But airlines argued in the previous rule-making that they distinguish themselves in part by how they market and sell additional services.
United Airlines said requiring fees with search results involving multiple carriers would take longer and lead to “information overload.”
“United has learned over many years—through extensive consumer feedback and other empirical observations—that many customers do not want this information at any point, and certainly not when they are looking at the first display that shows their search results,” the carrier said.
Delta Air Lines said travelers “highly value speed and efficiency in the reservations process” and tend to abandon searches after 430 seconds. Making searches more complicated could dampen sales, the carrier said.
American Airlines cited department cost estimates that the fee provision would cost airlines $46 million over a decade and yield benefits of $25 million. “The costs at issue are quite real” and “will inevitably be passed along to consumers in this intensely competitive industry,” the carrier said.