Passenger Protection

The Transportation Department has taken a more aggressive role in protecting air travelers the last four years, and it isn’t letting up.

The department’s latest proposal, which is expected early this year, could force airlines to provide common fees, such as those charged to check luggage and pick seats, to websites that compare airfares.

“With so many extra fees, consumers are getting a bit punch-drunk,” says Charlie Leocha, director of the advocacy group Consumer Travel Alliance and who’s on a department consumer advisory board.

It’s a contentious debate, because airlines prefer to sell tickets on their own sites and pay to be included in comparison sites. Nicholas Calio, president of the industry group Airlines for America, opposes the proposal, saying the “reasoning is flawed.”

It’s not clear yet what will be in the rule. But the department in December said it was actively working on the rule “that could require, among other things, that optional fees be displayed at all points of sale.”

Separately, the DOT’s Advisory Committee for Aviation Consumer Protection will continue reviewing suggestions to make air travel easier. The panel’s recommendations in October called for greater transparency in ticket pricing, simplifying contracts that accompany plane tickets and providing relief areas at airports for service animals.

Airlines don’t want you to know how much your ticket will really end up costing. For over two years, American carriers have been battling Barack Obama’s Department of Transportation (DOT), which is considering requiring airlines to disclose fee information to travel agent distribution systems and online ticketing agents like Orbitz. Some airlines previously sued the Obama administration over a rule requiring they disclose taxes as part of the cost of their flights, but they might hate the fee proposal even more . . .

Add-on and personally tailored services are well and good, but people should know how much they will be charged for them. And meanwhile, back on (or, if you will, above) Planet Earth, the shift in the airline industry over the past four decades has been towards more price sensitivity, not less. Most people who fly want to get from Point A to Point B as quickly and cheaply as possible, and airlines have proven that most flyers are willing to give up comfort for price. They may not like the brave new world of commoditised airline travel, but they’re living in it. It’s hard to see why consumer- and business-travel groups (which almost unanimously oppose the airlines on this) should have to kowtow to the airlines’ dream of a return to less price-sensitive air travel and less comparison shopping . . .

It should be non-controversial that companies competing in a free market should not attempt to deceive consumers about what their products and services actually cost.

For many passengers, air travel is only about finding the cheapest fare.

But as airlines offer a proliferating list of add-on services, from early boarding to premium seating and baggage fees, the ability to comparison-shop for the lowest total fare is eroding.

Global distribution systems that supply flight and fare data to travel agents and online ticketing services like Orbitz and Expedia, accounting for half of all U.S. airline tickets, complain that airlines won’t provide fee information in a way that lets them make it handy for consumers trying to find the best deal.

“What other industry can you think of where a person buying a product doesn’t know how much it’s going to cost even after he’s done at the checkout counter?” said Simon Gros, chairman of the Travel Technology Association, which represents the global distribution services and online travel industries.

The harder airlines make it for consumers to compare, “the greater opportunity you have to get to higher prices,” said Kevin Mitchell, chairman of the Business Travel Coalition, whose members include corporate travel managers.

Now the Obama administration is wading into the issue. The Department of Transportation is considering whether to require airlines to provide fee information to everyone with whom they have agreements to sell their tickets. A decision originally scheduled for next month has been postponed to May, as regulators struggle with a deluge of information from airlines opposed to regulating fee information, and from the travel industry and consumer groups that support such a requirement.

The Department of Transportation will demand more transparency on airline fees

But at least if you have to pay those fees, you may get more upfront disclosure about what they are. Airlines already have to advertise the whole cost of the ticket, including taxes and all mandatory fees (Spirit Airlines memorably argued against this). But consumer complaints about “hidden fees” are prompting the feds to propose requirements that all fees be prominently disclosed and displayed—and that this rule should extend to other air-travel sellers like travel agency websites. Look for the DOT to take some action as early as this spring.

Frequent and even occasional travelers are learning they must factor in add-on airline fees when calculating the full all-in cost of air travel. With the busy holiday travel season approaching, Open Allies for Airfare Transparency asked some travelers how they cope:

For would-be holiday travelers still shopping, remember to factor in:

• Baggage fees: Even for those who normally carry-on their luggage, do not overlook the potential cost of baggage fees. Holiday travelers carry more luggage than normal, often carrying gifts and winter coats that fill-up overhead bin space. All travelers should factor in the potential cost of checking a bag and paying the baggage fee. Some carriers also charge baggage fees for carry-ons. Airlines must post those fees on their websites and online travel agencies like Expedia, Orbitz and Travelocity must provide links that list the baggage fees of the airlines that they sell.

• Seat assignment fees: During Thanksgiving week, domestic flights averaged 90 percent full and during the upcoming holidays travelers can expect the same. Many airlines have increased the number of “preferred” seats – seats toward the front of the plane, window and aisle seats – that are only available for an additional fee. This can create difficulties for families, particularly those with young children, who need to sit together on flights. To avoid this, be prepared to pay preferred seat fees in order to obtain contiguous seats.

For those who have already booked holiday travel:

• Make sure to get seat assignments ahead of time. Selecting seats online and printing boarding passes ahead of time will help avoid long check-in lines and fees for printing boarding passes at the airport. It is likely that guaranteeing seats together on very full holiday flights may require some combination of free and “preferred” seats with extra charges. Airlines typically open up the seat assignment map as the departure date approaches, but by then, there may be even fewer options.

• Check baggage fee information, and measure and weigh your bags. The FAA limits all passengers to one carry-on and a personal item such as a purse or backpack. But keep in mind that very full flights may result in even less room for carry-ons. Checked bags that exceed weight limits by even a few pounds may incur even higher fees.

If you’re flying over the holidays, you might end up unwrapping some unexpected items, but they’re not anything you’d ever put on a wish list. Rather, these “presents” are the add-on fees that airlines charge for all kinds of things that used to be free, including choosing your seat and checking a bag. The fees can seriously jack up the cost of tickets.

What the airline industry euphemistically calls “ancillary revenue” is expected to add $36.1 billion (PDF) to their coffers worldwide this year, so you can probably expect more—and higher—fees ahead. Last year as part of our review of the best and worst airlines, 40 percent of nearly 15,000 Consumer Reports readers cited fees as the major reason they’re flying less.

As annoying as the fees are, what makes the situation unacceptable is that airlines have made it hard—and sometimes practically impossible—for you to add up all these charges before you make a reservation, in the way you can tally all the options when buying a car.

This problem is especially bad when you book through a travel site or travel agency, since you typically can’t see unlisted fees in an apples-to-apples fashion, preventing you from doing true comparison shopping.

Consumers Union believes that the U.S. Department of Transportation should require airlines to be more transparent about fees. We’re pushing for rules to ensure that you can see and compare the real costs of airline tickets before you buy.

In the meantime, make sure you never book a flight—through any channel—until you’re satisfied that you’ve obtained the bottom-line fare, including all taxes, surcharges, and fees. If you’re unsure, contact the airline or your travel agent directly.

• Open Allies moderated forum on airline ancillary fees sparks a lively discussion

• Florida Today editorial strongly endorses need for increased airline fee transparency

• Open Allies reacts to DOT Advisory Committee for Aviation Consumer Protection recommendations

• A Closer Look: Punishing airfare comparison shoppers at odds with what consumers want and deserve

While Open Allies applauds the committee’s recommendation that the “DOT should ensure transparency in air carrier pricing,” this does not go nearly far enough to protect consumers from hidden and poorly disclosed fees.

Consumers, travel agents, and travel managers all testified to the committee that the airlines’ continued refusal to share core fee information in a transparent and purchasable format is making it difficult, and some cases impossible, to comparison shop for and calculate the true “all-in” cost (fares+taxes+fees) of air travel.

This market breakdown is harming millions of consumers who are too often charged hidden or poorly disclosed fees.* It is not only appropriate, but necessary that the DOT step in to fix this market failure by issuing a new rule requiring the airlines to share core fee information, in a purchasable format, in all the channels through which they sell airfares.

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* Survey: 94% Of Summer Travelers* Using Online Travel Sites Want Airline Fee Information Available, September 2012, http://goo.gl/CZ4Km

The Transportation Department is considering whether to force airlines to disclose all ancillary fees through every potential sales channel — and not just through airline websites. Consumer groups and travel agencies say the rule is needed to allow travelers to truly compare fares.

Even as airlines began several years ago to “unbundle” services such as checked baggage, most carriers don’t disclose other potential fees through third-party travel websites and travel agencies. The lack of transparency can make fares look artificially low, although carriers say unbundling saves money for some customers.

“The consumer here is being harmed, and the government has a role to step in,” Bill McGee, a contributing editor to Consumer Reports, said at an event Thursday in Washington. “There is a growing mistrust among consumers for the whole process. That is going to hurt the airline industry and the whole economy.” . . .

The Transportation Department will have the final say about that. Transportation Secretary Ray LaHood has already approved two pro-consumer rules, which put a three-hour limit on tarmac delays and require bag fees to be disclosed with fare quotes, among other things.

Some insiders say regulation extending that transparency to seats and boarding is the next step, because consumers expect those things to be part of the ticket. The rule also could require that consumers be able to pay for those fees when they buy a ticket, instead of at the airport.

“The pushback from consumers on fees and fee transparency is far and away the No. 1 complaint among passengers,” McGee said. “It’s clear that if the industry won’t deal with this, the DOT will.”

Prior to the internet, this level of transparency of flight options and price comparison shopping was simply impossible for the average consumer. Now developing and booking a customized flight itinerary — including the most convenient departure time, the shortest total travel time, and the lowest fare — takes just a few clicks.

For consumers, this has created tremendous convenience and the ability to comparison shop for the best value for a given itinerary. And the airlines benefit too, by being able to distribute their fares to a massive worldwide market of travelers.

While this would seem to be a classic example of win-win market efficiency, several airlines have recently started down a path that punishes consumers who use online travel sites. More interested in driving consumers to their own websites than empowering true comparison-shopping, U.S. airlines are refusing to provide in a transparent and purchasable format crucial information about services like checked baggage and seat reservations to online travel sites and travel agents. As a result, consumers are no longer able to comparison shop for or easily calculate the true all-in cost (fares+taxes+fees) of various flight options.

Instead, consumers are now forced into a complicated, time consuming, and frustrating dance between multiple browser windows to see the different fees that each airline may charge for various flight and service combinations. And just try doing this on a cell phone web browser or app!

Inevitably, this lack of fee transparency has left many frustrated air travelers feeling they’ve had to pay “hidden” or poorly disclosed fees.

Recently, Frontier Airlines announced that it is taking things one step further by actually punishing consumers who book flights through an online travel site versus Frontier’s own FlyFrontier.com. Consumers who book a Frontier flight through an online travel site will not be able to pick their seats, will earn 50% fewer frequent flyer miles, and will pay higher baggage fees.

Refusing to share airline fees in a useful format and outright punishing consumers for using online travel sites is an odd business decision. Particularly given the findings of a recent poll conducted by Harris Interactive on behalf of Open Allies for Airfare Transparency, which found that 94% of Americans who recently used an online travel site to book their summer travel agreed that, “All airline fee information should be available to travel agents and online travel websites.”

In addition, 95% of Americans who used an online travel site to book their summer travel agreed that, “It would be easier to comparison shop if all airline fee information was available on online travel websites and to travel agents.”

When asked why they supported sharing airline fee information with online travel sites and travel agents, consumers gave a number of common sense answers like “To know the total cost up front,” and “No unexpected expenses.”

While the airlines, as well as all travel sellers, are required to provide consumers with a passive link to baggage fees, the airlines are not required to, and do not provide these fees as well as various other core ancillary fees, such as preferred seat assignment fees, in a way that provides consumers with a comparative all-in price at the point-of-sale. Further, even though some of these ancillary products are considered core travel components by consumers, such as seat assignments for a family that wishes to sit together, these products are not available for purchase at the point-of-sale from non-direct channels.

As a result of the airlines’ continued refusal to share this information, 31% of Americans who used an online travel site to book their travel agreed that they “paid for fees that were not fully disclosed when I initially purchased my ticket for my flight this summer.” That translates to more than 5 million Americans who were surprised by and forced to pay a hidden airline fee after purchasing their ticket.*

These results clearly show that there is a market breakdown being created by airlines’ refusals to provide fee information in a transparent and purchasable format to online travel sites. Indeed, they show that consumers are actually being harmed by this reality, as millions of air travelers are forced to pay unexpected fees.

Unfortunately, as evidenced by Frontier Airlines’ recent decision to punish online travel site users, the airlines do not seem to be listening to their own customers. That’s why it is time for the U.S. Department of Transportation, which is the only agency (state or federal) with a mandate to protect the flying public, to adopt a new rule requiring the airlines to share fee information in a purchasable format with online travel sites and travel agents, if airlines are selling their base fares through those channels.

This simple rule will restore transparency, efficiency, and convenience to the tens millions of consumers who use online travel sites to book their airfares.

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*U.S. adult population = 235 million. 24% traveled this summer = 56,400,000. 31% of travelers used an online travel site = 17,484,000. 31% of online travel site users paid for fees that were not fully disclosed = 5,420,000 consumers.