Airlines are hiding their fees. Maybe it’s time fares came with warning labels.
A provision in the recent Federal Aviation Administration (FAA) Reauthorization Act would have required air carriers to disclose their extra fees. Those include baggage fees, cancellation fees, change fees, ticketing fees and seat selection fees “in a standardized format.”
And just yesterday, I spoke with a prominent consumer advocate who said this issue would be front and center in 2020. Seems a lot of passengers are upset about the fact that airlines are hiding their fees.
The presence of the labeling provision raises some interesting questions. Chief among them: Why is it so hard to figure out what you’ll have to pay for an airline ticket? And why is airline ticket disclosure so awful — even shameful?
The warnings would be straightforward, according to lawmakers.
“As we envision it, the standardized disclosure would be relatively simple and user friendly,” said Bryan Gulley, a spokesman for the Senate Committee on Commerce, Science and Transportation. “It would be much like the Truth in Lending Act disclosures on credit card solicitations.”
Yes, airlines are hiding their fees, and it’s time to stop
The timing is right, experts say.
The reason is simple: Added fees increase airline profits. The more confusing they are, the better.
“Consumers looking for airline tickets are now confronted with a dizzying array of fees when they go shopping — bag fees, seat fees, and many others,” Nelson says. “This provision would allow consumers to see all the fees upfront, before they buy a ticket, and allow them to make an educated decision about what airline makes the most sense for their travel needs.”
When airlines are hiding their fees, here’s what they fail to disclose
Here are just some of the intricacies of modern-day airline tickets.
Change fees: These fees have gradually increased until, a few years ago, major airlines began introducing tickets that were completely unchangeable. Because these tickets are also the cheapest, many passengers booked them, often without reading the restrictions. Airlines collected $2.8 billion in fees for reservation cancellations and ticket changes in 2017. No one knows how many passengers simply threw away their unusable tickets.
Seat reservation fees: Airline tickets used to include the ability to reserve a seat. No longer. Many air carriers now sell seat assignments at $40 to $70 each, depending on when you make the reservation. While carriers insist that these fees give customers “more choice” in where they sit, they also add to their profits — for a service many passengers still expect at no cost. About 20 percent of all ancillary revenue comes from onboard services such as seat reservation fees. That was about $5 billion in 2017.
Miscellaneous nuisance fees: Extras such as the ability to make reservations by phone, early boarding or being allowed to carry a bag onto the plane are generally considered junk fees by air travelers. These are among the worst-disclosed of all fees and account for an unknown portion of the industry’s $24.6 billion in ancillary revenue last year.
Consumers support rules that would stop airlines from hiding their fees
All of these fees add up to one big problem: Consumers who don’t know exactly how much they actually have to pay for their airline tickets. A recent survey by the American Society of Travel Advisors found that 79 percent of travelers support requiring airline ticket disclosure up front.
It sounds simple, but it isn’t. Many travelers make airline reservations through a third party such as an online travel agent. Would the government also require companies such as Expedia or Priceline to list all the fees?
But would ticket disclosure rules work?
And even if the bill did require warning labels similar to those used by the Food and Drug Administration, what would they say?
“WARNING: This airline ticket does not include a reserved seat or a checked bag.”
Or, “INGREDIENTS: One airline seat. Additional fees may apply.”
If you thought airline tickets were complicated, wait until you see the warning labels. Also, imagine that the labels have to apply across all sales channels — airline sites, phone reservations, travel agencies, online agencies. It’s still an idea worth pursuing, says Freddie Julius, chief executive of Tourist England, a site about traveling to Britain.
“A breakdown of prices will give customers a feeling that they are dealing with an honest and transparent company,” he says. “This is something to be valued in an industry that is too often dominated by hidden fees and unclear terms and conditions. Since customers value clarity, companies that are upfront when selling their product can expect a boost in consumer confidence which will ultimately be translated into increased sales.”
Not everyone supports disclosure rules
Others aren’t so sure. Dori Russ, a consultant based in Jacksonville, Fla., and a frequent air traveler, says warning labels might be redundant and inefficient.
“Most companies have a description of services on their websites,” she says. “If you’re unsure about the charges, it’s easy to research them online. Why not do a little research before you book?”
That may be the only option air travelers have — at least for now. The fate of the labeling provision is uncertain. There’s no companion language in the House version of the FAA Reauthorization Act. That means ticket labeling might remain nothing more than an idea whose time has not yet come.
Update (Dec. 13, 2019): This article was first published Aug. 29, 2018. The disclosure provision in the Federal Aviation Administration Reauthorization Act failed. But I’m told the Senate may take up the issue of fee disclosure again in the near future.