It’s rather remarkable how often some body in the US government decides to take up an issue related to the airlines. This time, it’s the Minority Staff in the US Senate Committee on Commerce, Science, and Transportation’s Office of Oversight and Investigations who have prepared a report for the ranking member, Sen Bill Nelson (D-FL). (Give me a minute, I need to catch my breath after that one.) The report, unimaginitively-entitled “The Unfriendly Skies: Consumer Confusion Over Airline Fees,” tries to put forth suggestions on how the government can make things better for consumers now that ancillary revenues are a way of life. Is there anything of value? A little. But for the most part it looks like yet another attempt at re-regulating airline pricing.
The report’s overall conclusion is in no way shocking:
In the last five years, the ancillary fee model has become a central part of the revenue stream for major U.S. airlines. Unfortunately, this new system does not always result in fairness or transparency for the traveling public.
What’s the solution? There were 7 distinct recommendations on how the government can improve things for travelers. Two are minor (make airlines link to the DOT website and then make the DOT website better), but the other 5 are worth discussing. Only one of them has any merit.
1) Ancillary Fees Should Be Disclosed as Early as Possible in the Booking Process in a Standardized Format
Hasn’t DOT already tried this several times in one form or another? The report compares airlines to credit cards. Credit cards have a standard disclosure that is supposed to make it easier for people to compare various cards. Here’s the example that’s in the report.
The people behind this report think that should be brought over to the airline industry.
Committee minority staff believes that a similar disclosure box, presented at the time a route is selected on a booking website or orally over a telephone call, and also on the ticket receipt, could help more fully inform consumers about potential additional costs associated with an airfare purchase.
Now that’s funny. It’s simpler for credit cards, but fees on airlines can vary not only by route but also by fare and mileage program status. In addition, there are a ton of ancillary options and the amounts aren’t always straightforward to disclose. Can you imagine sitting on the phone while someone reads the entire disclosure on fees? That sounds like something that they would inflict on prisoners in Guantanamo.
I’m always for sensible improvements in disclosure, but this is a bad way to handle it.
2) Checked Baggage and Carry-On Baggage Fees Should Have a Clear Connection to the Costs Incurred by the Airline
Wait, what? What other industry that isn’t regulated is told that its prices have to track with the costs involved in providing the service? That’s just an absurd notion. Pricing should be done based on demand. I’ll talk about this a little more in point 4 below.
3) Airlines Should Promptly Refund Fees for Any Checked Bags That Are Delayed More Than 6 Hours on a Domestic Flight
While 6 hours seems like a strangely arbitrary number, I like the idea that there should be some compensation if the service isn’t delivered as promised, but it shouldn’t have to be a refund. I’m fine with Alaska’s baggage guarantee where you get a $25 voucher for future travel if your bag isn’t at the carousel in 20 minutes (forget 6 hours). Delta gives you 2,500 bonus miles instead. I LIKE this, but I don’t think it should be a regulatory requirement.
There are rules around how airlines must compensate travelers when bags are delayed or lost. That is sufficient. If airlines want to go above and beyond by providing a stronger guarantee, then that makes me more interested in flying that airline. But it shouldn’t be regulated.
4) Airline Change Fees Should Be Limited to a Reasonable Amount Tied to Lead Time Prior to Departure and a Maximum Percentage of the Original Fare Paid
I’ve been a harsh critic of the $200 change fee, and I absolutely hated that United lied and said that the fee was going up from $150 to compensate for costs. So in a sense, I think that is deceptive and airlines that use this excuse deserve a little punishment. But it’s insane to require that the change fee actually track costs. It would be nearly impossible to make that happen in the first place, but again, why can’t airlines charge more than the cost involved in providing that service?
As long as the rules are disclosed up front, that’s what matters. And I do find that airlines do a pretty lousy job of making change fee details known. I used to do airline pricing and it can still feel like reading a scientific dissertation when I have to interpret fare rules on some airlines. If there should be a focus here, it should be on forcing a better change fee disclosure and explanation. The report talked about this, yet it wasn’t mentioned in the final recommendations. I can only shake my head.
5) Airlines Should Provide Clear Disclosures That “Preferred Seat” Charges Are Optional
When I first saw this, I laughed. But I actually think there’s some merit here. It seems obvious to me and many seasoned travelers that if you only see preferred seats on the seat map, you can just wait and get your seat for free upon check-in. But for travelers who aren’t regulars, this might not be obvious. If there’s no free seat available, then travelers should be informed that they can get a free seat at check-in.
In the end, there are a couple of ideas in here that might make sense, but the big picture items? They look like pure price regulation to me. I’ll assume most if not all of this has little chance of being enacted anyway.