The FAIR Fees Amendment will protect consumers
Is the FAIR Fees Amendment (“Forbid Airlines from Imposing Ridiculous Fees Amendment”) a return to airfare regulation or is it simply a protection of consumers from an aviation marketplace that has become too consolidated? Every major network air carrier — American Airlines, Delta Air Lines, and United Airlines — charge indefensible change and cancellation fees of $200 for domestic travel and $300 for international travel. Not one of these airlines has justified their exorbitant charges.
The Number 1 complaint from airline passengers is the proliferation of extra fees. Every passenger has their own stories about being nickel-and-dimed by airlines. Passengers feel helpless as the Department of Transportation (DOT) has allowed airlines to unbundle their airfares — effectively creating a difference between airfares and extra fees. DOT has come down on the side of the airlines allowing this redefinition and not even requiring transparency of these fees that make up more and more of the cost of air travel.
Congress is taking the first steps to require airlines to justify their most egregious extra fees.
The major airlines are in a tizzy about this Fair Fees Amendment. They are claiming that the country is returning to the days of airfare regulation. However, by the airlines’ favorite definition of airfare, Congress is not proposing re-regulation of “airfares,” only unjust fees. Congress is only setting up a system whereby consumers will not be faced with unfair and unjustified added fees. This bill has nothing to do with regulating airfares. It deals strictly with protecting the public from exorbitant and unfair fees.
Airlines can make honest profits without extreme fees
Next, airlines claim that the Fair Fees Amendment will prevent them from making a fair profit if Congress restricts their ability to craft change and cancellation fees and checked-baggage fees.
This is an obvious misrepresentation. Southwest Airlines, the only airline to make a profit every year of its existence, charges neither change or cancellation fees. Southwest does not charge first- or second-checked baggage fees. Yet, they have been profitable and have expanded every year that they have been in business.
The network carriers are protesting far too much. Simple honesty would go a long way. However, the prevarications that the network carriers’ lobbyists are spreading through the halls of Congress of impending doom in the aviation industry are deceptive.
Without legislation like the FAIR Fees Amendment, airlines could claim that their “airfares” were only some ridiculously low price, like $1 and the rest of the cost of travel was made up of fees that could be created at will by airlines. Such a system would allow the airlines to ruin the free market even more than they do today with random fees and charges based on whatever metrics the airlines choose.
Contact your Senator or Representative
During the next few months, the FAA Reauthorization bill will be voted on in the Senate. Then it will be reconciled with the House of Representatives version that has already been passed. Of course, whether the Senate version of the bill is ever passed is in question. An extension of the current legislation governing America’s aviation system may push the final vote until after the upcoming national election.
That being said, Congress is attempting to move forward with both the Senate and the House versions to shape the aviation system for the next half a decade. Airline consumers should let their Senators and Representatives know that you expect them to support the Fair Fees Amendment to have airlines justify their extra fees.
The FAIR Fees Amendment language is limited to change, cancellation, baggage, and seat reservation fees.
REGULATIONS PROHIBITING THE IMPOSITION OF FEES THAT ARE NOT REASONABLE AND PROPORTIONAL TO THE COSTS INCURRED
a) IN GENERAL.—Not later than 270 days after the date of the enactment of this Act, the Secretary of Transportation shall prescribe regulations—
(1) prohibiting an air carrier from imposing fees described in subsection (b)(1) that are unreasonable or disproportional to the costs incurred by the air carrier; and
(2) establishing standards for assessing whether fees described in subsection (b) are reasonable and proportional to the costs incurred by the air carrier
(b) FEES DESCRIBED.—The fees described in this subsection are—
(1) any fee for a change or cancellation of a reservation for a flight in interstate air transportation;
(2) any fee relating to checked baggage to be transported on a flight in interstate air transportation;
(3) any fee relating to seat selection or reservation on a flight;
(4) any fee relating to changing between flights departing on the same day or flying standby on a flight; and
(5) any other fee imposed by an air carrier relating to a flight in interstate air transportation.
(c) CONSIDERATIONS.—In establishing the standards required by subsection (a)(2), the Secretary shall consider—
(1) with respect to a fee described in subsection (b)(1) imposed by an air carrier for a change or cancellation of a flight reservation—
(A) any net benefit or cost to the air carrier from the change or cancellation, taking into consideration—
(i) the ability of the air carrier to anticipate the expected average number of cancellations and changes and make reservations accordingly;
(ii) the ability of the air carrier to fill a seat made available by a change or cancellation
(iii) any difference in the fare likely to be paid for a ticket sold to another passenger for a seat made available by the change or cancellation, as compared to the fare paid by the passenger who changed or canceled the passenger’s reservation; and
(iv) the likelihood that the passenger changing or canceling the passenger’s reservation will fill a seat on another flight by the same air carrier;
(B) the costs of processing the change or cancellation electronically; and
(C) any related labor costs;
(2) with respect to a fee described in subsection (b)(2 )imposed by an air carrier relating to checked baggage—
(A) the costs of processing checked baggage electronically; and
(B) any related labor costs; and
(3) any other considerations the Secretary considers appropriate.
The airlines basically instituted their baggage fees overnight back in 2008 and then added new fees for seat reservations. Eventually, the airlines took a step too far when they all moved in lockstep to increase change and cancellation fees, giving consumers no opportunity to “vote with their wallet.” Plus, after repeated requests from travel advocates such as Travelers United, for an explanation of why these fees were necessary, the response from the airlines amounted to, “Because we can do it. We don’t need justification.”
Now, Congress is asking the same question — are these fees justified? Congress is taking time to examine the creation and the changes in fees and to examine the “fairness” of the fees — are these fees calculated based on actual costs or are they excessive and not measured against any empirical process other than what the airlines can get away with?
Basic questions are being asked about the seemingly nonsensical imposition of fees
• What justification is there to charge a passenger a cancellation fee of $200 when the same tickets are on sale on the airline website and through online travel agents (OTAs) for less than $100?
• Why should a passenger changing a ticket from one flight to another on the same airlines which are listed for the same airfare subjected to a $200 change fee when the prima facia evidence is that the airlines are not losing any money in terms of airfare? Perhaps, a $50 change fee plus the increase in airfare would be fairer.
• Why does it cost $25 to check one bag, but if a passenger checks two bags the cost is increased to $35?
These are common-sense questions from Congress to the airlines and common-sense solutions. This system to review a handful of fees is not difficult to put into effect. The airlines had no trouble instituting their system of expansive fees. This amendment will only apply to the most obviously questionable fees.
Any legislation that requires honesty from the aviation industry is welcome and should be strongly supported by the American public.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 11 years with Congress, the Department of Transportation and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.