Business

Transportation Department Wants To Uncover Hidden Airline Fees

As the debate over the transparency of airfares continues in Congress, the U.S. Department of Transportation is getting into the conversation with proposed rules that would target secondary airline fees like charges for checked baggage. Industry groups are mixed on the proposal.

With transparency in airfares already up in the air in Congress, the Department of Transportation just added another wrinkle to the situation.

Last week, the DOT proposed rules for airfares that would require airlines to detail upfront any “hidden fees” consumers might stumble upon at the airport—including those for checked bags, carry-on bags, and advance seat assignments—whether on a travel site or the airline’s website. For now, airlines must say they charge bag fees, but they don’t have to list exact figures for them.

DOT said its goal is to protect consumers. “A customer can buy a ticket for $200 and find themselves with a hidden $100 baggage fee, and they might have turned down a $250 ticket with no baggage fee but the customer was never able to make that choice,” Transportation Secretary Anthony Foxx told the Associated Press.

Industry Reactions

Trade and advocacy groups are already gearing up for a fight on the Transparent Airfares Act of 2014 in the House (which rolls back an existing DOT mandate that requires including taxes in the total airfare price) and the Senate’s Real Transparency in Airfares Act (which strengthens that DOT mandate). The groups have differing takes on DOT proposal.

In comments on the pricing rule, Airlines for America argued that the regulations represented an intrusion on free markets.

“We believe this proposal overreaches and limits how free markets work and will have negative consequences,” the group said in a statement. “The government does not prescriptively tell other industries (hotels, computer makers, rental car companies) how they should sell their products, and we believe consumers are best served when the companies they do business with are able to tailor products and services to their customers.”

Meanwhile, the Business Travel Coalition, a for-profit travel advocacy group, called the rule pro-consumer but had some caveats.

“DOT must require that ancillary fee information is disseminated to travel agents in an efficient manner that is truly usable by agents, and we urge the agency to ensure that consumers can purchase these services from travel agents at the same time as an airline ticket,” the group stated.

And the U.S. Travel Association said that while the regulations are a move in the right direction, legislators should not take their eye off the bills in Congress. The association raised a bigger question: “What, exactly, constitutes pricing transparency?”

“Consumers have indicated that they are concerned first and foremost with the bottom-line price of flying. Airlines favor a pricing structure that spotlights how taxes and fees affect baseline pricing, and they have a point,” USTA President and CEO Roger Dow said in a statement. “Whatever the policy outcome here, we believe the policy solution enables consumers to make the most informed possible decision about their travel purchasing.”

The proposed rules would require airlines to list any charges for checked or carry-on baggage. (iStock/Thinkstock)

Ernie Smith

By Ernie Smith

Ernie Smith is the social media journalist for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. MORE

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