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DOT Proposes New Transparency Rules On Airline Baggage and Seating Fees

by on May 21, 2014 · 16 comments

in Airline Industry

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Last month, consumers were up in arms over the possible passage of the Transparent Airfares Act of 2014, which would void a 2012 DOT ruling called the full-fare advertising rule that requires airlines to include mandatory taxes and fees in the base price of a flight. Those mandatory taxes and fees include things like TSA security screening fees and airport facility charges, but not other fees like seating selection and checked bag fees. Critics of the act (mainly airline industry lobbies) say that the ruling allows the DOT to “hide” these fees in the prices of tickets and that other industries including hotel and car rentals aren’t held to the same standard.

Checked baggage fees are waived for Premier Golds.

Checked baggage fees might be included in pricing if this rule goes into effect.

Today, Transportation Secretary Anthony Foxx fired back, releasing a consumer-protection rule proposal that would require airlines to improve the disclosure of optional fees as well including for checked-bags, carry-ons (which some airlines are already charging for) and advance seat selection. As with earlier DOT rules including ones that have raised penalties for tarmac delays and more transparent airfare advertising, the airline industry is expected to fight this proposed rule.

With this rule specifically, airlines and ticket agents at all points of sale would have to disclose fees for what are considered optional but still basic services including seat assignments, carry-on fees and charges for checked bags when they apply. Right now, airlines are simply required to disclose these fees, but they are often listed on a single page of an airline website. Though it is relatively easy to find them and see them all in one place, when it comes to actually purchasing a ticket, consumers can have a hard time understanding what the full cost of that ticket will be until they get to the final purchase page and have checked off all the add-on costs along the purchase process.

This is the exact opposite of what carriers like Frontier recently did by supposedly lowering fares while imposing new fees for things like carry-on bags and seat assignments as well as raising some existing fees, which can make the ticket-buying process feel like a classic bait-and-switch where you end up paying a lot more than you plan to.

Fees Add Up Quickly

For example, let’s say you wanted to fly on United from San Francisco to Denver next month on United. It’s easy enough to enter your cities and dates and then you come to a screen that pulls up the airfares.

United SFO DEN

Looks like you should be able to get there and back for $264. However, once you select your flights and enter your traveler information, you’ll be taken to seat selection. As you can see below, there are some free seats up for grabs still, but al of them except for two are middle seats (there are just two windows left).

United seat map

If you want to be sure you get an aisle, or a window closer to the front, or heck, just sit next to a travel companion, you will have to pony up at least an additional $43 each way for an Economy Plus seat – and that’s just for middle seats. If you want a window or aisle, most are going for $49 on these flights. So now we’re up to $362.

United with seats

Then let’s say you wanted to check a bag. That’s $25 each way, for another $50.

Add in $25 per bag, each way.

Add in $25 per bag, each way.

So what looked like a $264 airfare is actually going to end up at $412 – that’s a full 56% more than you would have thought just by searching for flights!

What Will Happen

I suspect airlines are going to fight this tooth and nail since ancillary fees make up an increasing proportion of airlines’ profits and in 2012 (the latest full year for which there is data), airlines raked in over $27 billion by charging for things like bags, seats, and cancellations or changes.

There are more airline fees than ever - and some of them are exorbitant.

There are more airline fees than ever – and they really start to add up.

There are also some other aspects of the proposed rule worth noting that would:

  • Expand the number of airlines reporting to the DOT on on-time performance, overselling numbers and mishandled baggage rates
  • Require better identifying of codeshare flights both by airlines and third-party booking sites like Orbitz and Kayak
  • Require travel agents to provide an option to hold reservations at a quoted fare without payment or to cancel without penalty within 24 hours if a reservation is made a week or more before departure
  • Prohibit preferential ranking of certain flights and carriers without disclosing bias.

My Thoughts

While I’m all for more transparency, and I’d like to see baggage and seating fees detailed at point of sale, I am not sure how practicable these rules are going to be. Not only is pricing going to get a lot more complicated to read – are there going to be price matrices, or price ranges quoted? – but third parties aren’t always able to bundle things like advance seat assignment and checked bag fees, so flyers could still be on the hook to pay when they get to the airport.

Not only that, but airlines would also have to price in or out the fees each specific passenger gets waived thanks to things like elite status or whether they carry a co-branded credit card. So all I see, at least in the short term, is a big mess.

That said, more transparency is a good thing, and being able to price out a ticket accurately from the first step of your search process will be a huge help to a lot of travelers, especially when you’re on a tight budget and every penny counts.

Share Your Thoughts

There will be a 90-day comment period on the proposed rule, so make your voice heard in a number of ways.

You can contact your state legislators or visit this page to view the proposed rule and comment under docket number DOT-OST-2014-0056.

You might also want to share information about this issue on social media to raise awareness, using these resources:

Department of Transportation on Twitter (@usdot) and Facebook (www.facebook.com/USDOT)
House Transportation and Infrastructure Committee on Twitter (@Transport)

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • Nick

    I wonder why the DoT doesn’t require similar transparency rules for hotels and rental cars. That is, the minimum price you must pay to use a reservation, inclusive of all taxes & fees.

  • Goat Rodeo

    who do you reserve a hotel room through where you don’t see the full cost prior to hitting submit?

  • Larry

    Any hotel with a resort fee, especially when booked through a site other than the hotel’s web site.

  • Larry

    I’m pretty sure the DOT has no role in regulating the hotel industry. Not sure about the rental car industry.

  • BobChi

    I seldom check a bag, and only pay for advance seat selection occasionally. I think my search process for prices is going to get a lot more complicated, not simpler. I want to see the price that includes everything I need to pay for and nothing I don’t need to pay for, and let me decide what to do.

  • Scott

    I like the current policy passed by DOT in 2012 where the mandatory fees are included in the base price of flights. Most airlines list the optional fees on their website and the frequent travelers know of them. I don’t see a need for regulation to be added for optional fees.

  • funkiehouse

    High Speed Rail…. Let’s do it.

  • BobChi

    Avoid these “resort fee” places if you possibly can. This is nothing but a way to lie about prices. It should be prosecuted as fraud.

  • epaminondas3294

    The rate listed for hotels don’t include tax. As it should be, because the government shouldn’t be allowed to hide these taxes into the price by making you think it’s the business collecting the full amount.

  • wwittman

    the entire reason for the “extra fees’ is to allow them to advertise false ‘low’ fares, as in your examples.
    It could easily be reframed as a “get a discount of $25 if you don’t check a bag”, but of course they don’t WANT that… they want to come up as “least expensive’ in a search.

  • wwittman

    taxes are applied evenly to all hotels… it’s not a guessing game as to the ‘real’ price

  • epaminondas3294

    No they’re not applied evenly to all hotels. It’s different in each state, and each country, and some cities even apply their own local tax like NYC. Some states even charge a different tax for hotels than they do for their sales tax, in CT for example sales tax is 6.35% but hotel tax is 15%. And those taxes are never included in the hotel price quote.

  • wwittman

    That IS applied evenly. Every hotel in New York City has the same tax rate applied. The airline guessing game is entirely different, where you can’t know EVERY airline in the same route adds the same extra fees to the advertised fares.

  • epaminondas3294

    How is that being applied evenly when it depends on your location? That would be the definition of unevenly applied. And how is that different with the airlines? I’m not talking about baggage fees, I’m talking about taxes. It’s the same with the airlines, depending on your port of entry it’s a different tax. Why do they have to include tax into the fare? You still haven’t directly answered that point.

    And besides, when you book a hotel, breakfast isn’t always included. When it’s not, they don’t tell you it’s not included. Should hotels be required to post their rates including the price of a breakfast entrée, coffee and juice? With baggage fees, how many bags should they include with the price when each passenger will carry with them a different set of bags? Give me a break, you’re trying to act like it’s somehow different for hotels when it’s exactly the same thing. With hotels you often pay for things a la carte.

    The answer to all of this is simple, let the free market decide. If a consumer is unhappy with his experience dealing with an airline, he can decide to shop elsewhere next time. Competition is the best incentive.

  • wwittman

    Ah. It becomes clear. You’re one of those people who doesn’t understand that Ayn Rand was just juvenile fiction.

  • epaminondas3294

    Ah, it become clear, once you realize you’ve lost the argument you turn into a petulant child and resort to name calling. I have no idea what Ayn Rand has to do with anything we’re talking about here, she didn’t invent the idea of a “free market’, that’s been around for centuries. What an incredibly stupid thing to say.

    So nice try with the insult, but obviously you know you’re wrong and can’t bother to explain how it’s different for hotels.

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