Mysterious Airline Fees: Why the Government is Cracking Down

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One of the many things that ticks us off about airlines is the lack of transparency: about the total cost of a flight, about flight delays, about whatever fee is coming down the pike next. That’s about to change.

Under new rules being imposed by the Department of Transportation, airlines will have to disclose all those extra fees they are charging in their advertised fares, “including but not limited to fees for baggage, meals, canceling or changing reservations, or advanced or upgraded seating.” So you’ll know that the $250 round trip to London is not what you’ll actually pay if you want, say, a seat. And should the airlines lose the bag for which they’ve charged you $25 to check, they’ll have to refund the fee. This might not seem all that satisfying if your bag is lost, but keep in mind that the industry lost just 3.57 bags per 1,000 customers last year. That’s a record low, although keep in mind 1,000 passengers is just seven 737s worth.

DOT is also increasing what you can get paid in case of denied boarding— involuntary bumping. On domestic flights you can now claim twice the ticket price up to $650 if you’re bumped and they get you another flight within two hours on a domestic route, and four hours on an international one. That’s up from $450. Any longer and the compensation is 4x the ticket price to a maximum $1,300; that’s up from $800. Don’t count on cashing in, though, since the airlines are actually getting better at avoiding the bumps. Last year there were 1.09 bumps per 10,000 passengers, down 11% from 2009. The carriers are experimenting with ways of heading off bumping altogether by asking people as they check in, rather than in the boarding area: How much will you take to be rebooked on the next available flight? It’s a reverse auction designed to limit their costs. Passengers who are checking in don’t know how many seats the airline is looking for, so they tend to underbid; the lack of information plays to the airline’s advantage.

On the other hand, the airlines are going to have to be more forthcoming about information regarding delays. We’ve all had that experience staring at a posted departure time, seeing it pass and then wondering what’s going on. DOT says that the airlines will be required to notify passengers “promptly” (whatever that means) if flights are delayed more than 30 minutes.  The information must be posted on their web sites.  And should you be delayed on the tarmac, DOT is extending to foreign carriers the rule that says airlines must provide food, water and working lavatories on delayed flights, and return to the terminal after three hours.  The foreign carriers will get up to four hours.

The Air Transport Association of America (ATA), the industry’s trade group, endorsed DOT’s goal of “providing safe, reliable transportation, treating customers fairly and providing the best service possible,” but it couldn’t resist a backhanded slap, noting that “market forces – not additional regulations – are already providing customer benefits.” This is not always apparent to the traveling public, especially the people who were trapped on planes on the tarmac for 8-to -12 hours, when snowstorms disrupted airport operations — which is why such rules were imposed in the first place.

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