Congress, DOT look at regulating airline fees

WASHINGTON -- Amid growing complaints from a flying public fed up with airline add-on fees, Congress and the Department of Transportation are considering new rules that could change how airlines charge for baggage, blankets, drinks and just about everything else these days.

"Hardly a weekend goes by in my travels that I am not asked by passengers, ‘Aren't you going to do something about these fees?' " U.S. Rep. James Oberstar, chairman of the House Transportation and Infrastructure Committee, said at a hearing Wednesday. "Well, we've started."

A report released Wednesday by the Government Accountability Office indicated that the growing number of airline add-on fees can be confusing and misleading to consumers and ought to come with better disclosures.

Airlines generated nearly $8 billion in revenues from baggage fees and reservation change and cancellation fees alone in the past two years, according to the GAO report.

While that extra revenue helped boost the bottom lines of some cash-strapped airlines, it also made it much harder for consumers to comparison-shop for tickets, particularly on third-party travel sites, according to the GAO.

Just as bad, since more travelers trying to avoid fees are now carrying on more luggage, that has helped cause flight boarding delays, longer airport screening lines and other problems.

And since airlines don't have to pay excise taxes on the baggage and other fees they rake in like they do with the money they get from airfare, the government has missed out on $186 million in taxes that could have been used for airport improvements, according to the GAO.

"There are all sorts of unintended consequences going on at this time," GAO investigator Gerald Dillingham told members of a House aviation subcommittee.

The DOT recently announced it is considering new rules that would require airlines to fully disclose all fees; prohibit airlines from advertising fares that don't include all mandatory fees, taxes and charges; and make it easier for consumers to compare full ticket prices between airlines.

"We believe the proliferation of these fees and the manner they're presented to the traveling public can be confusing and in some cases, misleading," DOT general counsel Robert Rivkin told members of the House panel.

The DOT also is considering requiring airlines to reimburse baggage fees to customers if luggage is delayed, and refund all optional fees to travelers if a flight is canceled.

The DOT plans to announce any rule changes by the end of the year.

Neither of the airlines with a major Atlanta presence -- Delta and AirTran -- testified at the House aviation subcommittee hearing, but both have defended baggage fees and other fees in the past.

David Castelveter, spokesman for the Air Transport Association, an airline industry group representing Delta, AirTran and other carriers, said airlines already disclose fees on their Web sites.

"We agree with the need for transparency, and we provide it today through our Web sites," Castelveter said.

According to DOT figures, Delta last year made $1.6 billion in ancillary fees -- more than any other airline. AirTran made nearly $250 million in fees.

The CEO of Florida-based Spirit Airlines -- which levies fees not only for checked bags but also for carry-on bags, as well as a host of other items -- defended the practice, saying it helps consumers more than hurts them.

"Unbundling [fees from ticket prices] gives more choice to consumers ... which stimulates air travel," Spirit CEO Ben Baldanza told the congressional panel.

Oberstar (D-Minn.) warned airlines that Congress will act if they don't slow down on the fee front.

"I just want to say to the airlines ... if they don't exercise restraint, there's going to be a continuing outcry from the traveling public," Oberstar said. "And then you're going to have some kind of regulation that you won't like."

U.S. Rep. Jerry Costello (D-Ill.), who chairs the aviation subcommittee, indicated that if the DOT doesn't do something to help make airline fees more transparent for consumers, Congress would.

"I frankly do not believe that we're going to get where we need to be if we don't do this through rule making or by taking action through Congress," he said.