An executive order signed Friday by President Joe Biden cracking down on anti-competitive practices includes airline fees.
The order directs the U.S. Department of Transportation to consider requiring airlines to refund fees when baggage is delayed or when the plane’s Wi-Fi is broken, according to a fact sheet released by the White House.
Biden’s executive order, signed Friday afternoon, also directs the DOT to consider issuing rules to require clear disclosure of fees for baggage, changes and cancellations.
Today, airlines are required to refund baggage fees only if a bag is declared lost by the airline.
Passengers also currently are entitled to Wi-Fi fee refunds if they are unable to use the service due to a flight cancellation, delay, schedule change or involuntary denied boarding. But the rules are less clear if the Wi-Fi itself is not working.
The executive order fact sheet notes that the four largest U.S. commercial airlines control nearly two-thirds of the domestic market.
“Reduced competition contributes to increasing fees like baggage and cancellation fees. These fees are often raised in lockstep, demonstrating a lack of meaningful competitive pressure, and are often hidden from consumers at the point of purchase,” it added.
Industry group Airlines for America responded that there is “robust competition” in the airline industry, resulting in low fares.
“We remain committed to transparency regarding fares and continue to be strong advocates for visibility on government taxes and fees,” the group said.
It’s not the first time federal officials have tried to require airlines to refund fees for delayed bags or require clear disclosure of fees.
In 2016 under President Barack Obama’s administration, the FAA Extension, Safety and Security Act required the DOT to issue regulations requiring airlines to promptly refund baggage fees when a passenger’s bag is delayed. The DOT later that year started the process to institute the requirement. However, it stalled in 2017 under President Donald Trump’s administration, as Trump waged an effort to cut regulations on businesses.
The Trump administration also withdrew proposed regulations on transparency of airline ancillary service fees in December 2017, saying “they are of limited public benefit.”
Delta Air Lines, the dominant carrier at Hartsfield-Jackson Atlanta International Airport, declined to comment immediately on Friday’s executive order.
In comments submitted in January 2017 on the Obama Administration’s proposed rule, Atlanta-based Delta said it would support a rule on delayed baggage refunds with a reasonable standard for delay that allowed airlines to choose “the format” of the refund.
Delta said at the time that it offered a $50 electronic travel voucher for bags delayed for more than 12 hours. It said a refund requirement should be triggered at 24 hours and only apply to domestic flights.
The airline estimated in 2017 that refunds of delayed baggage fees would cost it $615,000 annually if required for delays of more than 12 hours, $260,000 for delays of more than 24 hours, and $30,000 for international baggage delayed more than 15 hours.
In the past year, amid weak demand during the COVID-19 pandemic, Delta and other major airlines eliminated many of their change fees. But fees for other things like checked bags remain.
In 2020, even though air travel declined 60%, airlines brought in more than $2.8 billion in baggage fees, including more than $440 million at Delta.
Last year, U.S. airlines mishandled 4.11 bags per 1,000, according to the U.S. Department of Transportation. Delta mishandled 3.62 bags per 1,000. Mishandled bags are defined as those that are lost, damaged, delayed or pilfered.
Sometimes, a requirement for refunds when things go wrong doesn’t prevent problems.
Airlines are required to issue refunds for flights they cancel, if the passenger decides not to rebook. But last year, as airlines canceled hundreds of thousands of flights due to the pandemic, the DOT was flooded with 89,518 complaints from travelers about problems getting refunds.
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