In an important statement, the ranking member of the Aviation Subcommitte of the House Transportation Committee, Tom Petri (R-WI), acknowledged the problems caused by the proliferation of airline fees and the lack of airline disclosure of those fees.
Many observers have noted that the minority party would be concerned with “re-regulation” of the airlines. However, with the egregious withholding of these fees from GDSs, oniine travel agents and normal travel agents, even those who once stood on the side of the airlines are coming out in favor of stronger consumer protections and price transparency.
Here is the opening statement of Tom Petri (R-WI) to today’s House Transportation Committee hearing on airline fees.
“Since the tragic events of 9/11, the airline industry has been in economic turmoil. Volatile fuel prices, worldwide epidemics, and the global recession are just a few of the outside influences airlines have endured in the last decade.
“In response to the economic conditions, airlines have done what any business would do, they have sought ways to reduce costs and increase revenues.
“Much to the chagrin of airline passengers, airlines’ revenue boosting efforts have included increasing the number and amount of fees for services offered to passengers, including fees for checked baggage, early boarding, seat selection, and even leg room.
“The increase in the number and amount of service fees charged by airlines has not gone unnoticed by the federal government.
“The Internal Revenue Service reviewed the fees and determined that they are not taxable. The Department of Transportation has proposed rules to address transparency for consumers.
“As frequent flyers ourselves, several bills have been introduced in both the House and the Senate in response to the growing number of airline service fees.
“The GAO has also reviewed the issues related to airline service fees and is prepared to share with the Subcommittee its findings and recommendations they have on the subject.
“There are more than 100 types of fees charged by airlines and their combinations are very complex. It is imperative that consumers have access to clear and complete information on airline service fees.
“It is also important that the federal government’s taxes and fees are made known to consumers. The Department of Transportation should be sure that all federal taxes and fees remain fully disclosed and not hidden in the total fare price.
“Additionally, as airline pricing changes, it is critical that consumers have all the information they need to make educated and well-informed travel decisions.
“In preparing for this hearing, staff went online and called a random sampling of airlines to see what could be learned about service fees being charged. Not surprisingly, some airline websites were easy to navigate and provided clear and helpful information on their service fees. Others were not as easy to navigate.
“The phone calls did not go as well. A few airlines would not provide information on their service fees unless we had already bought a ticket and provided a confirmation number.
“To this end, I am interested in what the Department of Transportation is proposing as far as new regulations to address transparency for consumers. By this I mean the transparency of all fees, airline service fees and fares, as well as federal government taxes and fees.
“I am also interested to hear from the airlines on their service fee policies and how they share fee information with their customers. From consumer groups I would like to hear how they believe the information sharing can be improved.
“Finally, we all know that the airline industry is an ever-evolving segment of the economy. As airlines respond to changing conditions – economic or otherwise – Congress must monitor the potential impact to the Airport and Airway Trust Fund.
“The uncommitted balance of the Trust Fund is already much too low. In fact, many in the aviation community fear that the Trust Fund is in real trouble. Service fees are not subject to the 7.5% federal excise tax that funds the Trust Fund. Therefore, if airlines raise or add service fees in order to lower their air fares, the impact to the Trust Fund could be enormous.
“I look forward to hearing from all of our witnesses and I yield back the balance of my time.”
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
