Consumer and travel advocates unanimously support Sen. Markey’s FAIR Fees amendment to the Senate FAA Bill. The amendment seeks to rein in skyrocketing fees that are being imposed with no relationship to the actual costs borne by airlines. Travelers United, one of the key organizers of this letter, notes that this kind of fee regulation is not re-regulation of the airlines, but a means to allow the free market to function.
“Consolidation in the airline markets and the way that airlines follow each other’s airfares and fees in lockstep have eliminated competition in the aviation market,” according to Charlie Leocha, Chairman of Travelers United. “This merger seeks to rebalance the marketplace; however, the DOT, DOJ and FAA have actions that they can take that will limit the anticompetitive practices of today’s major airlines.”
April 5, 2016
The Honorable Mitch McConnell Majority Leader
United States Senate
317 Russell Senate Office Building Washington, DC 20510The Honorable Harry Reid Minority Leader
United States Senate
522 Hart Senate Office Building Washington, DC 20510Dear Senators McConnell and Reid,
The undersigned consumer and traveler advocacy organizations call on you and members of the U.S. Senate to adopt measures that strengthen consumer protections in the U.S. air travel industry. Specifically, as the Senate prepares to take up the Federal Aviation Administration Reauthorization Act of 2016 (S. 2658) we ask that you support the inclusion of the FAIR Fees Act (S. 2656), sponsored by Senators Markey and Blumenthal, as an amendment to the full bill.
Ancillary fees are out of control and the lack of effective competition means that market forces alone are unlikely to stop their growth. In 2015, U.S. airlines collected $10.8 billion in ancillary fees, an increase of 24% since 2014. These fees, combined with historically low fuel prices and increasingly cramped seats, drove record profits for the industry in 2015, a trend that is expected to continue in 2016.
Ancillary fees bear little to no relation to the cost to actually provide the services these fees allegedly support. These add-on fees also generate significant consumer outrage. For example:
- From 2009-2014, cancellation/change fees increased by 2-5 times the rate of inflation.
- In April 2013, the three largest domestic airlines all raised their cancellation/change fees from $150 to $200 within two weeks of each other;
- Consumer complaints to the Department of Transportation (DOT) increased by 30 percent from 2014 to 2015.
- Complaints about airline fares are the fastest growing category of complaint to the DOT (97.93% year-over-year increase).
The Justice Department (DOJ) pointed to exactly these kinds of anticompetitive fees in its complaint against the American Airlines-U.S. Airways merger when it stated:
- “Increasing consolidation among large airlines has hurt passengers. The major airlines have copied each other in raising fares, imposing new fees on travelers, reducing or eliminating service on a number of city pairs, and downgrading amenities[;]” and
- “In recent years, however, the major airlines have, in tandem, raised fares, imposed new and higher fees, and reduced service. Competition has diminished and consumers have paid a heavy price.”
The FAIR Fees Act, which enjoyed bipartisan support in the Senate Commerce Committee, would prohibit airlines from charging cancellation, baggage or other ancillary fees that are “unreasonable or disproportional to the costs incurred by the air carrier,” under standards to be set by the DOT. The bill does not seek to re-regulate the airlines, but it serves to remedy a systemic violation of the free market system that has been pointed out repeatedly by both DOT and DOJ.
The FAA Reauthorization Act is an important opportunity for you and your Senate colleagues to protect the millions of consumers who depend on the airline industry to provide an affordable, dependable and safe travel experience. The FAIR Fees Act would do much to help rein in the industry’s increasing reliance on ancillary fees, which are unfairly squeezing the pocketbooks of the flying public. We urge you to support this common sense, pro-consumer bill.
Sincerely,
National Consumers League
Business Travel Coalition
Consumer Action
Consumer Federation of America
Consumers Union
Consumer Watchdog
FlyersRights.org
National Association of Airline Passengers
Public Citizen
Travelers United
U.S. PIRG
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.
