Photo credit: finance.yahoo.com

Senate Panel to Address Surge in Airline Fees

WASHINGTON (Reuters) – A U.S. Senate committee has expressed growing concern over the escalating fees charged by airlines for seat assignments and luggage. The Permanent Subcommittee on Investigations, led by Senator Richard Blumenthal, is set to hold a hearing on December 4, inviting top executives from major airlines to provide testimony regarding these charges.

The upcoming session, titled “The Sky’s the Limit — New Revelations About Airline Fees,” will feature representatives from American Airlines, United Airlines, Delta Air Lines, Spirit Airlines, and Frontier Airlines. This initiative stems from a report highlighting that these five airlines collectively generated $12.4 billion in revenue from seat fees between 2018 and 2023. Notably, in the previous year, United Airlines reported $1.3 billion in seat fees, surpassing its $1.2 billion earnings from checked baggage fees.

Blumenthal’s committee conducted a comprehensive year-long investigation, uncovering that airlines are increasingly deploying algorithms to determine fees based on customer data. The findings suggest that certain airlines might be evading federal transportation excise tax obligations by categorizing some charges as nontaxable fees.

The report also revealed practices at ultra-low-cost carriers like Frontier and Spirit Airlines, which allegedly paid $26 million from 2022 to 2023 to gate agents and staff for catching passengers thought to be evading baggage fees or carrying oversized items. According to the investigation, Frontier employees could earn up to $10 for each bag that a passenger is compelled to check at the gate.

In response to the findings, Frontier noted that the commission system for gate agents is intended to motivate staff to ensure compliance with baggage size requirements, promoting fairness among all customers. Both Spirit and United Airlines refrained from commenting on the report.

Airlines for America, a key trade organization, defended the optional nature of these fees, asserting that average domestic round-trip fares, accounting for such fees, are 14% lower in 2023 compared to 2010, when adjusted for inflation. Delta Air Lines emphasized its commitment to offering a variety of fare options tailored to the diverse needs of its customers.

Blumenthal has urged Congress to mandate airlines to furnish more transparent disclosures regarding fees. He also called on the U.S. Department of Transportation (USDOT) to investigate potential abuses linked to incentive-based fee collections.

Historically, airlines have sought to contest the USDOT’s new regulations aimed at enhancing upfront disclosure of airline fees. Notably, in 2018, airline CEOs successfully campaigned against bipartisan efforts to establish “reasonable and proportional” limits on baggage and change fees.

Source
finance.yahoo.com