Senate Panel Slams Airlines for ‘Junk Fees’ in Latest Probe
(Bloomberg) -- A US Senate investigative panel blasted airlines for increasingly charging so-called “junk fees” to help boost their bottom lines, saying the practice has increased costs and complexity for consumers.
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The Permanent Subcommittee on Investigations led by Senator Richard Blumenthal said it found airlines use algorithms to set seat fees that can change from one flight or one customer to the next, and that some deploy gate agents to catch passengers not complying with baggage policies, subjecting them to additional fees.
Carriers have made billions of dollars from extra fees over the last several years, the panel led by the Connecticut Democrat found.
“This report pulls back the curtain on tactics like dynamic pricing that burden travelers and boost airline revenue,” Blumenthal said in a statement Tuesday following a probe the committee started last year.
The panel will hold a hearing Dec. 4, where executives from five airlines — American Airlines Group Inc., Delta Air Lines Inc., United Airlines Holdings Inc., Frontier Group Holdings Inc. and Spirit Airlines Inc. — will respond to lawmakers’ questions about the trends.
“Spirit Airlines has a long history of offering affordable, low-fare flights, which has made travel more accessible for the public,” the carrier said in a statement. “We are transparent about our products and pricing, our airport policies ensure guests are treated fairly and equally, and we comply with all tax laws and regulations.”
The discount airline, which recently filed for bankruptcy protection, said it’s time “to discuss meaningful initiatives that would even the playing field between larger and smaller airlines to benefit all travelers.”
Delta said it’s committed to offering a choice of fare products, and that it has provided the committee with documents and information for its probe for more than a year. Frontier said its a la carte services model has induced other carriers to reduce their fares and introduce new, lower-priced products. United declined to comment. American didn’t respond to a request for comment.
The staff report provided recommendations on how Congress might respond, including mandating that the Transportation Department collect and publish revenue from seat fees — the same way it does for bag charges — and requiring airlines to make more upfront disclosures to customers about fees.
The Transportation Department published final rules earlier this year on fee disclosure, but the regulation is currently stalled due to a legal challenge from several airlines and industry trade group, Airlines for America.
In a statement, Airlines for America said it’s “deeply disappointed” by the report, which it said assumes the industry should revert to a “one-size-fits-all” pricing model that existed before deregulation and favored only the wealthiest travelers.
This isn’t the first time the Senate’s investigative panel has waded into the aviation space. The subcommittee has has also been probing Boeing Co.’s safety culture and digging into whistleblower complaints against the company since a near-catastrophe in January where a door-sized fuselage panel blew off one of its planes mid-flight.
(Updates with airline comments in eighth paragraph.)
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