 "How US airlines made $12 billion from seat fees")
US airlines are making billions of dollars – and it’s all from “junk fees.”
A report published by the US Senate on Tuesday showed that five US airlines have earned $12.4 billion in revenue merely from seat fees alone.
The report found that United Airlines alone made over a billion dollars a year from seat fees – more than what it earned from fees in checked bags.
It comes in the backdrop of the outgoing Biden administration attempting to crackdown on ‘junk fees’ in several industries.
But what do we know about this?
Let’s take a closer look:
What does the report say?
The report was put out by the Permanent Subcommittee on Investigations headed by Senator Richard Blumenthal.
The report stated that the airlines collected $12.4 billion in revenue from seat fees between 2018 and 2023.
United Airlines, for example, charged $319 for a seat with extra legroom seat, while Spirit Airlines charged $299, Delta Air Lines charged $264, Frontier Airlines charged $141 and American Airlines charged $140.
“Seat fees have grown more expensive and farther-reaching,” the report states, as per CNN. “These five airlines charge passengers extra for additional legroom, aisle and window seats, or even selecting a seat in advance, compelling parents with minor children to pay to sit together.”
United itself earned $1.3 billion in seat fees – more than the $1.2 billion it earned from checked bag fees, the report said.
Blumenthal’s panel spent a year investigating, finding carriers are increasingly using algorithms to set fees, targeting pricing based on customer information and said some carriers may be avoiding federal transportation excise taxes by labelling some charges as non-taxable fees.
Impact Shorts
More ShortsHis committee found ultra-low cost carriers Frontier and Spirit paid $26 million to gate agents and others between 2022 and 2023 to catch passengers allegedly not paying for bag fees or having oversized items.
Frontier personnel can earn as much as $10 for each bag a passenger is forced to check at the gate, the report said.
“One Frontier official told the Subcommittee that bag policy enforcement was necessary because the airline does not want customers to be taking more or ‘stealing’ from the airline,” the report noted.
As per the Wall Street Journal, the report recommended that the Transportation Department collect more data on seat fees – as it does for baggage fees.
It also slammed Spirit and Frontier for offering commissions for upselling or catching passengers trying to get around carry-on bag charges.
What are the airlines saying?
Spirit and United did not comment.
Airlines for America, a trade group, said the optional fees that customers can choose, adding average domestic round-trip fares, including fees, were 14 per cent lower in 2023 real terms versus 2010.
The organisation told CNN that its “members comply with all laws and regulations, including those on taxes and fees.”
Frontier said, “The commission for gate agents is simply designed to incentivise our team members to ensure compliance with bag size requirements so that all customers are treated equally and fairly.”
“Frontier works every day to increase consumers’ access to affordable air travel and to ensure that it provides the best possible value to its customers. Our unbundled services model has democratised air travel, enabling millions of individuals, families, and small businesses who otherwise would not or could not afford to travel the opportunity to travel by air,” its statement said.
Airlines for America added, “The subcommittee clearly lacks appreciation for the fact that air travel today is democratised, allowing Americans across all income levels to fly. Today, because of the revolution in air travel, nearly ninety percent of Americans have flown. That is because Americans have the power of choice to pay for the services they want and forgo those they don’t.”
Spirit Airlines said in a statement that it disagrees with much of the report and is “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.”
Delta said it is committed to “providing a choice of fare products that best meets our customers’ specific travel needs.”
Blumenthal said Congress should require airlines to provide more detailed fee disclosures. He said the USDOT should investigate potential abuses in incentive-based collection of fees.
Blumenthal said the air carrier executives will be called to testify on December 4.
Blumenthal, who chairs the Permanent Subcommittee on Investigations, will convene a hearing titled “The Sky’s the Limit – New Revelations About Airline Fees” with senior executives from American Airlines, United Airlines, Delta Air Lines, Spirit Airlines and Frontier.
“I know that some airline CEOs have expressed hopes that the next administration will be less passenger-friendly and more corporate-friendly than this administration,” Transportation Secretary Pete Buttigieg said at a news conference last week.
“The passenger protections that we have put in place deservedly enjoy broad public, bipartisan support.”
Biden administration war on junk fees
The Biden administration in April published a Transportation Department rule requiring airlines to more clearly disclose fees when they advertise prices for a flight.
It published the rule, alongside another dealing with airline refunds, in April as part of a campaign against what it calls junk fees.
The decision was blocked by an appeals court which found the rule to be too detailed in its restrictions.
The court granted a request by airlines to temporarily block the rule while a lawsuit filed by the carriers plays out.
Under the rule, airlines and ticket agents would be required to disclose fees for checked and carry-on bags and canceling or changing a reservation. Airline websites would have to show the fees the first time customers can see a price and schedule.
Six carriers including American, Delta and United, along with Airlines for America, sued in May to block the rule. The trade group said then that the rule would confuse consumers by giving them too much information when buying tickets.
Airlines sued to block USDOT’s new rule on upfront disclosure of airline fees, while airline CEOs in 2018 successfully lobbied against bipartisan legislation to mandate “reasonable and proportional” baggage and change fees.
With inputs from agencies
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