U.S. Sen. Richard Blumenthal was in Hartford on Tuesday to call airlines to task for gouging consumers with extra fees — and to call on the federal Department of Transportation to do something about it.
The move comes after the state’s former attorney general, who has continued his consumer advocacy in the Senate, asked the U.S. Department of Justice to begin an antitrust investigation into potential illicit cooperation among the nation’s major airlines.
Blumenthal released the findings of a report issued last week by Democratic staffers from the Senate’s Committee on Commerce, Science and Transportation that included numerous recommendations to keep prices in check and to keep passengers better informed about what they’re buying.
“There’s a new reason for fear of flying. The shock of flying encountered at the ticket counter is worse than the fear of leaving the ground,” Blumenthal said.
According to the report, a trend toward what are known as “ancillary fees” began in 2007 when low-cost carrier Spirit Airlines first instituted a fee for baggage checking. American Airlines was the first transcontinental legacy carrier to hop on board in 2008 with a $15 fee each way for the first checked bag.
Blumenthal said airlines today often charge exorbitant amounts for services ranging from Wi-Fi to priority boarding.
“Airlines have already eliminated meals, added bag fees, and slashed leg room. Now we learn the lengths to which they stoop to nickel-and-dime passengers from the moment a ticket is purchased,” Blumenthal said. “In some cases, airline websites only offer seats that require additional fees, while in other cases the penalties for changing flight plans can double the cost of a ticket — even when such changes are made far in advance of the flight. Airlines are striving relentlessly to conceal added costs and fees until consumers are stuck.”
Many of the recommendations put the onus on the U.S. Department of Transportation to look more closely at certain pricing practices and to mandate a uniform approach to disclosing all extra fees as early as possible in the booking process.
Blumenthal said the DOT already has the power to require more transparency from the industry.
“There are rules that apply here mandating fair and full disclosure. They ought to be enforced,” he said. “There’s good reason to think that a pro-consumer DOT will take steps authorized and called for by this report.”
Other suggested measures include requiring baggage fees to more closely reflect the costs incurred for providing the service; requiring airlines to refund fees for any bags delayed more than six hours on a domestic flight; and charging passengers who request a flight change according to the time available for the airline to fill the seat.
But the lobbying group Airlines for America released a statement that said airlines — which already are required to prominently display their fee schedules on their websites — comprise one of the most transparent industries when it comes to pricing.
“The fact that a record number of people are traveling this summer further demonstrates that customers always know what they are buying before they purchase,” the statement said. “Airfare remains a bargain, and costs considerably less and air service is far more plentiful than it was when the government last dictated pricing.”
In 1978, the government ceded most of its industry oversight — except in areas of safety — through the Airline Deregulation Act.
Blumenthal said airlines are currently required to publicly report only baggage fees and change/cancellation fees. Based on the country’s top ten largest airlines, the report cited a 7.4 percent increase in revenue — $112 million — from those fees between the first quarter of 2014 and the first quarter of 2015.
The Bureau of Transportation Statistics said baggage fees alone amounted to $3.5 billion across all the airlines last year.
The report said the three largest airlines — Delta, United, and American — would not provide congressional staffers with revenue numbers over the past three years for preferred seats, priority boarding, Wi-Fi passes, advanced seat selection, and trip insurance.
Blumenthal said that kind of reporting would give him a better idea how much money companies are saving in excise taxes each year by using add-on fees instead of fare increases.
“If you’re charged for upgrading within the economy class to economy plus, there’s no excise tax. If you upgrade from one class to another, there is an excise tax,” he said.
The use of preferred seating or priority boarding to upgrade is “a means in effect of tax avoidance,” he said.
Evan Preston, director of the consumer advocacy group ConnPIRG, pointed to the lack of competition in the airline industry as one of the biggest concerns for travelers. He said a business model based on inflated fees raises questions about how to “set the right market incentives for pro-consumer products and pro-consumer policies.”