Airline fees make it hard to shop for best deal

[July 15, 2010]  WASHINGTON (AP) -- Finding the best deal on a flight has become a lot more difficult, thanks to hefty baggage and service fees that consumers often don't know about until they show up at the airline counter, congressional investigators say.

Those fees are not part of the ticket price, meaning they can easily go unseen until it's too late for the consumer to shop around. Amounting to billions of dollars for the airlines, the fees also are exempt from an excise tax, and some lawmakers want to reclaim that money for the Treasury.

Airlines, travel agents, online travel services and other ticket distribution channels should be required to disclose fees for checked baggage, changed reservations and other services in a clear and consistent manner, the Government Accountability Office said in a report out Wednesday.

Since 2007, many airlines have been charging for services that were traditionally included in the price of a ticket. That's improved airline bottom lines in a tough economy but raised the ire of travelers who find themselves nickeled-and-dimed to substantially higher costs.

Besides checked bags, some airlines charge fees for seat selection, extra leg room, prime spots in boarding lines, blankets, pillows, drinks and meals. "Those fees can be an unexpected shock totaling hundreds of dollars," said Charles Leocha, director of the Consumer Travel Alliance.

In the last budget year, 10 U.S. airlines collected $7.8 billion in such fees, congressional accountants say. The leader was Delta Air Lines, the world's largest airline, with $1.6 billion.

Rep. James Oberstar, D-Minn., who led a House hearing Wednesday on the matter, told airlines that the public will push back "and then Congress will act" if the industry does not show restraint with the fees. "That's not a threat," he said. "That's history."

Airlines say fees benefit passengers because they allow airlines to keep ticket prices down and consumers pay only for services they use.

"This is a deregulated industry and this is an industry that should be able to charge whatever it opts to charge for services," said David Castelveter, a spokesman for the Air Transport Association, which represents major airlines.

"There is no reason why one passenger should subsidize another for a service he or she doesn't consume," Castelveter said. He said airlines already disclose the fees consumers are most concerned about, like checked bag fees, on their websites.

But the GAO's Gerald Dillingham told the hearing airline fees "are not very transparent."

American, Continental, Delta, US Airways and United all charge $25 for the first checked bag, and $35 for the second, according to the booking website Kayak. JetBlue charges $10 and up for additional legroom. AirTran charges $6 for passengers to get seat assignments in advance, and sells exit row seats for $20 extra. Snacks at most airlines run $2 to $5, meals a bit more.

The Transportation Department is considering requiring airlines to disclose two ticket prices to passengers: a "full fare" with all mandatory charges like taxes, and "full fare-plus" with the extras.

Computer reservation systems used by travel agents and ticketing services are capable of providing clear information on fees that allows consumers to compare total trip prices. That hasn't happened because airlines won't supply the travel industry with fees, Kyle Moore, vice president of Sabre Holdings, which owns Travelocity, told the House Transportation and Infrastructure Committee.

Ben Baldanza, president and CEO of low-cost carrier Spirit Airlines, acknowledged that his airline doesn't provide ticketing services with fee information because he doesn't want to be at a competitive disadvantage with other airlines whose prices might appear lower because they exclude the cost of extras.

Moore said there would be no such concern if all airlines were required to supply ticketing services with the information.

The vast majority of consumers buy tickets based on the lowest fare, witnesses told the committee. About half the airline tickets sold in the U.S. are bought through ticketing services.

The government charges a 7.5 percent excise tax on airline tickets to pay for the air traffic system. The IRS ruled last year that optional fees aren't subject to the excise tax.

The report says the government could have raised $186 million last year if the checked bag fees alone had been taxed, an amount likely to grow as airlines charge more fees.

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Online:

Government Accountability Office:
http://www.gao.gov/

House Transportation and Infrastructure Committee: http://transportation.house.gov/

[Associated Press; By JOAN LOWY]

AP Transportation Writer Samantha Bomkamp in New York contributed to this report.

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