by Herb Weisbaum, The ConsumerMan

Last updated May 22, 2024

The nation’s airlines want to kill a new federal rule that would require them to disclose “ancillary” fees—extra costs for baggage, canceling a reservation, or changing a reservation—along with ticket prices.

Listen to audio highlights of the story below:

 

The U.S. Department of Transportation’s new price transparency regulations were designed to help consumers avoid unnecessary or unexpected fees, what the DOT called “hidden junk fees.” It would not limit those fees; it would simply require upfront disclosure. This could save airline passengers $500 million a year, the agency said.

“Airlines should compete with one another to secure passengers’ business—not to see who can charge the most in surprise fees,” said Transportation Secretary Pete Buttigieg when the final rule was announced in April.

The lawsuit, filed in mid-May by the industry trade group Airlines for America (A4A), along with Alaska, American, Delta, Hawaiian, JetBlue, and United, claimed the rule was unnecessary and misguided.

“Airlines already provide consumers with complete disclosure of all fees associated with air travel before they purchase a ticket,” A4A said in a statement. The group called the DOT rule “a bad solution in search of a problem,” claiming it would “greatly confuse consumers who will be inundated with information that will only serve to complicate the buying process.”

“That’s pretty laughable,” said travel columnist Christoper Elliott. “People are not going to be confused. If anything, it’s going to be the very opposite. People will be happy that they know exactly how much they need to pay for an airline ticket. So, this is just incredibly disingenuous on the part of the airlines.”

Airlines have built their entire business model on “deception,” Elliott told Checkbook. They quote you a low price “that no one can actually get,” and then add fees. “They know that people are more likely to buy a ticket if the initial price quote is for less,” he said. “If they start adding everything to it, then people are less likely to book the ticket.”

The DOT vowed to “vigorously defend” its rule. “Many air travelers will be disappointed to learn that the airline lobby is suing to stop these common-sense protections,” DOT said in a statement.

Southwest Airlines, which allows passengers to check two bags for free and does not charge for reservation changes or cancellations, did not join the lawsuit.

“Overall, we support every airline’s right to price its products, but believe fees should be clearly and consistently disclosed, so consumers can make informed purchasing decisions,” the company said.

Lawsuit Was No Surprise

Consumer advocates, who had been pushing for mandatory price transparency for nearly a decade, expected the airlines to sue.

“We’re sorry to see that the airlines are taking the step. Sorry, but not surprised,” said John Breyault, a vice president at the National Consumers League and a member of DOT’s Aviation Consumer Protection Advisory Committee. ”The airlines don’t like being told how to display how much their service costs, and they're fighting it.”

Providing consumers with the true price of a ticket allows them to make apples-to-apples comparisons and bolsters competition, Breyault told Checkbook.

“The airlines are simply trying to make up reasons not to provide the information to consumers that will help them make a more informed choice,” he said.

What the New Rule Would Require

When they quote prices, airlines and ticket agents (including online travel agencies, such as Expedia, Orbitz, and Kayak) are already required to disclose the price for each ticket, including all government charges and mandatory carrier-imposed fees. But they haven’t been required to add in extra fees for common services, such as baggage handling and change fees.

The new rule, set to take effect in the fall, would require airlines and ticket agents to “clearly, conspicuously and accurately” display “critical extra service fees” the first time an itinerary and fare are provided. The extra fees cannot be displayed through a hyperlink to another page, as is typically done now. Failure to meet these requirements would be considered an unfair business practice.

So far, the DOT considers “critical extras” any charges for a first or second checked bag, a carry-on bag, and canceling or changing a reservation. Fees for family seating are not part of this disclosure rule, the DOT said, because it plans to propose a separate rule that bans airlines from charging families to sit together.

Other provisions in the rule were designed to:

  • End Deceptive Discounts: Advertised percent-off discounts are deceptive when they apply to only a portion of the ticket price, not the full fare. Airlines would be required to calculate discounts using the total cost of fares, including all mandatory carrier-imposed fees.
  • Disclosure of Seat Selection Fees: Airlines and ticket agents would be required to tell customers that seats are guaranteed, and they are not required to pay extra for one (many airlines charge customers for selecting their seat assignments in advance). Prior to offering seat selection for purchase, airlines would be required to provide this notice:

“A seat is included in your fare. You are not required to purchase a seat assignment to travel. If you decide to purchase a ticket and do not select a seat prior to purchase, a seat will be provided to you without additional charge when you travel.”

NOTE: The upfront pricing requirements were one of two consumer protection rules announced in April that are scheduled to take effect this fall. The other will require airlines to provide automatic refunds when flights are canceled or significantly delayed.

Cruise Lines Soon Will Also Be Required to Provide Full-Fare Prices

Cruise lines have also used a pricing model that often hides mandatory fees and taxes that can easily add hundreds or thousands of dollars to the final bill. A new California law will change that.

Starting July 1, 2024, California’s Consumer Legal Remedies Act (CLRA) will require cruise companies operating in the state to display the total price for that booking—including government taxes and fees, and required fees and expenses—rather than simply the fare price.

Reacting to the new law, several major cruise lines will change how their prices are advertised nationwide, CruiseRadio.net reported.

The CLRA does not limit the mandatory fees cruise lines can charge. It only requires transparency, so consumers know the true cost of a trip and can more easily compare prices from one company to another.

More from Checkbook:

 

Become a Smarter Consumer Get free, expert advice delivered to your inbox every Wednesday when you sign up for the Weekly Checklist newsletter.



Contributing editor Herb Weisbaum (“The ConsumerMan”) is an Emmy award-winning broadcaster and one of America's top consumer experts. He has been protecting consumers for more than 40 years, having covered the consumer beat for CBS News, The Today Show, and NBCNews.com. You can also find him on Facebook, Twitter, and at ConsumerMan.com.