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Costs of Travel: Consumers Paid $9. 2 Billion in Airline FeesMarch 10, 2011 By: George Dooley Travel Agent
Consumers paid more than $9.2 billion in fees to U.S. airlines in 2010 for checked baggage and other services, but these fees were hidden from most travelers when they purchased their airline tickets, according to a new study by the Consumer Travel Alliance (CTA), a non-profit organization promoting consumer interests on travel policy issues. The CTA study charges that the lack of transparency is due to the airlines refuse to share their fee information with travel agents and other distributors.
Information on extra (or ancillary) fees, which are not visible to the more than half of consumers who use third parties to book their travel, was the focus of an analysis of major U.S. airlines’ year-end financial reports by CTA, in coordination with Open Allies for Airfare Transparency, a coalition representing hundreds of companies in the managed travel community.
On average, passengers paid a total of $36.80 in fees for every round trip ticket – nearly $150 for a family of four, the study found.
“It’s Christmas every day for the airlines that are raking in billions of dollars in fees without having to adequately disclose information about them up front during the shopping process,” said Charlie Leocha, director of CTA. “Competition is crippled for the millions of business and leisure passengers who are surprised by these fees – often at the airport. Airlines have the right to sell whatever services they want – but they have a responsibility to disclose their airfares and fees anywhere airline tickets are sold so travelers can compare the total cost of travel across airlines.”
Last fall, more than 60,000 travelers signed a petition sponsored by CTA and the Business Travel Coalition (BTC) that called on the federal government to put an end to hidden fees, and thousands of them shared their hidden fee horror stories. CTA/BTC cited one example offered by Marc in New Jersey wrote: “This is a nontransparent and dishonest way of making it appear as if the cost of the flight is lower than it actually is.” Pat in Arizona wrote: “In all fairness to air travelers, all fees should be disclosed so consumers can make the best choices among airlines to travel.”
This study, the first to look at how the hidden fees imposed by major U.S. airlines have impacted the cost of air travel in 2010, was based on fourth-quarter 2010 earnings releases from the nation's eight largest airlines as well as data from the U.S. Bureau of Transportation Statistics, a unit of the Department of Transportation (DOT).
“Buying a plane ticket has become an Alice-in-Wonderland experience where a consumer has to agree to purchase the ticket before being told how much the trip will actually cost,” said Andrew Weinstein, executive director of Open Allies for Airfare Transparency.
“Airlines should be able to charge whatever they want for their services, but they should have to share all of those prices with travelers in advance, so consumers can make informed buying decisions. A free market requires access to information to function efficiently, and the air travel marketplace is broken because airlines are not currently sharing any information on billions of dollars in hidden fees,” Weinstein said.
“It’s hard to ignore the tens of thousands of consumers who have spoken out against hidden airline fees,” said Kevin Mitchell, chairman of BTC. “That’s why as Congress debates U.S. Federal Aviation Administration reauthorization legislation this month, it has a clear opportunity to safeguard travelers’ ability to comparison shop by requiring airlines to provide ancillary fee information, along with airfares, in any sales channels in which they offer their products and services.”
The CTA study also offered a state-by-state analysis of fees paid by average airline passengers:
The study was based on Q4 2010 earnings releases from the nation's eight largest airlines and data collected by the U.S. Bureau of Transportation Statistics. The study combined the gross ancillary fee and other revenue collected by those airlines in 2010 while discounting non-ancillary fee revenue such as the sale of frequent flier miles. To determine how those fees impacted individual travelers, the study used passenger information released by the airlines in their Q4 2010 earnings releases, with the exception of two airlines that did not disclose that data. For those airlines, the study estimated 2010 passenger volume based on the January-November 2010 data gathered by BTS and projected December volume.
The Consumer Travel Alliance (CTA) is a nonprofit, nonpartisan organization that works to provide an articulate and reasoned voice in decisions that affect consumer travelers. CTA’s staff gathers facts, analyzes issues, and disseminates that information to the public, the travel industry, regulators and policy makers. Visit www.consumertravelalliance.org.
The Open Allies for Airfare Transparency, a coalition representing all of the stakeholders in the managed travel community, works to promote price transparency and full access to airline pricing and fee information. Visit www.faretransparency.org or on Twitter at @openairfare.
Founded in 1994, Business Travel Coalition empowers corporate travel managers to influence issues of strategic importance to their organizations. Visit www.businesstravelcoalition.com.