BAGGAGE & OTHER FEES DRAFT SUMMARY

What’s Going on Here?

This is a summary of the discussion on the Baggage and Other Fees post between June 2 and September 10.  (On September 11, the post was closed to further discussion.)  The summary was written by the Regulation Room team based on all the comments people made.  This version is a DRAFT. We need YOUR help to make sure that nothing is missing, wrong or unclear.

Important dates:

Sept. 13 – Sept. 19:  Comments can be made here on the draft
Sept. 20:  Commenting on the draft summary closed
Sept. 20 – Sept.  22:  Regulation Room team reviews comments and revises draft
Sept. 23:  Final Summary of Discussion is posted on Regulation Room and submitted to DOT Department of Transportation as a formal comment in the official rulemaking record.  (Sept. 23 is the last day of the official commenting period.)

Things to keep in mind as you read through the draft summary and make comments:

1. The goal here is to give DOT the best possible picture of all the different views, concerns, and ideas that came out during the discussion.  This is NOT the place to reargue your position or criticize a different one.  Focus on whether anything is missing or unclear, not whether you agree or disagree.
2. Rulemaking is not a vote. DOT is not allowed to decide what to do based on majority rule.  (Why? See Effective Commenting).  Approximate numbers are provided in the summary only to give DOT a sense of the frequency of views, concerns, and ideas.

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The issues around baggage and other fees generated more discussion than any other post except Peanut Allergies.  There were 116 total comments:

• 93 were made by 80 users
• 23 were made by Regulation Room moderators

Commenters included primarily people who identified themselves as air travelers. Four who identified themselves as working for a U.S. air carrier, one as working for a travel agent or Global Distribution System (GDS), one who is a researcher/expert, and one who described their interest as  “other” also commented.

Although DOT’s proposal about baggage and other fees focuses on getting passengers better information about the nature and amount of separate charges, commenters clearly wanted to talk about regulating airlines’ power to continue unbundled pricing.  Many commenters want DOT Department of Transportation to limit unbundled pricing – although there is disagreement about what services should be bundled into the basic ticket price, and there are several proponents of continuing to allow airlines to use an a la carte pricing model.  In general, commenters agree that consumers should get full, clearly presented information about the elements of whatever pricing structure is used.  There is some concern, however, that consumers (especially infrequent travelers) will be confused by complex pricing schedules.  Although commenters want full disclosure of costs and fees, there is also an expressed need for an uncomplicated format that is consistently used by all carriers, regardless of size.

Note that because DOT’s proposals sparked discussion of airline pricing practices as well as information disclosure, there is significant overlap between comment on this post and on the Pricing and Advertising post.  We have not tried to combine overlapping comments, so the Pricing and Advertising  Draft Summary should also be consulted.

The focus on unbundling charges for air travel services led many commenters to complain that there is insufficient transparency about airlines’ operating costs.  Many express frustration about paying for services that used to be included in the basic ticket price and are suspicious that unbundled fees are not necessary to the industry’s survival.  Some argue that airlines are charging unreasonable prices and overcompensating their executives while reducing service quality.  Many note that international airlines do not charge for baggage fees, or otherwise “nickel and dime” passengers for services, and yet are able to maintain healthy profit margins.  Several commenters urge DOT Department of Transportation to require that consumers have access to more operating cost information, such as each airline’s cost per passenger seat mile.

Of all the services airlines have unbundled from the basic ticket price, baggage fees seem to create the most frustration.  At least 15 commenters want DOT Department of Transportation to require airlines to include at least one checked bag in the base ticket price.  It appears that commenters mean this to be one checked bag in addition to a carry-on, although this is somewhat ambiguous since only about half of them explicitly mention the carry-on allowance as well.  Several say they are not opposed to a baggage fee scheme in principle, so long as the first bag is “free.”  By contrast, a few of the 15 commenters favor including two checked bags in the base ticket price.  Many of the commenters acknowledge the appropriateness of reasonable weight limitations, and no one argues against extra fees for overweight bags.

About half a dozen commenters disagree, favoring an a la carte pricing model that would involve separate fees for baggage as well as other services.  These comments are discussed in the next section.

As part of a side discussion of whether there should be regulations requiring very large passengers to purchase two seats, a couple of commenters suggest that fees should be based on the combined weight of the passenger and his/her luggage.  In response, one commenter argues that such a scheme would be impractical and nearly impossible to implement.

Commenters debated the broader air travel impact of charging for checked baggage.  About a dozen commenters argue that the practice is counterproductive because it creates incentives for passengers to cram as much carry-on luggage as possible onto the plane. This causes boarding delays, increases security risks, heightens the potential for injuries from packed overhead compartments, and generally raises the stress level of flight attendants as well as passengers.

Several other commenters (most of whom identified themselves as business travelers) insist that checked-bag fees are not the main cause of increased carry-on volume.  They argue that travelers are motivated to carry-on luggage because it is quicker and more convenient (baggage handling at check-in and at arrival is time-consuming and inefficient) as well as more reliable and secure for valuable belongings such as laptops. Some commenters hope that DOT Department of Transportation will address the issue of carry-ons given the problems created by lack of overhead compartment space.  Many also express frustration with baggage policies that are inconsistent across airlines and airports.

Although DOT’s “full fare” proposal extends only to how price information is presented to consumers, commenters tended to use it as a springboard for discussing the best air travel pricing model: unbundled (“a la carte”) pricing vs. bundled pricing.  Nearly two dozen commenters participated.  Their discussion is sometimes ambiguous, for many speak in terms of how fares and fees should be “listed” or “posted.”  However, requiring that air travel providers list a hypothetical “full fare” price that includes the cost of some or all separate-fee services does not change airlines’ power to charge – or passengers’ ability to choose whether to pay – separately for those services.  Hence, much of the discussion makes sense only if commenters are debating whether DOT Department of Transportation should regulate unbundling practices.  This summary has tried to sort out commenter views about whether unbundling should be permitted from the question whether airlines that do unbundle services should be required to include a hypothetical “full fare” price paid by a consumer who buys all those services.

The roughly two dozen commenters who discussed bundled vs. unbundelled pricing are about evenly split on which is preferable.

Commenters who favor unbundled “a la carte” pricing support this model because it allows individuals to choose what optional services they want (checked bags, entertainment, food, etc.). These commenters assume that most travelers do not want many of the services that airlines are now pricing separately. Therefore, although they generally favor requiring airlines and other air travel sellers to prominently display the available unbundled options to consumers, some see little use in requiring ticket sellers to list an additional, hypothetical “full fare” price.  Others, though, support the idea of presenting consumers with both the “minimum” price (with no optional services included) and a “maximum price” (with all optional services included).  Some suggest listing the maximum price and giving consumers the ability to “remove” unwanted options to get at the amount they will have to pay to get only the extra services they wish. It is not always clear whether these latter commenters are envisioning the full maximum price (or the maximum price with individual-selected deductions) as just a planning device that enables consumers to  estimate the total they will end up paying — or whether they think airlines should have various fares that include different combinations of services.  What is clear is that all commenters advocate clear and open disclosure on exactly what consumers will get for the fare they paid.

Roughly the same number of commenters wants some form of DOT Department of Transportation regulation requiring a bundled pricing model, in which the carrier must include “traditional” services passengers expect to be part of the basic price of the ticket.  Some commenters describe unbundling as deceiving consumers about the true cost of their fare; one argues that pricing tickets by class (first, business, and economy) is the only kind of “unbundling” of services that is not a deliberate attempt to confuse and mislead consumers.  As far as what “traditional” services include, most agree on the following: seat assignment, baggage (see the previous section for amount), overhead space, bathrooms, fuel surcharges, taxes and other required fees. Several also include blankets and pillows. All agree that entertainment is not included. There is some disagreement about whether meals should be part of the bundle, at least on flights over 4 hours.

Whether or not they joined the discussion of pricing model, commenters generally agree that pricing information should be prominently displayed and widely disseminated both at the time of marketing/advertising and at the time of purchase.  There is, however, disagreement about exactly what information should be included, and how it should be disseminated.

More than fifteen commenters favor requiring disclosure of all optional and mandatory charges and fees.  They say that the format of disclosure should be prominent, readily understandable, and concise, and should make clear which items are mandatory and which are optional.  However, some commenters disagree with requiring air travel sellers to disclose all possible fees and charges in marketing and ticket-purchasing materials.  One argues that such a “laundry list” would be counterproductive because it would cause more confusion among passengers.  Another suggests that meals, entertainment, and other clearly discretionary traveler purchases do need not to be included.  Air travel pricing already is complicated – especially for infrequent travelers – and there is concern that additional rules about advertising should not make the problem worse.  All airlines (regardless of size) should use a standardized, uncomplicated format that is understandable to all consumers.  One commenter also suggests “Plain English (and maybe Spanish), written at a fifth grade level.”

One commenter, who self-identified as a ticket agent, emphasized that if air travel sellers other than airlines are included in new regulations, DOT Department of Transportation must make certain that a procedure is in place to ensure that travel agents and other third parties get full, current fee information from airlines.  Third party air travel sellers should not be burdened with the responsibility to constantly call the airlines to verify baggage and other fees.

Commenters have a wide range of views on where fee information should be listed.  Some go as far as advocating that detailed fee information should appear everywhere ticket price information appears — including itinerary print-outs and boarding passes. One commenter explained that including separate fee information on the boarding pass is far easier for business travelers (who seek reimbursement for additional charges such as baggage fees) than separate fee receipts provided at check-in.  Several commenters favor requiring that detailed fee information be posted on the websites of carriers and code-share partner, as well as on independent, aggregate websites.  Others want this information posted on the websites of online travel services,  as well available from travel agents and traditional travel agencies. One commenter suggests posting the information in the check-in area.

Nearly all of these commenters state that, although they would like to see pricing information available through all these mediums, the minimum necessary posting is airline websites and ticketing outlets, including online ticket services. Still, a few commenters argue that the only required posting should be on the carrier’s homepage.  These commenters believe passengers should be able to investigate and determine which carrier they wish to use and compare fee schemes on their own.

One commenter suggests that consumers be required to formally acknowledge their understanding of all fees before the ticket purchase can be processed.

Several commenters address concerns about fee changes. Some think this should be handled by requiring carriers to give advance notice: Several would require that fee changes be announced at least six months prior to taking effect. One commenter suggests a three-month advance notice requirement, but several respond that three months is too short, particularly for less-frequent travelers.

Several commenters, however, argue that advance notice requirements are good but travelers who buy their tickets far in advance should not be penalized.  They propose that whatever fees are in effect the day the ticket is purchased must be the fees the passenger actually pays, regardless of the fees in place on the date of travel.

Commenters generally agree that the fee structure imposed should be that of the issuing airline, not the carrier providing the service. Two commenters go so far as suggesting that the code partner’s fee should apply if less than the issuing airline.

Commenters also note the importance of providing purchasers information about any code share partner. One notes in particular that the issuing airline should inform travelers if its partner has more stringent restrictions on luggage that could potentially lead to additional fees (i.e. smaller overhead bins, which might require the passenger to check the bag).

Five commenters address refunds, arguing that carriers should be required to refund a baggage fee if the baggage is delayed, lost, or damaged.  For a more in-depth discussion of refunds see the Pricing and Advertising Summary.