Travelers to Airlines: "Enough, Already!"

Ed Perkins, February 18, 2015
Fares from Washington DC:

    "I'm as mad as hell, and I'm not going to take this anymore!" Peter Finch's classic line from the movie Network may have been about television, but it seems appropriate for airline travelers as well. Two prominent airline user groups have recently asked the Department of Transportation (DOT) to correct two egregious abuses that the big airlines apparently decided to ignore.

    Excessive Ticket-Change Fees: Last week, FlyersRights.org, the big advocacy group for air travelers, petitioned the DOT to limit the amount that international airlines can charge to change nonrefundable tickets, at a cap of $100. When airlines first started assessing change fees, they were a reasonable $25 to $50, but in recent years, fees on international tickets have risen to a typical $300 and as high as $700 in some cases, which is clearly unreasonable.

    Nobody has a quarrel about the basic idea of change fees. Originally, when airlines first started issuing nonrefundable tickets, they were really nonrefundable: Change the trip; lose the ticket (except for a few specified reasons, mainly medical). But with the rise of "desktop forging," the airlines couldn't cope with the flood of phony "doctor's letters." In response, the airlines adopted a new approach: You won't get your money back, but if you cancel a trip, you can retain the cash value, less a fee, and apply it to a future ticket. This was a sensible market-based solution, fair to everyone. Unfortunately, the airlines later decided to view change fees as a cash cow rather than keep fees reasonable, and they raised the fees to current gouge levels.

    Despite deregulation, the DOT retains the authority to require that fees in international air travel be "reasonable." In the past, the DOT has chosen to ignore that authority. But as a result of failure to enforce reasonability, airlines have raised fees well above a reasonable level. In effect, FlyersRights is saying to the DOT, "It's time to step up and do what you're supposed to do."

    Outrageous Fuel Surcharges: Earlier this month, the Business Travel Coalition (BTC) asked the DOT to investigate excessive airline fuel surcharges. BTC cited a case where the fuel surcharge exceeded the "base fare," and I've noted many similar cases. Clearly, these levels of fuel surcharges have nothing to do with the real cost of fuel or any other identifiable cost. Instead, they're just a way to keep base fares artificially low. And, as such, they're a scam.

    Splitting a true fare into a phony low-ball base fare plus a surcharge doesn't scam the typical consumer who is buying a ticket. Although airlines originally tried to separate fuel charges, the DOT said, "No, you can't do that; you have to include all the fees in what you post as the fare." But consumers are scammed in other situations: On a "free" companion ticket, for example, the companion has to pay the surcharge, often more than the coupon covers. Frequent flyers on some lines—mainly foreign—have to pay the surcharge on supposedly "free" award travel.

    High phony surcharges scam business travelers more than consumers. A company with a contract providing, say, 10 percent discounts, can take the discount only on the low-ball base fare, while paying the full surcharge. That's one reason BTC is involved. And BTC says its case remains valid even when an airline renames a fuel surcharge as a "carrier-imposed fee."

    Airline Response: At this writing, airlines haven't responded to either proposal yet, but you can bet they will whine along the line: "More unnecessary regulation—more government interference in our business. We should let the marketplace decide these issues."

    It's hard to see how airline managements can remain so tone-deaf about these abuses, but they are. The sad fact is that most airline consumer-protection regulation has been in response to serious airline abuses. The airlines knew about those abuses, could have handled them as market responses, but didn't. I'm a firm believer in a free market. But when the market fails, the only recourse is government action.

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    This article was published by SmarterTravel under the title Travelers to Airlines, "Enough, Already!".  Follow Ed Perkins on Google+ or email him at editor@smartertravel.com.

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