February 22, 2016
Hartford, CT–Good morning. My name is John Breyault and I am the Vice President of Public Policy, Telecommunications and Fraud at the National Consumers League. Based in Washington, DC, NCL is the nation’s oldest nonprofit consumer and worker advocacy organization.
Before I begin, I’d like to thank Senator Blumenthal for inviting NCL to speak today and for his leadership in the U.S. Senate. Since his days as a U.S. attorney, state legislator and Attorney General here in Connecticut and now as a U.S. Senator in Washington, he continues to be one of the greatest friends consumers have.
I am here today to express the concerns of millions of travelers nationwide at the ever-growing list of fees that the American airline industry is demanding from its customers. This is an industry that in less than a decade has consolidated from nine national carriers to just four major ones. Combined, American, Delta, Southwest and United control 80% of the market for domestic air travel. Thanks to this consolidation, cheap fuel, reducing seat sizes and a litany of fees, the industry last year posted its highest profits on record — $14.1 billion for the Big Four alone. And the industry’s record profits are set to continue for the foreseeable future – $33 billion in 2016 according to the International Air Transport Association.
While we applaud the industry’s ability to make money for its workers and shareholders, we believe that these “blowout” profits (as one analyst put it) are coming at the expense of consumers’ pocketbooks and safety.
We share Senator Blumenthal’s concerns about the proliferation of egregious add-on fees in the air travel industry. Only in an industry as opaque as this one could they expect to get away with calling a $650 add-on fee a “carrier-imposed surcharge.” That’s on top of $200 cancellation fees, $25 bag fees, $125 in-cabin pet fees (American), $150 unaccompanied minor fees (Delta), $25 reservation by phone fees (JetBlue), $75 name change fees (Frontier) and literally dozens of other penalties and add-on costs. For goodness sake, there’s even a $150 antler fee, per rack! (Delta)
These charges can add hundreds of dollars to the price of a ticket, yet consumers too often have to click through page after page of airline websites to get an accurate picture of what flying will actually cost them. And forget about being able to easily compare prices across airlines. For far too many consumers it feels like you need to break out a slide rule just to figure out what is the best deal for flying to grandma’s house. And don’t let the airlines kid you. All this nickel-and-diming adds up to big bucks. Cancellation fees alone contributed an estimated $3 billion in revenue for the industry in 2015 (BTS). I’ve seen no indication that these fees are in any way related to cost for the airlines. It appears that “whatever the market will bear,” is the modus operandi when it comes to airline fees.
Consumers are fed up and are speaking out. Last week, the U.S. Department of Transportation reported a 30% year-on-year increase in consumer complaints about the airlines. This comes despite repeated assurances from the industry that they are reinvesting revenue from all those fees in an improved customer experience.
Our simple question is this: “If, as the airlines argue, consumers are willing to put up with all the fees as long as ticket prices are low, why are complaints skyrocketing?”
Airlines are, of course, free to charge whatever fees they want, but they shouldn’t be able to hide those costs from consumers by making fee information difficult to obtain. Consumers should be able to easily and accurately compare the cost of flying — including add-on fees — across airlines so that they can get a full picture of exactly how much a particular trip is going to cost.
This is why we feel it is so important for the Department of Transportation to require mandatory reporting of all ancillary fees. The DOT has proposed rules that would require basic reporting of such fees. However, we believe these rules can and should require much greater detail from the industry. Should the DOT fail to put in place adequate disclosure rules for consumers, we would urge Congress — with the help of leaders like Senator Blumenthal — to step in and require greater fee transparency. We hasten to add that disclosure is only a first step. Reining in these punishing fees is high on NCL’s list of much-needed consumer protections.
In conclusion, I would again like to express my thanks to Senator Blumenthal on behalf of the National Consumers League and consumers nationwide for raising this important issue. We look forward to continuing to work with him and other pro-consumer leaders in Congress to push forward reforms that promote fair dealing and fair treatment of airline passengers.