National Consumers League

NCL letter to Committee on Commerce, Science, and Transportation in support of Fair Fees Act

June 28, 2017

The Honorable John Thune
Chairman
Committee on Commerce, Science, and Transportation
United States Senate
512 Dirksen Senate Office Building
Washington, DC 20510 

The Honorable Bill Nelson
Ranking Member
Committee on Commerce, Science, and Transportation
United States Senate
512 Dirksen Senate Office Building
Washington, DC 20510

Dear Senators Thune and Nelson,

The National Consumers League (NCL) urges you to support the FAIR Fees Act of 2017. The bill, sponsored by Senators Markey and Blumenthal will increase competition and benefit consumers who are increasingly abused by the airlines’ nickel-and-diming practices.

Thanks to unchecked consolidation, four major airlines now control more than 80% of all domestic flights. This unprecedented concentration of power has allowed the proliferation of punitive add-on fees to spread unchecked. Through an industry-wide “unbundling” strategy, the three biggest U.S. airlines -- United, American, Delta -- increased their ancillary fees revenue from $5.3 billion in 2008 to $14.69 billion in 2015, a staggering 177% increase. [1] U.S. air carriers, legally barred from colluding on fares, have shown a willingness to collaborate on fees. In 2013, for instance, the three largest domestic airlines all increased their cancellation/change fees from $150 to $200 within two weeks of each other. [2]

The massive increase in ancillary fees coincided with a long period of low fuel costs and historically high profits for the airlines. [3] In a truly competitive marketplace, airlines would have shared their savings with consumers to increase their market share, or at the very least, the increase in fees would have coincided with additional service. Unfortunately for consumers, the ancillary fees charged by the airlines bear no relation to the actual cost for the airline to provide the service that these fees allegedly support.

Fortunately, the FAIR Fees Act, which received bipartisan support when it was considered last year, would rein in this abusive practice. Under the legislation, airlines would be prohibited airlines from charging cancellation, baggage or other ancillary fees that are “unreasonable or disproportionate to the costs incurred by the air carrier,” as determined by the Department of Transportation.

Increasing competition is the best solution for improving consumers’ air travel experience. In the absence of competition, rules banning unfair and deceptive practices, such as advertising low fares only to slam consumers with large ancillary fees that bear no relation to the cost of providing the service is the next best step. NCL urges you to support the bipartisan FAIR Fees Act, and we hope we can count on your help in advancing this common sense pro-consumer legislation through committee.

Sincerely,

Sally Greenberg
Executive Director
National Consumers League

CC: Members of the Senate Commerce Committee

[1] IdeaWorksCompany.com. 2016 CarTrawler Yearbook of Ancillary Revenue. September 20, 2016. Online: https://www.cartrawler.com/ct/media/2016/09/CarTrawler-ancillary-revenue-yearbook-2016.pdf

[2] Mayerowitz, Scott. “Analysis:Airline mergers have already led to higher fares,” Associated Press. August 14, 2013. Online:http://fortune.com/2015/11/18/airline-fees-customers/http://www.mercurynews.com/travel/ci_23861826/analysis-airline-mergers-have-alreadyled-higher-fares

[3] Mouawad, Jad. “Airlines Reap Record Profits, and Passengers Get Peanuts,” New York Times. February 6, 2016. Online: http://www.nytimes.com/2016/02/07/business/energy-environment/airlines-reap-recordprofits-and-passengers-get-peanuts.html