Watchdog: Airline baggage, cancellation fees rise to $7B

The amount of money that airlines reap from baggage and cancellation or change fees each year has increased to more than $7 billion, according to a new watchdog report.

The Government Accountability Office (GAO) found that the total annual revenue from those two fees has increased from $6.3 billion in 2010 to $7.1 billion in 2016.

The two fee categories are the only ones that airlines are required to disclose to the government.

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The report, which was requested by Sen. Bill Nelson (D-Fla.) and released Wednesday, comes as the airline industry has come under heavy scrutiny for its treatment of passengers this year.

“Going to an airline check-in counter should not result in a last-minute shake down,” Nelson, the top Democrat on the Senate Commerce, Science and Transportation Committee, said Wednesday.

“It’s time for the airlines to stop run-away fees.”

Airline officials told the GAO that the a la carte model gives passengers the opportunity to better customize their flights and only pay for the services that they need.

The industry maintains that this unbundling process has allowed them to offer lower base airfares to customers. Indeed, data from the Department of Transportation (DOT) shows that ticket prices have been on the decline.

But the GAO report found that on average, customers end up paying more when they buy a base airfare and separately purchase at least one checked bag, as opposed to buying airfare that already includes checked luggage.

In addition to increasing baggage and cancellation fees, U.S. airlines have also introduced a variety of new fees for “optional” services in recent years, such as carry-on bags, seat selection and priority boarding.

Airlines are not required to report those fees to the DOT, however. The agency did issue a final rule in 2011 requiring airlines to disclose information about optional service fees on their websites.

But consumer groups say it’s still difficult for passengers to compare airfare ticket prices, fees and associated rules.

“Since 2008, U.S passenger airlines have increasingly charged fees for optional services that were previously included in the price of a ticket,” the report says. “Consumer advocates have raised questions about the transparency of these fees and their associated rules.”

Efforts to overhaul the airline industry’s customer service policies have gained steam in Congress this year following a string of controversies, including a passenger being violently dragged off a United Airlines flight.

The Commerce Committee attached language to an aviation bill aimed at reining in fees. The provision would prohibit airlines from imposing ancillary fees that the DOT deems unreasonable or disproportionate to the actual costs incurred by air carriers.