Government Orders More Transparency For Airline Fees

The reason airlines charge fees for checked bags and peanuts is so they don't have to raise their fares as much. If airlines had to raise fares to reflect the true cost of flying, passengers might be less likely to fly, or would choose another airline.

But the fact is, consumers end up paying what amounts to a higher fare, when you factor in fees, so wouldn't it be better if the consumer knew what she was going to be paying to get from Cleveland to Kansas City?

New rules

The U.S. Government thinks so, and the Department of Transportation has issued new rules requiring airlines to be more upfront about the fees they charge. They don't limit those fees, just require that they be fully disclosed. Advertisements, for example, will have to disclose the full price, including taxes.

The new rules also require airlines to increase the compensation paid to passengers who are involuntarily bumped from flights. For the longest delays, this compensation could now be as much as $1,300.

You don't pay for lost bags

The rules also require airlines to refund checked bag fees if those bags are lost during a flight. And the four-hour limit for domestic flight tarmac delays will be expanded to include international flights.

“Airline passengers have a right to be treated fairly,” said Transportation Secretary Ray LaHood. “It’s just common sense that if an airline loses your bag or you get bumped from a flight because it was oversold, you should be reimbursed. The additional passenger protections we’re announcing today will help make sure air travelers are treated with the respect they deserve.”

Specifically, the new rules require airlines:

• To refund any fee for carrying a bag if the bag is lost.  Airlines will also be required to apply the same baggage allowances and fees for all segments of a trip, including segments with interline and code share partners.  Airlines are already required to compensate passengers for reasonable expenses for loss, damage or delay in the carriage of passenger baggage
• To prominently disclose all potential fees on their websites, including but not limited to fees for baggage, meals, canceling or changing reservations, or advanced or upgraded seating.   In addition, airlines and ticket agents will be required to refer passengers both before and after purchase to up-to-date baggage fee information, and to include all government taxes and fees in every advertised price.  Previously, government taxes and fees were not required to be included in the up-front fare quotation
• To double the amount of money passengers are eligible to be compensated for in the event they are involuntarily bumped from an oversold flight.  Currently, bumped passengers are entitled to cash compensation equal to the value of their tickets, up to $400, if the airline is able to get them to their destination within a short period of time (i.e., within 1 to 2 hours of their originally scheduled arrival time for domestic flights and 1 to 4 hours of their originally scheduled arrival time for international flights).  Bumped passengers are currently entitled to double the price of their tickets, up to $800, if they are delayed for a lengthy period of time (i.e., over two hours after their originally scheduled arrival time for domestic flights and over 4 hours after their originally scheduled arrival time for international flights).  Under the new rule, bumped passengers subject to short delays will receive compensation equal to double the price of their tickets up to $650, while those subject to longer delays would receive payments of four times the value of their tickets, up to $1,300.  Inflation adjustments will be made to those compensation limits every two years.
• To allow reservations to be held at the quoted fare without payment, or cancelled without penalty, for at least 24 hours after the reservation is made, if the reservation is made one week or more prior to a flight’s departure date. 
• To promptly notify consumers of delays of over 30 minutes, as well as cancellations and diversions. 
• To report lengthy tarmac delays at U.S. airports with DOT, including data for international flights and charter flights.  Previously, only the 16 largest U.S. passenger carriers were required to file this data, and only for domestic scheduled flights.
• To refrain from post-purchase fare increases unless they are due to government-imposed taxes or fees, and only if the passenger is notified of and agrees to the potential increase at the time of sale.

Most provisions of the rule will take effect 120 days after its publication in the Federal Register.  The final rule, proposed rule and comments are available on the Internet at www.regulations.gov, docket DOT-OST-2010-0140.