The Navigator: The great airline fee grab

Together, those fees generated more than $10 billion for the airline industry worldwide in 2011, according to a recent study by the airline consultancy firm IdeaWorks. For many airlines, the fees made the difference between a profit and a loss, and in a few instances, they might have made the difference between survival and liquidation.

But at what cost? “From the passenger’s perspective, the price of that $10-plus billion is the truth,” says Charles Leocha, president of the Consumer Travel Alliance and the consumer representative to the DOT’s Advisory Committee for Aviation Consumer Protection. “Somewhere during the booking process, the passengers weren’t told the full cost of air travel.” (Disclosure: I co-founded the Consumer Travel Alliance and serve as its volunteer ombudsman.)

(Alla Dreyvitser/The Washington Post)

It’s easy to mislead customers, even when you’re complying with government regulations. Airlines do it by not including all charges in the price of a ticket, making the fare seem less than it is. And history lends a hand. Traditionally, making a seat reservation, paying for a ticket by credit card or printing a boarding pass at the airport has been included in the fare price. But now, the airlines have quietly “unbundled” those services while doing little or nothing to inform the public that tickets now don’t include them.

Leocha says that regulators are struggling with how to address what he sees as unfair and deceptive pricing practices. Strictly speaking, the fees now being charged by airlines are completely legal, and their disclosure meets all government standards. Yet many passengers still feel duped when they unexpectedly have to pay extra for something while they’re flying. More than half of the passengers surveyed by Harris said that they’re still being surprised by fees after they buy their airline tickets.

The problem is simple: In deciding to shift to a fee-based system for airline tickets, airlines did their homework, making sure that every step they took was legal, though not necessarily transparent.

The solution won’t be so easy. It will take creative regulations or new legislation to overcome misleading airline ticket prices. And both of those routes mean that consumers won’t see solutions for more than a year.

But a little pressure from the flying public could bring a fix closer. That’s what happened to Allen when he was faced with the change fee from United. He sent a polite e-mail to the airline’s director of customer care and copied me, explaining that he thought the charge was absurd. “Surely,” he wrote, “you can’t believe that anyone who has been charged such a fee would ever fly with United again.”

To his surprise, he received a call a few days later. A United representative reiterated the company’s position that the fee was correct but then added that, as a goodwill gesture, it would waive it.

That decision, as I noted a few days ago on my customer-service blog, gives me hope that airlines will see that fees — and the way they’re being charged — are not an effective long-term business model. And it makes me think that airlines can find a smarter way of making money long before any government action is taken.

Elliott is National Geographic Traveler magazine’s reader advocate. E-mail him at chris@elliott.org.