Airlines Collected More Than $7 Bln In Baggage And Cancellation Fees

U.S. airlines collected a record $7.1 billion in revenue from fees for checked baggage and for changing or canceling reservations, reflecting a marked increase from 2010, according to a government report.

The U.S. Government Accountability Office or GOA said in a report that U.S. airlines’ revenue from these two fees increased to $7.1 billion in 2016 from $6.3 billion in 2010, in constant dollars.

These two fee categories are the only optional service fees for which revenues are separately reported to the Department of Transportation by the airlines.

“Since 2008, U.S passenger airlines have increasingly charged fees for optional services that were previously included in the price of a ticket, such as checked baggage or seat selection. Consumer advocates have raised questions about the transparency of these fees and their associated rules,” the GOA said.

In addition, selected U.S. airlines have introduced a variety of new fees for “optional” services and increased some existing fees since 2010. New fees for optional services such as fees for carry-on baggage and priority boarding have been introduced.

Airline officials told the GAO that charging fees for optional services allows the airlines to offer lower base airfares to customers.

Officials from nine of the ten selected airlines interviewed by GAO said that the process of “unbundling” allowed passengers to customize their flight by paying for only the services that they value.

Further, airline officials said they consider customer demand and willingness to pay when setting prices for optional services. A majority of the airlines also take into account competitors’ prices for similar services.

However, the GAO said that its review showed that on average, customers who paid for at least one checked bag ended up paying more in total for the airfare and bag fees than they did when airlines included checked baggage.

The air travel industry has always struggled to earn a good reputation for customer service. In April, a video showing a passenger being violently dragged off a United Airlines flight sparked outrage on social media and highlighted the airline industry’s controversial practice of overbooking flights.

Nevertheless, lower fuel costs have enabled airlines to reinvest profits on enhancing their in-flight services.

by RTT Staff Writer

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