Report: Airlines made over $7.1 billion in checked baggage and c - KCTV5

Report: Airlines made over $7.1 billion in checked baggage and changed reservation fees in 2016

Updated:
© iStockphoto.com / Jeffrey Smith © iStockphoto.com / Jeffrey Smith


By Joan Lowy


Travelers who check at least one bag when flying domestically are paying more overall than they did before airlines began unbundling fares in 2008 and charging separately for checked baggage, a government watchdog said Wednesday.

A report by the Government Accountability Office said airline officials told GAO investigators that base airfares are now lower than before airlines began separately charging passengers for checked bags, reservation changes, priority boarding and other services. But the GAO's review of studies that have examined the effect of bag fees on ticket prices shows that charging separately for bags reduced fares by less than the new bag fee itself.

"As a result, customers who paid for checked bags paid more on average for the combined airfare and bag fee than when the airfare and bag fee were bundled together," the report said. "Conversely, passengers who did not check bags paid less overall."

One study found airlines with bag fees lowered fares to appear more competitive and then made up the lost revenue in bag fees. Another study found declines in airfares amounted to less than the bag fee, so on average the combined total of the fare and bag fee increased.

Airlines collected $7.1 billion in revenue from checked bag and changed reservations fees in the federal budget year ending Sept. 30, 2016, the GAO said. Those are the only fee revenues that airlines are required to report to the government.

The Department of Transportation said Wednesday that airlines collected nearly $1.2 in checked bag fees during the seconded quarter of this year. That's a record and the fifth consecutive quarter that bag fee revenues exceeded $1 billion.

"At this rate, passengers are going to have to start showing up with a suitcase full of clothes and a suitcase full of money just to get on the plane," said Sen. Bill Nelson, D-Fla., who requested the report. "It's high time the airlines rein in these outrageous fees."

Airlines for America, a trade association, said fares are "historically low and have trended that way since deregulation" in 1978.

The group, citing federal figures, noted "we are in the third consecutive year of real declines in domestic airfares, and year after year we continue to see record numbers of flyers taking to the skies."

But the report said the Transportation Department's data had serious limitations that may cause fares to appear lower than they actually are.

Consumer advocates and online travel agents also told GAO investigators that the proliferation of new fees for services means flyers aren't always able to determine the full cost of their travel and compare prices across airlines before buying tickets.

Congress told the Transportation Department to issue new rules requiring quick automatic refunds for bag fees when checked luggage isn't delivered, but the department hasn't yet acted on the directive.

--The Associated Press

The original "Report: Airlines made over $7.1 billion in checked baggage and changed reservation fees in 2016" article can be seen here.

© 2017 Inc.com.
All rights reserved.
  • Money Tips from It's Your MorningMore>>

INFORMATIONAL DISCLAIMER The information contained on or provided through this site is intended for general consumer understanding and education only and is not intended to be and is not a substitute for professional financial or accounting advice. Always seek the advice of your accountant or other qualified personal finance advisor for answers to any related questions you may have. Use of this site and any information contained on or provided through this site is at your own risk and any information contained on or provided through this site is provided on an "as is" basis without any representations or warranties.
Powered by Frankly
KCTV 5 News

Online Public File:
KCTV  KSMO

Powered by WorldNow CNN
All content © 2017, KCTV; Kansas City, MO. (A Meredith Corporation Station) . All Rights Reserved.
For more information on this site, please read our Privacy Policy, and Terms of Service, and Ad Choices.