U.S. airline revenue from carry-on baggage and priority boarding fees increased from $6.3 billion in 2010 to $7.1 billion in 2016, according to a recently-published report on airline fees for optional services from the U.S. Government Accountability Office (GAO).
Since 2008, the U.S. commercial airline industry has increasingly charged fees for optional services such as seat selection and baggage options that were previously included as part of the purchase of a ticket.
Three years later, the U.S. Department of Transportation (DOT) issued a rule requiring that specific U.S. and foreign commercial air carriers disclose information about optional service fees on their websites.
The increase in fees prompted Congress to task GAO with reviewing a number of issues related to optional service fees, including how U.S. airlines have modified their pricing of optional services, the factors U.S. airlines consider when determining how much to charge for a service, and the actions DOT has taken since 2010 to improve the transparency of optional service fees.
The report found that each of the 11 U.S. airlines examined by GAO charged fees for “preferred” seating, which will sometimes include more legroom or a seat closer to the front of the economy cabin.
When asked about the increase in fees, airline officials cited competition and customer demand as factors they consider whether and how much to charge for optional services. Nine out of ten airlines interviewed by GAO stated that the “unbundling” process allows customers to personalize their flight experiences in order to offer lower base airfares to customers.
While the unbundling process may have provided more options for customers, GAO found that on average customers who paid for at least one checked bag paid more in total for the airline and bag fees than they did when airlines included checked baggage with the price of a ticket.
To address pricing transparency issues, DOT has proposed a number of actions including monitoring and enforcing airlines’ compliance with existing transparency regulations, collecting and responding to consumer complaints, collecting additional data on revenue generated from fees, and educating travelers about existing regulations and consumer rights related to optional service fees.
GAO noted that while transparency issues still exist, DOT is conducting ongoing regulatory proceedings in order to address those concerns.
The office offered no recommendations in its report.