Airline execs to attend hearing on junk fees
A U.S. Senate subcommittee is set to question airline executives on Wednesday about so called “junk fees.”
WASHINGTON – The U.S. Senate Permanent Subcommittee on Investigations will hold a hearing Wednesday with five major airline executives about the rise of ancillary or “junk” fees and its impact on consumers.
The hearing comes on the heels of a Majority staff report released on Nov. 26 revealing how major airlines have increasingly used junk fees to boost their revenue, resulting in higher costs and negative experiences for consumers. Today’s hearing comes as millions of Americans prepare to travel for the Christmas holiday.
The executives expected to testify include:
- Steve Johnson, Vice Chair and Chief Strategy Officer, American Airlines
- Peter Carter, Chief External Affairs Officer, Delta Air Lines
- Andrew Nocella, Executive Vice President and Chief Commercial Officer, United Airlines
- Robert Schroeter, Senior Vice President and Chief Commercial Officer, Frontier Airlines
- Matthew Klein, Executive Vice President and Chief Commercial Officer, Spirit Airlines
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“Our investigation has exposed new details about airlines exploiting passengers with sky-high junk fees,” U.S. Senator Richard Blumenthal (D-CT), who chairs the subcommittee, said in a news release. “This report pulls back the curtain on tactics like dynamic pricing that burden travelers and boost airline revenue. I will be asking airlines to justify these practices when they testify on December 4th before my Permanent Subcommittee on Investigations.”
Sen. Blumenthal went on to say that over the holidays, travelers would be charged “millions of dollars in fees that have no basis in cost to the airlines but simply fatten their bottom lines.”
Last year, the subcommittee launched its investigation into airline junk fees by seeking information from three major airlines – American Airlines, Delta Air Lines, and United Airlines – as well as two “ultra-low-cost” carriers: Frontier Airlines and Spirit Airlines.
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According to Blumenthal’s office, Frontier and Spirit helped pioneer many of the fee structures now used throughout the industry, including “unbundling” or charging separately for goods and services that were once included in the price of a ticket. Staff said the report “details these five airlines’ strategies to grow revenue from ancillary fees, including previously undisclosed data about these practices.”
The report alleges that Frontier and Spirit pay incentives to gate agents for bag policy enforcement, and that airlines are increasingly using algorithms to set fees and are investing in ways to target pricing based on customer information. It also found that five airlines are making more money from seat fees than ever before.
Additionally, the report claims that the price of ancillary fees at American, Delta, United, Frontier, and Spirit is not tied to each airline’s cost of providing a service and that Frontier, Spirit, and United appear to avoid the federally mandated transportation excise tax by labeling portions of their charges as nontaxable fees.
The hearing will be held at 10 a.m. in Room SD-342 of the Dirksen Senate Office Building.
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