Travelers feel the pinch as major airlines cash in on added service fees

John Yang:

The way we pay for air travel is changing. There are fees for things like checking a bag, picking a seat in advance or getting something to eat. What was once a budget airline tactic is now common practice. Worldwide fees account for about 20 percent of airline revenue. William Brangham has more.

William Brangham:

Is concerned about COVID has diminished Americans are returning to the skies in force. The number of people flying today has returned to pre pandemic levels. And airline companies are cashing in. Budget airlines like Spirit and Frontier have long been known for their litany of added charges, pay for a seat, pay for a carry on, pay for a drink.

But now other airlines have latched on to this same pricing model. And customers are paying for it shelling out nearly $118 billion a year in these extra fees. Oriana Pawlyk is POLITICO's aviation reporter and has been covering this.

Oriana thank you so much for being here. Why is it that this Allah carte pricing model has taken over? Is it I mean, is it simply because consumers are willing to pay for it?

Oriana Pawlyk, Aviation Reporter, POLITICO:

That's exactly right. I mean, it's a trend that works. As soon as people have more options, the more willing they are to buy into these options. I mean, if people have to get from destination A to destination B, and they have to pay for a certain amenities, they will do it if they want to.

Now the bigger airlines are using that same exact model, because it's a business practice that is working. And it's working for the ultra-budget carriers. And now it's going to be working for the big four carriers.

William Brangham:

And when you total up all of these things, you know, seat choice, snack choice, checking your luggage, do those things add up to that consumers are paying more for flights? Meaning could you argue that this is deceptive pricing?

Oriana Pawlyk:

Well, that's something for the transportation department to look into whether or not this is a deceptive practice. But I mean, it depends on what you're paying for a bag could cost up to $75 per bag. And as you add more on, then you're going to be paying more.

So yeah, it's getting more expensive as these ala carte options are starting to trickle into other types of services, whether you want Wi-Fi on a flight, whether you want that drink, or whether you want food on a longer like flight.

You know, these are all these types of things that when it comes to pinching pennies on the budget airlines, you're still going to end up paying more for some of the services just to get you from that destination to destination. But you're going to have a lot more to pay for once you get there.

William Brangham:

Is anybody complaining about this in an official way? And is it as you said the Department of Transportation is job to field those.

Oriana Pawlyk:

So the Transportation Department I think has had one of the largest volumes of consumer complaints over the last year. They actually have dispatched a team to look into some of these complaints. And of course, what their department looks into is whether or not the airline has unfairly charged a person for their flight in the event that it got canceled or delayed.

But of course, other consumers are going to be complaining about other things like what if that Wi-Fi didn't work on my flight and the airline refuses to pay me back for it. Those are things that people are going to be asking the Transportation Department to look into and whether or not this could be under the, you know, definition of deceptive practices and whether or not they could use a regulatory enforcement to try to see what these airlines are doing unfairly.

William Brangham:

What is the industry's take on all of this? I mean, I could see the argument that if you're a budget flyer and you want to take that middle seat and pack your own sandwich and just take a carry-on bag then you're saving some money so what is the problem here?

Oriana Pawlyk:

So this all started over a decade ago, as we said, because airlines wanted to save fuel costs. I mean, weight is a big problem when it comes to how many bags are coming on board, how many people are coming on board. And as airlines started to pack more people in, of course, the weight of the plane got heavier and heavier.

So when people started getting the bags on board, they said, well, you know, if you want to bring that you're going to have to get charged for it. And it proliferated into charging for a lot of these ala carte services, because people are willing to pay for it. So that's ultimately how this all started, just from the baggage standpoint. And now it's trickled its way into other types of services.

William Brangham:

I know that the Biden administration has been proposing rules to press companies to show the full price of an item or a service upfront, would that apply to airlines as well?

Oriana Pawlyk:

Yes, absolutely. The junk fees rule is something that they're taking very seriously. Ultimately, when you buy the buy your ticket upfront, the price doesn't always reflect what you're going to be paying for it, you know, there's many taxes that go into airline fees. But ultimately, once you get to that, you keep clicking that next button on the website. And then by the end of it, you see what the total cost of the ticket is you realize, I'm paying for much more than I actually saw when I Googled the original price tag of that flight.

So they're trying to get that transparency issue right up front. So people know, hey, am I buying a seat? How much is that going to cost? So when you're looking for that cheap flight, you know, you're going to want to hunt around to make sure you're getting the exact price point that you want and to know exactly what you're paying for when you start that process.

William Brangham:

If these practices are not found to be, quote, unquote, deceptive, technically deceptive, is this just something we're all going to have to live with. Because this is what consumers are willing to do. And airlines want to make that money.

Oriana Pawlyk:

As long as the options remain, and people continue to buy into that type of business market, then it's going to continue. Ultimately, yeah, as soon as people are going to buy into it like a subscription based model, like you and I would purchase Netflix or anything like that. It works and people are going to pay for it. So it's going to continue.

William Brangham:

Separately a judge recently blocked the merger of JetBlue and Spirit Airlines, arguing that that would be harmful to consumers. Is that a relevant factor here? And what does that tell us about the ongoing economics of airline flying?

Oriana Pawlyk:

For the last 20, 30 plus years, we've seen a, you know, big consolidation of the airline industry. And that's not a secret. Businesses want to grow, become monopolies and the airline market is no different. You've seen partnerships. You've seen cooperations from airline to airline overseas or domestic because they want to get these partnerships on board because ultimately, it gives their passengers fewer choices. And that means they're going to have to fly these certain airlines.

But you know, as the industry has grown tighter and tighter, and as the judge this past week blocked that from having the industry consolidate two airlines into one larger airline. You know, the variety is still there, but it's still a handful to only a few airlines than what it used to be back in the day.

William Brangham:

All right, Oriana Pawlyk of POLITICO, thank you so much for sharing your reporting with us.

Oriana Pawlyk:

Thanks.

John Yang:

JetBlue and Spirit Airlines are appealing the federal judge's ruling blocking their planned merger and the Justice Department is reviewing Alaska Airlines agreement to buy Hawaiian Airlines.