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Groups call out airlines for pocketing hidden fees

Wednesday, September 14, 2011

Consumer Groups Call Out Airlines for Pocketing Tax Monies, Hidden Fees

WASHINGTON, D.C. – In a letter to the CEO of the Air Transport Association, a coalition of consumer interest groups today condemned airline executives for two major anti-consumer moves over the last few months — pocketing tax monies that should have gone to consumers and continuing to obscure their proliferating airline fees.
First, many airlines chose to pocket nearly $500 million during the temporary shutdown of the U.S. Federal Aviation Administration (FAA) rather than refund the discontinued excise tax charges and other government fees. The Consumer Travel Alliance, Consumers Union, National Consumers League, Consumer Action, US PIRG, AirlinePassengers.org, Association of Airline Passenger Rights and Consumer Federation of America noted in the letter that the majority of airlines actually raised their airfares rather than pass this money onto consumers as savings.
The FAA’s taxing authority expired on July 23 when Congress failed to extend the reauthorization of the agency. At the same time, the Air Transport Association was delivering newspaper advertisements to Senate and House offices, calling for tax reductions in order to provide consumers more bang for their dollar.
The airlines that increased their airfares, were able to collect nearly $70 million dollars a day, almost $500 million in total, before the FAA’s taxing authority was reinstate on Aug. 8.
“This could have been a profound teaching moment,” the consumer interest groups wrote, “regarding the benefits of lower aviation taxes and fees. Instead, we are chagrined that some airlines chose to pocket the substantial windfall created by the expiration of taxing authority. Rather than doing right by their customers, most airline CEOs decided to line their corporate pockets.”
The letter also urged the ATA to insist the airlines adopt greater transparency with respect to airline fees that can add substantial amounts to ticket prices. When the Department of Transportation’s (DOT) latest rules came into effect requiring airlines to inform consumers of the variety of optional fees related to the cost of an airline ticket, many of ATA airline members chose to present the information in ways that do not meet the test for a “prominent” link on the home page. This is despite the DOT’s clear intent to provide transparency for consumers with respect to airline fees that can add substantial amounts to ticket prices.
“Actions speak louder than words,” the groups wrote. “Airlines, like all businesses, should be driven by customer service, price transparency and honest disclosures. Suffice it to say, we are disappointed in most of the airline industry’s response to the new DOT rules.”
The consumer groups are calling for a meeting with ATA and making sure that the Secretary of Transportation and the appropriate congressional committee chairmen and ranking members are aware of these anti-consumer airline actions.
Separately, Consumers Union filed formal comments with DOT regarding its notice of proposed rulemaking on airline baggage fees and other charges, calling for greater transparency so consumers know the actual costs of their travel. CU filed the comments in cooperation with NCL, CFA, and Consumer Action.
To learn more about these consumer interest groups visit their websites:
AirlinePassengers.org, www.airlinepassengers.org
Association of Airline Passenger Rights, www.flyfriendlyskies.com
Consumer Action, www.consumer-action.org
Consumer Federation of America, www.consumerfed.org
Consumer Travel Alliance, www.consumertravelalliance.org
Consumers Union, www.consumersunion.org
National Consumer League, www.nclnet.org
U.S. PIRG, www.uspirg.org

Kara Kelber, 202-462-6262