Airlines Charge Billions In ‘Junk Fees’ To Boost Revenue: Senate Report

Authored by Chase Smith via The Epoch Times (emphasis ours),

As millions of Americans prepare for record-setting air travel this holiday season, the Senate Permanent Subcommittee on Investigations (PSI) released a report on Nov. 26 detailing the growing reliance of major airlines on ancillary fees.

These charges, sometimes referred to as “junk fees,” have become a vital revenue stream for the airlines while travelers “confront more and increasingly complex fees and fewer options for avoiding them,” according to the report.

The report, led by the chairman of the subcommittee, Sen. Richard Blumenthal (D-Conn.), examines practices by American Airlines, Delta Airlines, Frontier Airlines, Spirit Airlines, and United Airlines.

It highlights the use of dynamic pricing, incentive programs, and other strategies the committee said are used to generate revenue from services that were previously included in ticket prices.

“Our investigation has exposed new details about airlines exploiting passengers with sky high junk fees,” Blumenthal said in a statement accompanying the report. “As we head into the Thanksgiving weekend, we regret that travelers will be charged millions of dollars in fees that have no basis in cost to the airlines but simply fatten their bottom lines.”

Among the findings, the report revealed that Spirit and Frontier paid $26 million to gate agents and personnel between 2022 and 2023 for enforcing baggage policies.

These incentives were designed to identify passengers who exceed baggage allowances, often leading to additional fees, the report stated. Frontier agents, for example, can earn up to $10 per bag flagged for a fee at the gate.

The report also explored how airlines use algorithms to adjust ancillary fees based on customer data. This approach allows fees for services like seat selection to vary significantly, even on the same flight.

Between 2018 and 2023, the five airlines generated $12.4 billion in seat fee revenue, with some charges reaching as high as $899 for premium seats.

The subcommittee further noted that these fees are not consistently tied to the airlines’ costs of providing the associated services. Airlines reported that they do not maintain granular cost data to calculate the expenses of baggage handling or seat assignments, raising questions about fee transparency.

In some cases, airlines classify charges as “optional” services to avoid federal transportation taxes, which are applied to the airfare. The report found that such practices create inconsistencies in how services are taxed across carriers, potentially complicating price comparisons for travelers.

Executives from the five airlines are scheduled to testify before the subcommittee on Dec. 4 during a hearing titled “The Sky’s the Limit—New Revelations About Airline Fees.” Topics for discussion include consumer complaints about fee practices and potential measures to improve transparency and fairness in airline pricing.

Delta and American Airlines referred The Epoch Times to industry lobbyist group Airlines for America (A4A) for a comment, who said they were deeply disappointed in the report.

“The report demonstrates a clear failure by the subcommittee to understand the value the highly competitive U.S. airline industry brings to customers and employees,” A4A told The Epoch Times. “Rather, the report serves as just another holiday travel talking point.”

A4A defended the use of ancillary fees, stating that these charges provide consumers with greater flexibility and affordability.

The lobbyist group said that modern air travel is more accessible than ever, a development they attribute to pricing models that allow travelers to pay only for the services they need.

A4A further noted that airlines fully disclose fees at the time of purchase and comply with all laws and regulations, including those governing taxes and fees, which can comprise over twenty percent of ticket prices. They described any suggestions of noncompliance as “uninformed and inaccurate.”

Delta in a separate emailed statement said: “Delta looks forward to the continued dialogue with the Subcommittee including appearing at next week’s hearing. For more than a year, Delta has voluntarily responded to the Subcommittee’s sweeping requests, including providing documents and information, responding to numerous rounds of requests and follow-ons, and providing a senior level employee and subject matter expert at the Subcommittee’s request for a lengthy interview to discuss ancillary fees.”

Spirit Airlines told The Epoch Times that the company has “a long history of offering affordable, low-fare flights, which has made travel more accessible for the public.”

“We are transparent about our products and pricing, our airport policies ensure Guests are treated fairly and equally, and we comply with all tax laws and regulations. We respectfully disagree with numerous statements and conclusions contained in the report.”

Spirit said they look forward to explaining their position at the December hearing and believe that it’s “time to come together and discuss meaningful initiatives that would even the playing field between larger and smaller airlines to benefit all travelers, including those who rely on airlines like Spirit.”

United Airlines declined to comment to The Epoch Times. Delta and Frontier Airlines did not respond to a request for comment from The Epoch Times.