Key Takeaways. Airlines are facing scrutiny from lawmakers. A new Senate panel report found that airlines generate billions of dollars in ‘junk fees’ for seats and baggage. The Senate Permanent Subcommittee on Investigations said Tuesday it will hold a hearing next week on these fees and call airline executives to testify. Five airlines cited in the report collected more than $12 billion in seat fees from 2018 through 2023.
Airlines and their ‘junk fees’ are in the crosshairs of Congress. The Senate panel’s new report slams the billions of dollars in fees that airlines take in each year and claims they far outweigh the actual cost of the services. The Senate Permanent Subcommittee on Investigations said in a report Tuesday that airlines’ fees for services like checking a bag and reserving a specific seat are often calculated with algorithms that vary at each purchase and have little to no connection to the actual cost of the service. Lawmakers plan a hearing for Dec. 4 and executives from five airlines will be called to testify. The report says five U.S. airlines—Delta (DAL), United (UAL), American (AAL), and lower-cost competitors Spirit and Frontier (ULCC)—collected $12.4 billion in seat fees from 2018 through 2023. Last year, United took in more seat fees than checked-bag fees for the first time since at least 2018. The report also said Spirit and Frontier offered incentive payments to gate agents who caught potential baggage rule violations, which lawmakers claimed often forced consumers to pay relevant fees or risk missing a flight. Additionally, the report alleged that airlines can artificially reduce their tax burden by classifying some fees as ‘optional’ and avoiding the 7.5% tax rate on airfare. Airlines have found more places to tack on fees in recent years. Delta recently told investors that its ‘premium’ offerings should outpace revenue of the main cabin in coming years. Earlier this year, the Department of Transportation (DOT) said airlines would now be required to disclose baggage and cancellation fees upfront, which could save consumers up to $500 million annually if they avoid surprise fees. The Senate subcommittee recommended various follow-ups, including the DOT collecting more specific data on junk fees and investigating whether consumers have been harmed by them and assessing penalties as needed.
