In recent years, travelers have faced many extra fees when flying, like fees for checked bags, picking seats or even getting a little extra legroom. Now, lawmakers have made it clear they’re tired of this. During a heated Senate hearing, senators questioned airline executives about these “exploitative” fees that anger customers and drive them to spend more money.
A Mountain of Fees
The Senate investigation uncovered a staggering $12.4 billion in revenue that five major airlines – American, Delta, United, Frontier and Spirit – pulled in from seating fees between 2018 and 2023. Passengers have been annoyed by these surcharges, which have led to increased expenses and confusion while making travel arrangements. “Airlines these days view their customers as little more than walking piggy banks to be shaken down for every possible dime,” said Sen. Richard Blumenthal, a Democrat, without holding back.
Don't Miss:
- It’s no wonder Jeff Bezos holds over $70 million in art — this alternative asset has outpaced the S&P 500 since 1995, delivering an average annual return of 11.4%. Here’s how everyday investors are getting started.
- Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Last Chance to get 4,000 of its pre-IPO shares for just $0.26/share!
Blumenthal, who chairs the Senate’s Permanent Subcommittee on Investigations, shared that airlines aren't just adding fees – they're targeting individual passengers based on what they think they're willing to pay. These so-called “junk fees” include extra charges just for selecting a standard seat, whether by the aisle, window or even for a bit of extra comfort.
No Transparency, No Limits
Senators argued that these fees aren't based on any real cost to the airline. The Senate report found that airlines couldn't explain the real expenses behind these charges. Blumenthal noted that the prices aren't based on the service provided but are another way to bump up revenues.
Republican Sen. Josh Hawley joined in, harshly criticizing how airlines charge different baggage fees, even when people are on the same flight. "This is Russian roulette," Hawley said. "Nobody enjoys flying on your airlines. It’s a disaster. … It's absolutely terrible." He said that these fees make flying an increasingly miserable experience for most travelers.
See Also: The global games market is projected to generate $272B by the end of the year — for $0.55/share, this VC-backed startup with a 7M+ userbase gives investors easy access to this asset market.
Executives Defend Themselves
Executives from the airlines attempted to defend their methods by claiming that these fees provide flexibility. Delta’s executive Peter Carter said the company provides "options and value for every customer." At the same time, Stephen Johnson of American Airlines insisted they need to "appeal to the most budget-conscious customers." However, it did not sit well with the senators, who persisted in asking the executives why the fees were so inconsistent and why they kept going up.
The report also showed how budget airlines like Frontier ULCC and Spirit SAVEQ have been paying gate agents bonuses to strictly enforce baggage rules. Between 2022 and 2023, these airlines paid gate agents $26 million in bonuses for catching passengers with too-big bags. This often forced passengers to pay extra fees or even miss their flights. Frontier’s CEO, Barry Biffle, tried to justify it a day before by saying, "These are shoplifters. These are people that are stealing," referring to passengers trying to avoid bag fees.
Trending: During market downturns, investors are learning that unlike equities, these high-yield real estate notes that pay 7.5% – 9% are protected by resilient assets, buffering against losses.
Biden Administration Steps in
The Biden administration is also resisting these practices. President Biden has stated that families shouldn’t have to pay more simply to sit together as part of a larger fight against unjust “junk fees” in sectors including banking, hotels and, as of late, airliners. This push aims to make flying less of a headache and a bit more fair, especially for families hit hardest by these extra costs.
Blumenthal said his committee plans two more aviation-related reports before the end of the year. One key focus will be transparency – something the senators argued is sorely lacking in the current setup. "You charge people fees they know nothing about," said Hawley. "You harass them to death."
Read Next:
- Inspired by Uber and Airbnb – Deloitte's fastest-growing software company is transforming 7 billion smartphones into income-generating assets – with $1,000 you can invest at just $0.26/share!
- If there was a new fund backed by Jeff Bezos offering a 7-9% target yield with monthly dividends would you invest in it?
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.