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At a committee hearing, members of Congress on Tuesday implored U.S. airlines to focus on customer service, telling several airline executives, including United Airlines CEO Oscar Munoz, that they and their constituents no longer will tolerate policies that do not prioritize passenger needs.
“Seize this opportunity,” Bill Shuster, a Pennsylvania Republican and the chairman of the House Transportation & Infrastructure Committee said, “Because if you don’t, we are going to come and you’re not going to like it.”
That Shuster used a hearing to threaten airlines in such harsh language was unusual. He has long been among the industry’s most passionate defenders, often siding with airlines on contentious issues. But on Tuesday, even he appeared skeptical, asking how airlines could treat some customers so dismissively.
United’s April 9 incident came up often, with Shuster and others asking how airlines could be so cavalier with how they oversell flights. Representatives also asked about other recent events, including a confrontation between an American Airlines crew member and a mother over a stroller. They questioned executives about other matters, too, including fees and a lack of competition in some markets.
“Two million people will fly today — or something close to two million,” Shuster said. “And they’re tired of being treated inappropriately and without courtesy. Something is broken, and the obvious divide between passengers and airlines needs to be addressed.”
Five executives appeared, representing Alaska Airlines, Southwest Airlines, American and United. Munoz, accompanied by United President Scott Kirby, was the only CEO present. William J. McGee, a consumer advocate, also joined the group.
Among the executives, Munoz was most contrite, repeatedly apologizing for the incident in which United employees in Chicago called airport security to remove a passenger from a flight. The passenger was seriously injured, and received a settlement from United after threatening to file a lawsuit. Munoz called it a “mistake of epic proportions,” and summarized several changes the airline announced last week to ensure nothing similar happens again.
“We had a horrible failure three weeks ago,” Munoz said. “It is not who we are. It is not this company. And frankly, it is not this industry.”
Still, Tuesday’s hearing was more of a fact-finding mission than anything else. Executives made few promises they had not previously announced. And though several airlines promised better training for airport agents, in many cases, executives defended the industry’s existing commitment to customer service.
Focus on overbooking
Several representatives wanted to know why most U.S. airlines often overbook flights, or sell more tickets than they have seats.
It was a question Bob Jordan, Southwest chief commericial officer, seemed to relish answering, since his carrier recently announced it would stop overbooking flights next week. One lawmaker asked if this policy change — Southwest will be only the second carrier to stop overbooking, along with JetBlue Airways — will cost profits. “We are not going to go broke,” Jordan said. “I promise you that.”
But other executives defended overbooking, arguing the practice helps keep airfares lower. They noted that, on many flights, not all passengers show up. If airlines don’t overbook, they said, they might fly with empty seats, and that would lead to lower revenues.
“By overbooking flights in 2016, Alaska was able to list for sale 675,000 more seats than it could have had if it stopped letting customers buy tickets when flights were full,” said Joe Sprague, the airline’s senior vice president of external relations. In some cases, he said, the airline was able to accommodate lucrative last-minute business travelers on flights that were already full.
“Frankly, having those additional seats available for sale allows us to keep fares low,” he said. Still, he said, Alaska is evaluating its overbooking policies.
Usually, airlines can guess how many passengers will not show up, and adjust how many tickets it sells accordingly. Sometimes, though, airlines make errors, and they must remove passengers from flights. They prefer to ask for volunteers — an airline might offer travel vouchers to a passenger who agrees to take a later flight — but sometimes not enough customers volunteer.
Many lawmakers said they didn’t think it was fair to remove paying passengers because the carriers miscalculated and sold too many seats. Executives from United, American and Alaska generally agreed, promising they would offer more lucrative packages to ensure they can find more volunteers. The airlines do not like telling passengers they cannot board, the executives said, and prefer to have volunteers.
United is now allowing agents to offer up to $10,000 in travel vouchers to solicit volunteers. In the past, when the cap was much lower, customers volunteered to take another flight in 96 percent of instances where a flight was oversold, Kirby said. He said he expects the number of volunteers to increase now that agents are authorized to increase payouts.
“We view overbooking, particularly in situations where we can incentivize a customer to take an alternative flight, as a win-win for both airlines and those customers,” Kirby said.
Executives also reminded Congress that they sometimes end up with too many passengers for reasons not related to selling too many tickets. Sometimes, for example, they must switch to a smaller aircraft at the last minute, and there are not enough seats for everyone. Other times, pilots and flight dispatchers ask that passengers be removed because of weight-and-balance issues.
Fees a concern
When oil prices spiked in 2008, most U.S. airlines started charging fees for checked luggage. The carriers, led by American, said they had to recoup their increased costs.
But fuel is cheaper now, and in 2016, according to data released Tuesday, U.S. airlines made a combined $13.5 billion in after tax-profit. With business strong, some lawmakers asked why airlines still charge for checked luggage. According to the government, airlines earned $4.2 billion in baggage fees last year.
But with one exception — Southwest, again — airline executives said they’re not interested in free bags. “We view charging for checked bags as one of the ways we keep all the other fares low,” United’s Kirby said.
American is keeping the fees because it doesn’t want customers who do not check luggage to subsidize people who do. American wants passengers to “pay for just the choices they intend to consume,” said Kerry Philipovitch, senior vice president of customer experience.
At Southwest, however, Jordan said not having bag fees makes the most sense. “We try to make policies that just make sense for the customer,” he said. “We feel like if you are going to travel it makes sense that you can bring your clothes along.”
Responses were similar for change fees. Some representatives asked how some airlines could charge as much as $200 to make changes on a domestic ticket. “They are mostly about our ways of offering low fares to customers,” Kirby said.
The government said Tuesday that U.S. airlines generated $2.9 billion from change fees in 2016. Only Southwest does not assess them.
Shuster was not the only representative to make veiled threats against airlines. Duncan Hunter, a Republican from California, complained that some nonstop routes have no competition at all, including from San Diego, near where he lives, to Washington, D.C. Only United flies between the markets.
“I have heard a lot of you talk about competition,” Hunter said. “Explain that to me. I think that’s a joke. It’s an absolute joke that there’s competition in the airline industry.”
Executives responded that many routes have nonstop competition, including from ultra low cost carriers Spirit Airlines and Frontier Airlines. Southwest’s Jordan said the industry has never seen so much competition. “The best measure is probably fares,” he said, adding that ticket prices fell 3 percent in the fourth quarter of 2016, compared with 2015.
Executives also noted that airlines compete fiercely for one-stop passengers between most U.S. markets. Passengers who want deals can connect, they said.
Hunter, however, was skeptical. “Competition, really quick, is Jack in the Box, and McDonalds and Wendy’s. … Having only one airline that flies one straight shot, out of all the airlines? That’s not competition.”
Meanwhile, Delegate Eleanor Holmes Norton, a Democrat from Washington, D.C., wanted to know why United Airlines has a 37,000-word contract of carriage, a document that describes the airline’s rights for each ticket. Other airlines have similar contracts, which, among other things, describe an airline’s rights to bump passengers.
Norton said she wondered why airlines can’t list policies on one page, in an easy-to-understand format. All the airlines agreed it could be done more simply, but only Alaska’s Sprague said one page might be possible.
Overall, Norton said she was disappointed in airlines.
“Essentially you represent four regional monopolies,” she said. “You’ve been able to do everything you want to do — add on fees for basic services that we take for granted. It’s as if you have to tip a corporation to do what they used to do for free as a courtesy.”
Represenative Mike Capuano, a Massachusetts Democrat, criticized airlines for constantly returning to Congress to ask for infrastructure improvements, but not making investments in customer service. He called on airlines to improve — and quickly.
“If you want to keep treating us this way, fine,” he said. “I guess we can only do so much. But there will come a day when Congress won’t accept it anymore on behalf of the American people.”