The travel industry is a huge part of Biden's junk fee crackdown, and it is only a matter of time before travel companies get called out specifically in public
President Biden has publicly called out travel companies as part of a crackdown on so-called junk fees, a campaign that takes aim at companies across the sector, looking at their fee structures and how they are displayed.
The White House first raised concerns over these fees in October 2022 and has kept the conversation going, specifically targeting airline and hotel resort fees. It has now taken additional steps: The Federal Trade Commission proposed new rules that would ban businesses – including hotel and lodging companies, short-term rental providers, and car rentals – from charging misleading fees.
In March this year, two democratic senators introduced the Junk Fee Prevention Act, which would require full prices to be shown upfront and targets “surprise” and “exorbitant” fees. In July, Democratic Senator Amy Klobuchar and Jerry Moran, a Republican, introduced a bipartisan bill known as the Hotel Fees Transparency Act, which would address the issue of hidden resort fees for hotel stays. “It requires that the cost of the rooms are there up front. Transparency, full disclosure. So you know exactly what you’re getting into,” said Senator Amy Klobuchar.
The push for transparent hotel rates continued in August. The State of Texas has taken legal action against Booking Holdings, claiming that the company breaches state regulations by promoting hotel rates in a misleading fashion, as it fails to incorporate a range of charges when initially showcasing room costs. The state seeks to obtain a temporary restraining order followed by a lasting injunction and civil penalties.
What Are Junk Fees?
Junk fees in the travel industry refer to charges imposed by travel service providers that are seen as hidden, unnecessary, or excessive. These fees may not be directly related to the service you thought you were buying. And even when valid, they may come as a surprise after you’ve made the purchase. According to the White House, Americans spend $65 billion on junk fees per year.
For the travel industry, examples of junk fees could include seat selection fees, resort fees, charging for overhead bin space on a plane, or excessive cleaning fees in a short-term rental. It’s when that $270 flight to New York suddenly costs $300, and the $450 hotel room is now over $500.
Not all extra fees are junk fees – separating out the price of a ticket or room can be valid if you know what you’re buying, have a choice, and want the extra service.
Why Are Junk Fees a Problem?
– You can’t easily comparison shop. If the total price is not clearly displayed at the start of the search, you can’t accurately compare options. You might see two identical hotels and pick the one you think is cheaper. It’s not until you click through to book that you realize you’re ultimately paying more. It’s called “drip pricing,” where additional costs are “dripped in” as the consumer goes through the shopping process.
– You might get surprised. You book an airline seat or hotel room and it’s not until you’ve locked it in or are checking out that you realize there are additional fees. You might have reasonably assumed the fees were included in the basic price.
– You’re forced to pay for services you don’t want. These are added to the final bill and you have to pay – even if you never wanted the service and won’t be using it.
– They are predatory or excessive. Is $50 a reasonable price to change your flight? Or $100 for a hotel service? It can be subjective, but regulators can assess whether a cost is reasonable by considering how much a company is profiting and the justification for the fee.
What’s Being Done About Junk Fees?
Two rules have been proposed by government agencies in an effort to tackle junk fees.
- The U.S. Department of Transportation issued a notice of proposed rulemaking in October last year for “a rule titled “Enhancing Transparency of Airline Ancillary Service Fees.” The aim is to ensure that consumers have all ancillary fee information at the time of ticket purchase. The Department of Transportation expects to issue its final rule in March 2024.
- The Federal Trade Commission said in October 2022 it was exploring rules addressing allegedly deceptive or unfair acts or practices relating to fees. The rule was open to comment, and according to Federal Trade Commission staff, the organization received 12,000 responses. This October, it proposed the rules. Next comes a 60-day public comment period after which the FTC will determine any changes to the proposed rule, an agency spokesperson told Skift. Then the Commission would vote on a final rule.
Which Travel Companies Have Stepped Up On Transparency?
The Department of Transportation last year created an Airline Customer Service Dashboard, which reveals the varying degrees to which U.S. airlines commit to fee transparency.
The dashboard tracks the commitment of 10 U.S. airlines to fee-free family seating and how they handle costs related to delays and cancellations – whether they provide rebooking with no additional cost, for example, or complimentary hotels.
The White House referred to this data this summer, and Biden publicly cited American, Alaska, and Frontier for changes to their family-seating fee policies and noted that United had taken preliminary steps for families with children under the age of 12. The Department of Transportation Dashboard only recognizes airlines that waive seat-selection fees for adults with children aged of 13 or under.
Fee-free family seating is defined by the Transportation Department as providing guaranteed adjacent seat assignments to the adult traveling with a child aged 13 or under no later than the day before the flight. This is for airlines that assign seats as well as those with an open seating policy.
Across all factors on the dashboard, Alaska Airlines received 15 check marks out of a possible 17, the highest number of all U.S. airlines.
Airbnb was acknowledged by the Biden-Harris Administration for its move last November to introduce a total price display. The feature includes a breakdown of all fees before taxes to be shown in search results as well as on the map, filter, and listing page.
While Biden called out junk fees in his State of the Union address last January, the White House has not named names.
According to the Transportation Department Dashboard, while Frontier is one of only three U.S. airlines observing a commitment to fee-free family seating, it received only five check marks out of 17 categories, the lowest number of all the airlines.
To keep track of hotel behaviors, Resort Fee Checker allows users to search for a hotel and check if it charges resort fees and, if so, how much. While the tool doesn’t rate companies like the Transportation Department does for airlines, it does allow customers to make more informed decisions.
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