Senate Panel Calls on Executives to Give Testimony Over “Junk Fees”


Luggage sits in rows at Los Angeles International Airport.

Christina House via Getty Images

The Key Takeaways

  • Airlines are facing scrutiny from lawmakers, as a new Senate panel report found that the companies generate billions of dollars in "junk fees" for seats and baggage.
  • The Senate Permanent Subcommittee on Investigations announced Tuesday it would hold an hearing on fees next week, inviting airline executives to give testimony.
  • The report revealed that five airlines mentioned in the report collectively collected over $12 billion from seat fees between 2018 and 2023.

Airline companies and their “junk fees” Congress has targeted airlines in a recent report. A Senate panel found that the millions of dollars of fees charged by the airline industry each year far exceed the costs of the services provided.

The Senate Permanent Subcommittee on Investigations reported in a report on Tuesday that fees charged by airlines for certain services, such as checking bags and reserving seats are often calculated using algorithms that change with each purchase and bear little or no relation to the real cost.

A hearing is planned for December 4, at which the legislators will invite executives from all five airlines to give testimony.

Five Airlines Collect $12 Billion Seat Fees Between 2018 and 2023: Report

The report found that 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.

United earned more money in 2018 from seat fees than checked bag fees for the first year since 2018. The report says that United made $1.3 billion in seat fees and $1.2 billion in checked bags fees.

In the report it was stated that Frontier and Spirit offered incentives to gate agents for potential bag rule violations. This, according to lawmakers often forced passengers to pay fees or miss flights.

Finaly, it was also stated in the report that some airline fees are classified as “optional,” How to avoid the 7.5% rate of tax on air travel

The cost of air travel keeps on rising

In recent years, airlines have increased the number of places where they charge fees. Delta told its investors recently that it would be increasing fees. “premium” Offerings should surpass revenue from the main cabin within a few years.

The Department of Transportation said earlier this year airlines must now disclose cancellation and baggage fees up front. It said that consumers could save $500 million a year if these fees were avoided.

The Senate subcommittee suggested a range of actions, including that the DOT collect more data specific to junk fees. It also recommended investigating whether these fees have hurt consumers and assessing penalty amounts as necessary.

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leadzevs/ author of the article

LeadZevs (John Lesley) is an experienced trader specializing in technical analysis and forecasting of the cryptocurrency market. He has over 10 years of experience with a wide range of markets and assets - currencies, indices and commodities.John is the author of popular topics on major forums with millions of views and works as both an analyst and a professional trader for both clients and himself.

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