A recent U.S. federal appeals court ruling regarding the Biden administration's new airline junk fee disclosure rule has sparked a contentious debate.
Under the new rule, airlines and ticket agents must disclose fees for checked and carry-on bags, as well as for cancelling or changing a reservation. Airline websites would also be required to display these fees upfront so that pax can easily see the total price prior to purchase.
A group of major U.S. airlines, such as Delta Air Lines and American Airlines, filed a lawsuit against the Biden administration in May, arguing that the new rule would confuse pax and complicate the purchasing process. Transportation Secretary Pete Buttigieg strongly criticized the lawsuit and expressed disbelief at the airlines' opposition.
As a result or the lawsuit, on 30JUL, a U.S. federal appeals court temporarily blocked the Biden administration's new rule. The ruling has sparked a debate over the Department of Transportation's (DOT) authority and its potential impact on airlines.
Despite the contentious debate, both carriers and cruise lines have been adopting more transparent pricing practices.
CBS, on 02JUL, shared that airlines such as Spirit are rolling out fewer fees. Delta and American have also made strides in eliminating certain fees to accommodate their customers better.
Open Jaw, on 02JUL, reported on the cruise industry's efforts to comply with California's junk fee law by disclosing upfront port and other mandatory fees.
The conflicting viewpoints expressed by stakeholders and the ongoing legal battles highlight the complexity of the issue and its impact on the airline and travel industries.
Canadian Airlines Push Back
On this side of the border, as Open Jaw reported earlier this year, the Canadian airline industry is also balking at a proposed federal crackdown on junk fees.
Under a section of the budget unveiled in Ottawa in April, called "Fairer Prices, Fewer Fees," the Trudeau government said it wants to address what it calls "junk fees" or drip-pricing, when a retailer displays only part of an item's price, revealing the total amount only at the end of the buying process.
"When booking a flight, every Canadian wants to get the best deal possible, but they are often surprised to find out there are additional costs on top of the advertised fare," the budget reads. "From selecting seats, to checking bags, to meals on board, it is only fair that Canadians have full transparency about the full cost of their flight."
Federal officials used an example to make their case, stating that a family of four flying from Toronto to Vancouver would have to compare base fares and then consider optional fees for seat selection, checked or carry-on bags, in-flight meals, and in-flight WiFi.
The budget document states that the family "could pay up to $481 in additional fees as part of their trip."
In a section of the budget entitled "Amending the Air Passenger Protection Regulations," Ottawa said it will introduce regulatory amendments later this year "to ensure that airlines seat all children under the age of 14 next to their accompanying adult at no extra cost … The government is also taking further action to strengthen transparency of optional fees charged by airlines, for everything from baggage to seat selection to in-flight meals."
Canadian airline representatives appear baffled by the budget talk, arguing that ancillary fees offer travellers choice in what they want to pay for.
"We were surprised to see Budget 2024 contained a measure to increase transparency for optional fees that are currently transparent and allow for consumer choice and tailored travel options for our valued guests," Andy Gibbons, Vice President External Affairs for WestJet, in response to a request for comment from Open Jaw.
"This item was published without any consultation and fails to include a commitment from the government to enhance the transparency of its own fees and those of third parties, which are mandatory," he said. "A ‘one size fits all' approach does not work for Canadians as it requires them to pay for services they may not use, increasing the cost to travel for all guests, including those who rely on the availability of low-fare ticket prices.
"To preserve affordable air travel, Canadians require the choice to opt into the products they require for their journey beyond their seat, to avoid subsidizing for a service that does not fulfill their individual needs," Gibbons said.
"We are puzzled by the inclusion of this measure but will be pleased to share more information on the optional, pro-consumer measures we have in place for our valued guests."
An Air Canada spokesperson said that all AC fares are sold at the final price: "Customers know exactly how much they are paying and what is included, as we also provide a breakdown of the price prior to final sale (you can click on it before purchasing). Moreover, customers have a choice when buying a ticket as to what ancillary services they wish to purchase, which are spelled out clearly in our individual fare descriptions, so it is very transparent."
"Our experience is customers appreciate having the option to tailor their travel to suit their needs, including not paying for services they do not wish to have," the spokesperson said. "If they want to avoid paying additional fees, we have a fare brand that includes two checked bags and full refundability. On the other hand, if they want to save a few dollars (but still have a great experience flying Air Canada) they choose a lower priced brand that includes only the options they need."
"It's unclear what the intent of these budget comments are," Porter Airlines spokesman Brad Cicero told Open Jaw. "Passengers already have many choices when it comes to selecting fares where all of the typical options are included, or they have the ability to add on desired items to lower-priced fares as desired.
"Optional fees are clearly accessible to review."
Porter was the first airline in Canada to introduce all-in pricing over a decade ago, including fees and taxes in the published airfare, so we understand the value this provides to customers, Cicero said.
Jeff Morrison, president and CEO of the National Airlines Council of Canada, said his group doesn't fully understand what Ottawa is after.
"Ancillary fees charged by airlines put greater choice and flexibility in the hands of passengers, and NACC members are transparent in this regard. We will need greater clarity on the intent of this announcement," he said in a statement after the budget was released.
According to Cansumer.ca, the initiative "aims to help make life more affordable for Canadians and follows a similar move by the U.S. to crack down on junk fees."
The federal budget calls on other levels of government to address such hidden fees as well: "Where junk fees fall under federal jurisdiction, the federal government is taking action. Many of the junk fees that frustrate Canadians are under provincial and territorial jurisdiction. That's why the federal government is calling on all orders of government to do their part to cut junk fees, so that Canadians can keep more of the money they worked hard to earn."
The government also plans to amend the Air Passenger Protection Regulations (APPR), to strengthen airline fee transparency and ensure children under 14 are able to sit next to their accompanying adult at no extra cost.
On 02AUG, CTV reported that the U.S. DOT also proposes a new rule that would ban airlines from charging parents more to sit with their young children.
