How much does a plane ticket really cost? Just a decade ago, when most airfares included a checked bag and the ability to reserve a seat or book a ticket by phone, the answer was pretty straightforward: the price you saw was the price you paid, minus taxes. Today, most airlines, except for a few full-service Asian carriers and a holdout or two in the United States, charge economy-class passengers extra for almost everything—a process known as “unbundling.” Want to check your luggage? That’ll be $25 for the first bag. Sit next to a window?: $29. Book by phone? An extra $25, please. Maverick Irish carrier Ryanair even charges customers $86 a pop to print boarding passes at the airport.
Now U.S. regulators are considering a crackdown on what critics charge are deceptive pricing practices that have unjustly enriched airlines by concealing the true cost of flying. A recent report by IdeaWorks, an aviation consultancy, found that the airline industry is making a fortune on fees, netting $22.6 billion worldwide in 2011, a 66 percent jump from two years before.
A new rule, enacted at the beginning of 2012, already requires domestic airlines to quote fares that include all mandatory taxes and fees. And last week, an advisory committee to the federal Transportation Department considered recommending that the government go a step further by requiring airlines to disclose all of their fees before a ticket purchase. “Passengers deserve to know how much a ticket actually costs,” says Charles Leocha, president of the Consumer Travel Alliance, which represents passengers on the committee.
But airlines insist they’re as transparent as they need to be when it comes to fares, and that regulators would be overstepping their mandate if such a rule were adopted. “Airlines should be able to sell their product at a price and through providers they choose,” says Steve Lott, a spokesman for A4A, which represents the major U.S. carriers. Besides, airlines say, fees are already revealed on airline websites, and disclosure is constantly improving. For example, United Airlines, currently the world’s largest carrier, recently introduced a baggage-fee calculator that allows customers to determine how much they’ll pay for their checked luggage. That’s a significant step forward, considering that just a year ago, the only warning of luggage fees was a cryptic notation at the bottom of a booking screen cautioning that additional fees “might” apply.
The committee’s recommendations are nonbinding, and they may have some trouble getting a nod from the next secretary of Transportation if President Obama loses the upcoming election to his Republican opponent. They also face a tedious rule-making process and a likely court challenge by airlines. But consumer groups appear to have some momentum. Airlines balked when they were required to add taxes and mandatory fees to their fares, charging the government with “hiding” taxes and with it, the true cost of air travel. Two carriers sued the government in an effort to overturn the rule. But last month, a Court of Appeals sided with the government. If the move toward price transparency catches on, it could have a ripple effect worldwide, creating a global standard for disclosure and answering the question of how much an airline ticket costs once and for all.