On Wednesday, the Biden-Harris administration announced new rules to protect consumers from “surprise” airline fees. It comes as part of a wider initiative to expand consumer protections in air travel.
The new initiative is estimated to save consumers over half a billion dollars every year in “hidden and surprise junk fees.” The press release issued by the US Department of Transportation (USDOT) explained:
“The rule requires airlines and ticket agents to tell consumers upfront what fees they charge for a first or second checked bag, a carry-on bag, and for cancelling or changing a reservation. This will help consumers avoid unneeded or unexpected fees that can increase quickly and add significant cost to what may, at first, look like a less expensive ticket.”
As the industry recovered from the pandemic, ancillary sales helped to grow revenue and these “a la carte” extras have since become a key part of strategy for many airlines. Last year, airline ancillary revenue reached a record high at $117.9b worldwide with popular ancillaries including seat selection, extra baggage, and insurance.
Amongst other specifications, the new rules brought in by the USDOT now require airline and ticket agents to follow these steps:
- Disclose critical extra fees upfront
- Explain critical extra fee policies prior to purchase: To help consumers figure out whether they want to purchase a critical extra service, the rule requires airlines and ticket agents to explain the airline’s baggage, change, and cancellation policies before ticket purchase. For each type of baggage, airlines and ticket agents must spell out the weight and dimension limitations that they impose.
- Inform consumers that seats are guaranteed: To help consumers avoid unneeded seat selection fees, airlines and ticket agents must tell consumers that seats are guaranteed and that they are not required to pay extra. Prior to offering seat selection for purchase, they must provide the following notice: “A seat is included in your fare. You are not required to purchase a seat assignment to travel. If you decide to purchase a ticket and do not select a seat prior to purchase, a seat will be provided to you without additional charge when you travel.”
Discussing the changes, U.S. Transportation Secretary Pete Buttigieg explained:
“Airlines should compete with one another to secure passengers’ business—not to see who can charge the most in surprise fees”
Although these new rules are intended to protect passengers from unnecessary additional charges, they may also impact airlines that rely heavily on ancillary revenue streams. Do you think we will see a change in airlines’ ancillary strategy following these events?
For more like this see:
- The top ancillary products according to airBaltic
- From selling ancillaries to shaping travel experiences
- CarTrawler forecasts a record-breaking $117.9 billion in worldwide ancillary revenue for 2023
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