Tackling travel’s junk fee jumble
Many of us consumer advocates were delighted to hear President Joe Biden’s comment on junk fees “I’ve directed my administration to reduce or eliminate them.” The catch with the overall objective is that what people consider junk fees is not a homogenous set — and that no single approach will solve all junk fee problems. Some are outright deceptions, some are overpricing, some are clearly unfair to everyone, some are unfair to only a subgroup of consumers — and each problem requires a different remedy. You don’t have to leave the travel marketplace to find examples of both fees and fixes.
In my view, the worst junk fee in travel is not really a fee at all: A Hotel “resort” or similarly named fee is simply a portion of the true regular price that hotels carve out in order to post the low-ball remainder on search systems and in some advertising. Although hotels post a list of amenities the fees are supposed to cover, the fees aren’t optional: You have to pay them.
Some people complain that resort fees are “hidden,” but that’s not strictly true: Hotels do disclose them before you buy, but they hide part of the true price from you when you start a hotel search or read a promotional piece.
The remedy here is simple: The Federal Trade Commission has authority to police deceptive advertising, and it has previously admitted that the practice of splitting a true cost into a phony lowball figure with the remainder added later is, in FTC language, “per se deceptive.” The remedy here isn’t eliminating the fee; if hotels want to allocate revenue between rooms and amenities, that’s fine, as long as they present the true total cost to consumers from the get-go.
In short, the fix is to take the deception out. Currently, the FTC is again looking at the situation. All the president needs to do is tell the FTC, “Enough with the looking; just do your job.” We’ll see how that works out.
Airline fees are different. The Department of Transportation has already prohibited airlines from splitting its true fare into a phony base plus a “fuel surcharge” or any other mandatory fee. Some lines still do make that separation in their accounting, but so long as they post the total cost to consumers, all’s well with the pricing.
The problems with airline fees involve excessive charges and fairness. Currently, DOT is deciding whether requiring families to pay extra to assure that a minor child is seated next to an accompanying adult is fair. It obviously isn’t fair. And there’s a good chance DOT will issue a rule to require seating minor children next to an adult in the travel party.
Airline fees for truly optional extras are problematic.
Is $20 to check a bag excessive? Is $50 unfair? What about $60 for a carry-on bag in the overhead bin? Should these fees be reduced or outlawed?
Clearly, the easiest solution is simply to allow consumers to compare alternatives on a consistent basis — in effect, an issue of presentation. Opponents of pricing clarity cite the huge number of possibilities an airline or online agency would have to post, but that’s a straw man. The answer here is simple and easy: filters. Set up a fare search in which a consumer enters what extras he/she wants from the start — a checked bag, a meal, an assigned seat, a preferred seat location, whatever, and the computers can easily post a single apples-to-apples price comparison of prices from all lines. Ditto the claim that eliminating fees would raise fares. In a technical sense, it would, but not the total price: Honest presentation would just lump all the mandatory price components into the fare.
Fees in other markets and other travel problems are likely to be more intransigent than travel fees. I’ve just shown simple, straightforward fixes to the three worst offenders in travel. All we need is the resolve and authority to do what we already know we should. Easy peasy.