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[USA] Lawmaker denounces airline surcharges on intl flights

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[USA] Lawmaker denounces airline surcharges on intl flights

Unread post by bimjim » Tue Mar 08, 2016

http://www.travelweekly.com/Travel-News ... l-flights/

[USA] Lawmaker denounces airline surcharges on international flights
Robert Silk
March 07, 2016

In separate letters late last month, a U.S. senator and the Business Travel Coalition (BTC) called for a federal investigation into airline surcharges that are deeply cutting into the value of frequent-flyer rewards miles.

Both are accusing airlines of continuing to levy fuel surcharges in violation of a 2012 Department of Transportation (DOT) regulation on the matter, even as the price of oil has plummeted from a high of $147 per barrel in 2008 to approximately $30 per barrel today.

Sen. Richard Blumenthal (D-Conn.) has asked the DOT to take particular notice of the impact such surcharges have on the value of frequent-flyer programs.

“It is an unfair and deceptive practice when airlines convince consumers they are earning thousands of miles to use with award programs only to be surprised by hundreds of dollars in hidden fees at the checkout page,” Blumenthal wrote in a Feb. 22 letter to Transportation Secretary Anthony Foxx.

In its 2012 regulation, the DOT stated that airlines’ surcharges must be based upon a reasonable estimate of the per-passenger fuel expenses incurred by a carrier above a baseline fuel cost.

Blumenthal accused carriers of responding to those rules by renaming their fuel surcharges with vague titles such as “carrier-imposed charges” or “international/domestic surcharges.”

Simple ticket searches on carriers’ websites reveal how significant surcharges can be on international flights. For example, a total ticket cost of $1,412 for an April roundtrip on Delta between Atlanta and London Heathrow included a $458 “carrier-imposed international surcharge” alongside a $729 base fare. Taxes and fees accounted for the remaining $226.

Similarly, an American Airlines flight on the same April dates between New York and Heathrow had an economy-ticket cost of $966. Of that total, the base fare accounted for only $285, while “carrier-imposed fees” were $458. Taxes and government fees made up the remaining $223.

United, on the other hand, didn’t include a surcharge in a $1,162 ticket it was selling for the same dates between its Chicago O’Hare hub and London. Instead, United charged a base fare of $940 plus taxes and government fees of $222.

Airlines for America (A4A), the trade organization that represents major U.S. carriers other than Delta, declined a phone interview request for this report. However, A4A spokesman Vaughn Jennings provided emailed statements in which he said that Blumenthal’s assertion about domestic surcharges was incorrect because surcharges are permitted only on tickets for international travel.

“In general, surcharges on international tickets reflect a variety of factors and market forces that vary from market to market,” Jennings wrote. He did not respond directly to the allegations of Blumenthal and the BTC that some carriers have simply changed the name of their fuel surcharge to steer clear of the 2012 regulation.

Jennings said that Blumenthal’s assertions did not stand up to the facts. Domestic airfares, he said, fell to their lowest level since 2010 during the third quarter of last year.

“It would be difficult to find an industry that is more transparent than airlines in their pricing,” he wrote.
In his complaint to the DOT, Blumenthal made specific note of the impact surcharges have on frequent-flyer ticket redemption.

“That carrier-imposed surcharges sometimes only surface when a consumer attempts to redeem an award ticket through an airline loyalty program seems to further confirm the deceptive nature of these surcharges,” he wrote.

But because carriers have begun awarding loyalty miles based upon how much customers spend in fares, rather than on how far they fly, the surcharges also impact reward accrual, said airline industry analyst Bob Mann of R.W. Mann and Co.

A Travel Weekly search for a reward ticket from Miami to Barcelona from May 24 to June 2 through American’s AAdvantage program yielded an economy fare that cost 60,000 miles plus $439 in taxes and fees, including $280 in carrier-imposed fees. Flights were operated by American and by its partner British Airways.

Blumenthal singled out Delta in his letter, writing that the carrier’s “voluminous rules and conditions web page” contains only a passing mention that an international-award ticket could contain up to $600 in taxes, fees and carrier-imposed surcharges. Delta also asserts that it reserves the right to change or add fees without notice.

Such disclaimers are neither new nor unusual, Mann said.

“The bottom line is that carriers have always reserved the right to change the terms of these programs with or without notice,” he said. Mann added that courts have ruled that such policies are legal.

In an email, the DOT acknowledged that it had received Blumenthal’s letter and was working on a response. The agency also said that it had previously investigated British Airway and Air France respectively for noncompliant and mislabeled fuel charges. In 2012, the DOT fined Air France $85,000 for failing to disclose the full price of frequent flyer tickets and for describing a carrier-imposed surcharge as a tax.

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