Watchdog: Airlines should disclose all fees, inform passengers of eligible refunds

U.S. airlines are getting governmental pressure to disclose all fees and to pay taxes on them, as well.

The U.S. Government Accountability Office, an investigative arm of Congress, recommends that the Dept. of Transportation require airlines to consistently disclose optional fees across all channels.

In the GAO report, Commercial Aviation: Consumers Could Benefit from Better Information about Airline-Imposed Fees and Refundability of Government-Imposed Taxes and Fees [pdf], the GAO also chides airlines for failing to notify passengers that they are eligible for refunds of security fees for unused nonrefundable tickets.

“… Consumers with unused nonrefundable tickets with expired or lost value are entitled to a full refund of the September 11th Security Fee, but few consumers request a refund because airlines are not required to inform consumers of this,” the GAO notes.

The GAO notes that the DOT requires that airlines to disclose checked-bag fees — and not other optional services fees — and that this creates confusion for consumers.

“… Information about the fees is not fully disclosed through all ticket distribution channels used by consumers, making it difficult for them to compare the total cost of flights offered by different carriers,” the GAO says.

The GAO notes that ATPCO is testing a system where airlines would be able to file their optional services data, “but airlines are not likely to disclose them unless compelled to do so.”

The DOT is currently considering new regulations about the disclosure of airlines’ optional fees, which amounted to about $3 billion of revenue in 2009.

Many of these fees — including checked-bag fees — do not fall within the purview of the 7.5% excise tax because they are not defined as being directly relating to the “transportation of a person.”

The airlines are facing pressure to having these fees disclosed and taxed, and the GAO says that Congress would have to revise the Internal Revenue Code in order to tax airline fees that currently are untaxed.

Meanwhile, the Business Travel Coalition surveyed 188 corporate travel managers, travel agencies executives and other technology executives and consultants, and found that 86% of them believe that airlines won’t disclose their optional fees unless compelled to do so.

And, some 95% of survey participants expressed support for a DOT proposal which would require airlines to disclose ancillary fee data to travel agencies through the GDSs that airlines choose to participate in.