US government watchdog reviewing airline fees

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A US government watchdog is determining the scope of its inquiry into airline fuel surcharges, checked baggage fees and other ancillary fees.

The US Government Accountability Office (GAO) will outline its plans for the fee analysis to Reps. James Oberstar and Jerry Costello by the end of January 2010, GAO director of civil aviation issues Gerald Dillingham says, noting GAO is currently in the design phase of the project.

Fees will be scrutinized to determine to what extent the revenue is taxable or a potential contributor to the Aviation Trust Fund. The study also seeks to understand the prevalence of ancillary fees and the basis for such charges.

Preliminary findings based on interviews with airlines, aviation trade groups, the US DOT and outside experts are expected in March or April of next year, likely followed by a final report between June and August, Dillingham says.

The report comes at the request of Oberstar and Costello as many carriers have unbundled their fares and adopted a la carte pricing.

Oberstar, chairman of the House transportation and infrastructure committee, and Costello, chairman of the House aviation subcommittee, note that US airlines collected $1.1 billion in excess baggage fees in fiscal year 2008, and that in fiscal year 2009, US airlines made more than $400 million from ticket changes and cancellation fees, according to data from the US Bureau of Transportation Statistics (BTS).

"We are concerned that these fees may be excessive and that they are resulting in revenue being diverted from the Airport and Airway Trust Fund," the congressmen say in an August 2009 letter to Gene Dodaro, the acting comptroller general at GAO. "In addition, we request that you study ways that Congress can effectively capture these fees for the Airport and Airway Trust Fund."

GAO was also tasked with looking at whether additional fees such as baggage and cancellation fees are commensurate with the cost of providing such services to passengers.