In a scathing report released on November 26, 2024, the U.S. Senate Permanent Subcommittee on Investigations (PSI) criticized major airlines for their widespread use of “junk fees” to boost revenue, particularly focusing on the billions earned through seat selection charges12. The investigation, led by Senator Richard Blumenthal (D-CT), revealed that five major U.S. airlines—American Airlines, Delta Air Lines, United Airlines, Frontier Airlines, and Spirit Airlines—collectively generated $12.4 billion in seat fee revenue between 2018 and 202314.
The report highlighted that seat fees have become a significant source of income for airlines, second only to baggage fees in many cases2. In fact, United Airlines collected more revenue from seating fees ($1.3 billion) than from baggage fees ($1.2 billion) for the first time in 20232. This trend underscores the growing importance of ancillary fees in the airline industry’s business model.
One of the most concerning aspects revealed by the investigation is the disconnect between fee pricing and actual costs. The airlines admitted that the prices of ancillary fees are not directly tied to the cost of providing the underlying services1. This admission raises questions about the fairness and transparency of these charges.
The report also shed light on the increasing use of algorithms for dynamic pricing of fees. This practice can result in significant variations in fees between customers, potentially leading to unfair treatment of certain travelers2.
The investigation uncovered potential tax avoidance strategies employed by some airlines. Frontier, Spirit, and United were found to potentially avoid the federally mandated 7.5% transportation excise tax by labeling portions of their charges as nontaxable fees1. This practice not only impacts government revenue but also creates an uneven playing field in the industry.
The report criticized Spirit and Frontier for implementing incentive programs that paid gate agents to enforce baggage policies. Between 2022 and 2023, these airlines reportedly paid $26 million to personnel for catching passengers who did not comply with bag policies4. Frontier defended this practice, stating it ensures fair treatment of all customers2.
Airlines for America, the trade group representing major U.S. carriers, expressed disappointment with the report, arguing that it fails to understand the value and competitiveness of the U.S. airline industry24. Individual airlines like Frontier and Spirit also defended their practices, emphasizing the benefits of their unbundled service models for consumers2.
In response to these findings, Senator Blumenthal has scheduled a hearing on December 4, 2024, titled “The Sky’s the Limit—New Revelations About Airline Fees.” Five major airline executives are expected to testify and justify their fee practices14.
As the Thanksgiving travel season approaches, with an estimated 79.5 million Americans expected to travel more than 50 miles, these revelations about airline fees are particularly timely4. Travelers may face millions of dollars in fees that, according to the report, have no basis in the airlines’ costs but serve to increase their profits1.
The findings of this Senate investigation may lead to increased scrutiny of airline fee practices and potentially new regulations to protect consumers. As the debate continues, travelers are advised to be aware of these fees when booking flights and to carefully consider their options to avoid unexpected charges.
