Getting upset about junk fees is like getting upset concerning the flu.
Of course I get annoyed after I get sick and when I even have to pay $20 for my preferred seat, but there's no point in getting upset concerning the viruses or the airlines which are chargeable for them. They're just doing their job: some maximize their self-replication, others maximize their profit.
Since low-cost airlines rose to prominence over a decade ago, airlines have taken advantage of a quirk of human purchasing psychology: We are drawn to low initial prices and are inclined to overlook high total costs as fees slowly trickle down.
In fact, it has been shown that customers systematically make suboptimal decisions when prices are hinted at in the course of the payment process and never disclosed upfront, in line with a 2020 study within the Harvard Business School journal Marketing Science.
Just as a virus takes advantage of a weakness within the human immune system to multiply, airlines quickly realized that they might increase their profits by offering the bottom possible base prices and the very best possible fees.
A 2023 report by IdeaWorksCompany, an industry reporting firm for the airlines, and CarTrawler, a travel software provider, finds that the share of ancillary revenue (i.e. fees) in total revenue has greater than doubled from 6.7% in 2014 to 14.7% in 2023.
Junk fees exist because they work, and so they won't go away until they stop working.
Recent interventions by the Federal Government
In April, the U.S. Department of Transportation (DOT) recent consumer protection measures for passengers, including rules to forestall Junk fees.
Over the following two years, airlines and travel booking platforms must start displaying baggage costs and cancellation fees “clearly, prominently and accurately.” They must also cast off some weird things like making seat selection fees seem mandatory once they aren’t—certainly one of my biggest quirks.
This is a step in the precise direction and can hopefully save passengers the money and time they might have otherwise spent fretting over these fees. But just as viruses mutate, it's possible that airlines will find workarounds and recent fees faster than federal regulators can stop them.
In fact, airlines are already suing the U.S. Department of Transportation over its recent fee transparency rules, calling them “arbitrary, capricious, an abuse of discretion and otherwise unlawful,” in line with a Reuters report, so who knows if they are going to ever go into effect.
We need higher search tools
In preparation for its recent rules, the U.S. Department of Transportation held a public hearing earlier this month to assemble feedback from affected groups, including travel booking platforms. One name that stands out within the summary of those hearings—38 times by my count—is “Google.”
Some excerpts from the report:
- “Google expressed the view that the Department had failed to explain how consumers would be harmed by the fees not being disclosed until the ticket is purchased in the booking process and that consumers were aware of the fees.”
- “Some … metasearch companies, such as Google, said the existing marketplace provides transparency and that the rule would limit consumer choice and competition.”
Basically, Google tried to persuade the DOT that the present model, through which search engines like google like Google Flights Showing base prices without junk fees is sweet enough.
Huh?
Of course, airlines have a vested interest in maintaining the establishment, as they make tons of cash doing so. But why does Google care? Aside from the technical hassle of adapting its software to U.S. Department of Transportation regulations, Google Flights should welcome anything that helps consumers find the most affordable airfare.
If Google doesn’t do that (and it seems like they won’t), there must be a travel search tool that helps travelers Understanding additional fees.
The DOT's regulations are like dietary labels on food: They're a very good first step to helping consumers make higher decisions. Now we’d like the travel shopping equivalent of Whole Foods to really offer the products budget-conscious travelers crave.
It shouldn’t be complicated. We just need to understand how much a Flight or hotel room actually costsIf services like Google don't figure it out, another person (hopefully) will.
Immunity from herd junk fees
Stopping the junk fee pandemic may require one other change: annoyed consumers.
Although airlines are racing to the underside in terms of increasing fees, they still vary significantly. According to our recent evaluation at NerdWallet, Airlines with the bottom fees Are:
- United Airlines.
- Alaska Airlines.
- Hawaiian Airlines.
And the airlines with the very best fees are:
- Border airlines.
- Spirit Airlines.
- United Airlines.
When I seek for flights, I normally skip the massive offenders altogether by either filtering them out of the search results or ignoring their fares.
Do they often offer the most effective flights at the most effective prices? Probably. But it's not well worth the hassle for me to undergo their tedious, lengthy checkout processes to learn the way much I'm actually going to pay.
This is a kind of “acquired immunity” to the junk fee virus. I’m exposed to those fees often enough (it’s principally my job) that I can either avoid them or ignore them.
However, many travelers will not be necessarily affected by these unnecessary fees and only seek for flights a few times a 12 months.
It could take years to achieve herd immunity, where the spread of the issue is stopped because enough individuals are immune, but I'm confident that with a bit of help from the federal government and innovation from the private sector, we are able to turn the junk-fee pandemic right into a not-so-pleasant memory.
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