Enhancing Transparency of Airline Ancillary Service Fees

Regulatory Impact Analysis

RIN 2105-AF10

Office of the General Counsel, Office of Regulation

September 2022

U.S. Department of Transportation

Office of the General Counsel

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis i

Executive summary

This analysis evaluates the effects of a rule proposed by the U.S. Department of Transportation

to change how air carriers and ticket agents disclose information about certain ancillary fees for

flights and change how certain consumers can purchase assigned seats. Ancillary fees are fees

for optional services provided by a carrier beyond passenger air transportation. The rule would

require carriers and ticket agents to show baggage fees, ticket change fees, and ticket

cancellation fees when they first show fares and schedules to consumers searching for flights.

The rule would also require carriers who charge assigned seating fees for children 13 or under to

show the fees and allow for transactability, or the ability to buy the seating, at all points of sale.

Finally, the rule would require carriers and ticket agents to provide the same ancillary fee

information to consumers buying tickets offline or on the phone.

The analysis uses a basic economic model of asymmetric information as a framework for

evaluating the proposed rule. While asymmetric information can lead to a market failure, the

significance of the resulting inefficiency and the need for government intervention depends on

several factors. In addition, mandatory disclosures can have unintended effects like crowding out

relevant information, which can create other inefficiencies. The analysis evaluates the potential

for a failure in the market for airline tickets due to information asymmetry and evaluates existing

mechanisms for providing information to consumers. Due to a lack of data and other significant

uncertainties, quantitatively evaluating the effects of the rule is not possible at this time.

The rule would yield societal benefits if it reduced deadweight loss from inaccurate price

calculations or reduced search costs. Inaccurate price calculations lead to overconsumption and

can distort consumer perceptions in ways that confer a competitive advantage to producers who

produce a lower-quality product. While we lack information to estimate benefits, we calculated a

hypothetical example range using methods from earlier rulemakings. At the same time, the rule

could lead to crowding out of other relevant information for some consumers. The potential

effect represents an offset to benefits, and it is possible that it equals or outweighs the benefits.

The primary costs of the proposed rule are the costs that carriers and ticket agents would incur

to share ancillary fee data, modify websites, and allow transactability for assigned seats for

children 13 or under. These costs include startup implementation costs as well as ongoing costs.

Third parties involved in data exchange, such as global distribution systems (GDSs) and direct-

channel companies, would incur costs as well despite not being directly regulated by the rule.

Because these entities are already starting to upgrade systems for market reasons, the cost

properly associated with the proposed rule is the cost of requiring them to upgrade earlier than

they would without the rule.

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis ii

Table ES-1 summarizes the results of the analysis and the potential economic effects of the

proposed rule. Because it is not possible to quantify total benefits or total costs at this time, it is

also not possible to quantify whether the proposed rule would yield benefits that exceed costs.

Table ES-1: Summary of economic effects

Item

Annual amount

Benefits

Gross benefits

Reduction in deadweight loss due to increased accuracy in consumers’

price calculations

See illustrative example

Reduction in search costs for consumers seeking information on

ancillary fees

See illustrative example

Reduction in surprise costs and anxiety for passengers traveling with

children

Not estimated

Market feedback effects (enhanced price and quality combinations)

Not estimated

Offsets to gross benefits

Increase in search costs for consumers seeking information on items

displaced by new disclosures

Not estimated

Total benefits

Indeterminate

Costs

Implementation and contract negotiation costs for carriers, ticket

agents, GDS companies, and direct-connect companies to display

ancillary fees and allow transactability for assigned seats for children

13 or under

See illustrative example

Ongoing costs for carriers to provide data

See illustrative example

Ongoing costs for carriers and ticket agents to exchange and maintain

ancillary fee information for offline and in-person purchases

Not estimated

Total costs

Not estimated

Net benefits

Indeterminate

Transfers

Gains in consumer surplus (from airlines back to consumers)

Indeterminate

Table ES-2 summarizes the key uncertainties for quantifying or monetizing the economic effects

of the proposed rule. The same uncertainties that prevent estimating the primary effects also

preclude assessing the potential secondary effects, including effects on airfares, ancillary fees, or

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis iii

GDS contracts with carriers and ticket agents. The Department seeks comments and information

that would help with quantifying and monetizing the effects.

Table ES-2: Summary of key uncertainties for quantifying economic effects

Item

Uncertainties

Benefits

Gross benefits

Reduction in deadweight loss due to

increased accuracy in consumers’ price

calculations

•

Amount of price mistake

• Number of passengers who do not incorporate full

information into price calculation

• Number of passengers who would choose not to

use ancillary services with full price information

versus those who would forgo air travel altogether

Reduction in search costs for consumers

seeking information on ancillary fees

•

Amount of time saved

• Number of consumers who would save time

shopping for airline fares

Reduction in surprise costs and anxiety

•

Number of consumers unaware of ancillary fees

Offsets to gross benefits

Increase in search costs for consumers

seeking information on items displaced by

new disclosures

•

Increase in search time

• Number of consumers who experience increased

search time

Costs

Implementation and ongoing costs for

carriers, ticket agents, GDS companies, and

direct-connect companies to display ancillary

fees and allow transactability for assigned

seats

•

Needed changes to websites

• Needed changes to programming

Ongoing costs for carriers and ticket agents

to exchange and maintain ancillary fee

information for offline and in-person

purchases

• Amount of training required to enable

Transfers

Gains in consumer surplus (transfer from

airlines to consumers)

•

Extent to which existing industry pricing practices

increase producer surplus (profits)

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis iv

Contents

1 Introduction .............................................................................................................................................. 1

2 Need for regulation ................................................................................................................................. 1

2.1 Information asymmetry and market failure ........................................................................................ 2

2.2 Addressing inadequate or asymmetric information ........................................................................ 5

3 Rulemaking history ................................................................................................................................. 6

4 Ancillary fees for domestic carriers ..................................................................................................... 6

4.1 Baggage fees .................................................................................................................................................. 7

4.2 Ticket change and cancellation fees ...................................................................................................... 8

4.3 Seat assignment fees and family seating policies ............................................................................ 9

4.4 Re-bundling of airfares ............................................................................................................................ 10

5 Requirements of the proposed rule ...................................................................................................11

5.1 Baggage fee information ........................................................................................................................ 12

5.2 Ticket change and cancellation fees ................................................................................................... 13

5.3 Family seating fees .................................................................................................................................... 13

5.4 Additional policies ..................................................................................................................................... 14

6 Travel booking industry structure ..................................................................................................... 14

7 Economic effects of the proposed rule ............................................................................................ 16

7.1 Baseline for analysis .................................................................................................................................. 16

7.2 Benefits .......................................................................................................................................................... 17

7.2.1 Reductions in deadweight loss .................................................................................................... 18

7.2.2 Reductions in search costs ............................................................................................................ 21

7.2.3 Other benefits .................................................................................................................................... 22

7.2.4 Offsets to benefits ............................................................................................................................ 23

7.3 Costs ............................................................................................................................................................... 24

7.3.1 Costs for carriers ............................................................................................................................... 24

7.3.2 Costs for GDSs and direct-connect companies..................................................................... 27

7.3.3 Costs for ticket agents and metasearch sites......................................................................... 27

7.4 Comparison of benefits and costs ....................................................................................................... 27

7.5 Distributional effects ................................................................................................................................ 28

8 Uncertainties .......................................................................................................................................... 28

9 Regulatory alternatives ....................................................................................................................... 30

9.1 Displaying maximum seating fees for family seating .................................................................. 30

9.2 Displaying fee information on the final page ................................................................................. 30

10 Summary .................................................................................................................................................. 31

Appendix A International baggage fees by carrier ............................................................................. 33

Appendix B Air fare and ancillary service bundles ............................................................................. 36

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 1

1 Introduction

The U.S. Department of Transportation (USDOT) has proposed a rule requiring air carriers and

ticket agents to change how they disclose information about certain ancillary fees for flights and

change how certain consumers can purchase assigned seats. Ancillary fees are fees for optional

services provided by carriers beyond passenger air transportation. The rule would require

carriers and ticket agents to show baggage fees, change fees, and cancellation fees when they

first show fares and schedules to consumers searching for flights. The rule would also require

carriers who charge assigned seating fees for children 13 or under to show the fees and allow

for transactability, or the ability to buy the seating, at all points of sale. Finally, the rule would

require carriers and agents to provide the same ancillary fee information to consumers buying

tickets offline or on the phone.

This regulatory impact analysis (RIA) qualitatively assesses the economic effects of the proposed

rule. The RIA examines information on the potential existence and significance of a market

failure and evaluates the benefits, costs, and distributional effects of the requirements of the

proposed rule. Due to a lack of data and other significant uncertainties, quantitatively evaluating

the effects of the rule is not possible at this time.

2 Need for regulation

The main premise underlying the proposed rule is that a market failure may exist because airline

consumers may have inadequate information about ancillary fees before buying tickets. In 2008

and 2009, legacy air carriers began unbundling the products offered to consumers, offering

lower base fares and charging ancillary fees for baggage transport and other optional trip-

related services.

In the following years, carriers increased these fees and introduced new types

of ancillary fees.

In 2020, the ten largest passenger air carriers in the United States collected an

estimated $2.8 billion in baggage fees and $900 million in change and cancellation fees.

The notice of proposed rulemaking (NPRM) cites reports by the Government Accountability

Office (GAO) in which the GAO concluded that some consumers may have insufficient

Jan K. Brueckner, Darin N. Lee, Pierre M. Picard, and Ethan Singer. 2015. “Product Unbundling in the

Travel Industry: The Economics of Airline Bag Fees.” Journal Of Economics & Management Strategy 24 (3):

457-484. https://doi.org/10.1111/jems.12106

IdeaWorksCompany. 2021. 2021 Ancillary Revenue Yearbook. https://ideaworkscompany.com/wp-

content/uploads/2021/09/2021-Ancillary-Revenue-Yearbook.pdf.

U.S. Department of Transportation, Bureau of Transportation Statistics. 2022. “TranStats: Air Carrier

Financial Reports.” Schedule P-1.2. https://www.transtats.bts.gov/Tables.asp?QO_VQ=EGI

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 2

information about ancillary fees. The reports concluded that carriers are increasingly charging

fees for passenger services without disclosing the fees consistently. In 2010, GAO recommended

to the Department that carriers disclose baggage fees consistently across distribution channels.

In 2017, GAO found that airlines increased the number of optional services for which they

assessed fees. The variety of new fees, combined with packages of services sold in bundles,

made it difficult for consumers to compare prices.

At the same time, GAO also notes that the

airlines reported that the practice allowed them to lower base airfares for customers who

preferred not to use the services.

The Department also reviewed baggage and other ancillary fees and found that the fees vary

widely across airlines, as discussed in Section 4.1 (Baggage fees). Carriers also use different

systems for assessing fees for baggage on international flights, as described in Appendix A,

making price comparisons for international flights less straightforward.

2.1 Information asymmetry and market failure

Information asymmetry occurs when buyers and sellers in a market have unequal information

about aspects that affect the total price of a product or service. These aspects can include

monetary components such as ancillary fees or non-monetary attributes such as quality. If

buyers have less information than sellers and underestimate total price as a result, then they will

purchase more of the good at a higher price than they would if they had better information. The

equilibrium price and consumption are higher in the presence of asymmetric information. The

higher price paid causes a transfer of surplus from consumers to sellers. The transfer correlates

with additional profit for producers, who thus have a disincentive to disclose the information to

consumers. The overconsumption also leads to a deadweight loss for society because the

resources used to produce the good would have been put to a better use if consumers had

better information. Figure 1 illustrates the model.

GAO. 2010. Commercial Aviation: Consumers Could Benefit from Better Information about Airline-Imposed

Fees and Refundability of Government-Imposed Taxes and Fees.

https://www.gao.gov/products/gao-10-

785.

GAO. 2017. Commercial Aviation: Information on Airline Fees for Optional Services.

https://www.gao.gov/products/gao-17-756

Aidan R. Vining and David L. Weimer. 1988. “Information asymmetry favoring sellers: a policy

framework.” Policy Sciences 21:281-303.

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 3

Figure 1: Effects of information asymmetry leading buyers to overestimate quality

For airline ancillary fees, inefficiencies could arise if consumers making purchase decisions lack

information about the fees or have poor information that leads them to underestimate the fees.

In that case, consumers cannot calculate the full price of air travel, and they behave as if air

travel prices are lower than they are. In the basic asymmetric information model, the lack of

information influences consumer decisions to purchase airline tickets because it affects their

perceived price of air transportation. In the model, consumers would respond to information on

ancillary fees by reducing their purchases of airline tickets, either by not traveling or choosing

another mode of transportation.

In practice, consumers may respond in other ways because ancillary services are optional for air

travel, even if consumers often buy them. If consumers would primarily respond to an

information disclosure by not using ancillary services rather than reducing airline ticket

purchases, then the potential inefficiency from insufficient information comes from consumers

purchasing ancillary services they may not want or paying too much for them, rather than from

distortions in the price of air travel itself. With better price information, consumers may be able

to shop around, perhaps finding an airline that offers these services at lower prices. In addition,

consumers may have alternatives to paying ancillary service fees even after they purchase

airfares. For example, some travelers may be able to pack fewer items and avoid additional

checked bag fees.

Information problems can occur due to the inherent features of the product or producers might

engage in actions to create them. One method a producer can create an information advantage

is through of the practice of drip pricing, “a pricing technique in which firms advertise only part

of a product’s price and reveal other charges later as the customer goes through the buying

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 4

process.”

In a simple model of drip pricing, a producer creates the favorable information

asymmetry by shrouding part of the price of a product.

Experimental research suggests that

consumers encountering drip pricing are more likely to make purchasing mistakes if they are

uncertain about the extent of the drip pricing.

The point during the purchase decision that the consumer acquires the information can also

affect decision-making. For example, when a grocery store included sales taxes in its advertised

prices as part of a field experiment, people purchased fewer products despite already being

aware of the sales taxes before the field experiment.

Producers could also use timing to create

an information advantage, as shown in research on drip pricing. One study found that

individuals are more likely to choose a lower-price airfare when all fees are disclosed up front

rather than revealed at points during the purchase process. Even when the participants became

aware of the additional fees, they were reluctant to restart the purchase process because they

perceived high search costs and inaccurately assumed that all companies charge the same

fees.

Asymmetric information could also have broader market effects, as shown in the literature on

asymmetric information and product quality.

A lack of consumer information can create

circumstances where low-quality or otherwise inefficient producers have a competitive

advantage. This advantage could lead to adverse selection, where high-quality producers exit

the market.

In sum, the basic model of information asymmetry favoring producers identifies two primary

effects that may occur when consumers make purchase decisions without full information. The

first effect is a deadweight loss or a reduction in social surplus due to overconsumption. When

Howard A. Shelanski, Joseph Farrell, Daniel Hanner, Christopher J. Metcalf, Mary W. Sullivan, and Brett W.

Wendling. 2012. “Economics at the FTC: Drug and PBM Mergers and Drip Pricing.” Review of Industrial

Organization 41: 303-319. https://doi.org/10.1007/s11151-012-9360-x

David Laibson. 2012. “Drip pricing: A behavioral economics perspective.” Presentation at Federal Trade

Commission, May 21, 2012.

https://www.ftc.gov/sites/default/files/documents/public_events/economics-

drip-pricing/dlaibson.pdf.

Alexander Rasch, Miriam Thöne, and Tobias Wenzel. 2020. “Drip pricing and its regulation: experimental

Evidence.” Journal of Economic Behavior & Organization 176: 353-370.

https://doi.org/10.1016/j.jebo.2020.04.007

Raj Chetty, Adam Looney, and Kory Kroft. 2009. “Salience and Taxation: Theory and Evidence.” American

Economic Review 99, no. 4: 1145-1177. https://doi.org/10.1257/aer.99.4.1145

Shelle Santana, Steven K. Dallas, Vicki G. Morwitz. 2020. “Consumer Reactions to Drip Pricing.”

Marketing Science 39(1): 188-210. https://doi.org/10.1287/mksc.2019.1207

George A. Akerlof. 1970. “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism.”

Quarterly Journal of Economics 84(3): 488-500. https://doi.org/10.2307/1879431

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 5

the information problem is corrected, resources supporting overconsumption become available

for better societal use, and the deadweight loss is reduced or eliminated. The second effect is

distributional because it involves a transfer of consumer surplus to producers, which a

producer’s information advantage facilitates. It is not necessary for the information to be

completely absent from the market for these effects to occur; information that is ambiguous or

time-consuming and costly to obtain will have similar effects. Resolving information asymmetry

can counter consumer issues and give rise to secondary effects like improved product quality or

increased productive efficiency as producers respond to consumer changes in purchasing

behavior.

2.2 Addressing inadequate or asymmetric information

If the cost of providing the information to the consumer is lower than the deadweight loss due

to the consumer’s lack of information, then the market solution will be inefficient. Efficiency

could be enhanced by disclosing the information to the consumer, possibly through

government intervention requiring the seller to supply it. At the same time, the additional profits

that the seller earns from favorable information asymmetry act as an incentive for third parties

to enter the market. Third parties might supply the information as long as the cost of providing

that information is lower than the price consumers are willing to pay for it. The entry of third-

party information suppliers could correct the inefficiency without government intervention.

The basic asymmetric information model assumes that providing information is sufficient to

reduce information asymmetry and improve consumer decision-making. If the added

information is redundant, unusable, or ignored by consumers, however, consumers will continue

to behave as if the information were not provided. In some cases, excess information can create

or exacerbate information asymmetry. “Crowding out” occurs when individuals become

overwhelmed with information and do not pay attention to the most salient information.

Crowding out could increase deadweight loss if it leads consumers to make worse decisions.

Consumers also can sometimes acquire information on their own and are likely to do so when

search costs are low—low, at least, relative to the price of the good or service. When consumers

can easily acquire the information needed to evaluate the full spectrum of price and quality

combinations in the market, they can eliminate the asymmetry through their own actions, albeit

with the cost of additional time and effort. Homogeneity of a product or service is one reason

search costs might be low because consumers can acquire information without repeated price

comparisons. Additionally, if consumers purchase the product or service frequently, then they

can passively acquire knowledge over time.

Ben-Shahar, Omri, and Carl E. Schneider. 2011. “The Failure of Mandated Disclosure.” University of

Pennsylvania Law Review 159, no. 3: 647-749. http://www.jstor.org/stable/41149884

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 6

Circular A-4 from the Office of Management and Budget identifies several factors for agencies

to consider when proposing regulation to address inadequate or asymmetric information.

examine these factors in Section 7.1 (Baseline for analysis).

3 Rulemaking history

In May 2014, the Department issued an NPRM addressing a variety of aviation consumer

protection issues (Consumer Rule III).

One provision proposed requiring carriers and ticket

agents to disclose baggage fees and seat assignment fees on the first page of search results for

flights. The baggage fee requirement applied to carry-on and first and second checked bags. In

January 2017, the Department issued a supplemental notice of proposed rulemaking (SNPRM)

limiting the proposed disclosures to baggage fees but withdrew it in December.

The current NPRM expands upon the 2014 and 2017 rulemaking actions by proposing to require

carriers and ticket agents to disclose baggage fees, cancellation fees, and change fees on the

first page of search results. The NPRM further proposes to require carriers and ticket agents to

show seat assignment fees for consumers traveling with children 13 years or under and allow for

transactability, or the ability to buy assigned seats, at all points of sale.

4 Ancillary fees for domestic carriers

Department regulations currently require carriers to disclose all ancillary fees on a prominent

link on their homepage.

Carriers must also include baggage fee information for carry-on bags,

first checked bags, and second checked bags on e-ticket confirmations.

While carriers can

show some fees as a range, they must show baggage fees as specific amounts and account for

factors like frequent-flyer status that affect the fees.

Office of Management and Budget. 2003. OMB Circular No. A-4, p. 5.

https://www.transportation.gov/regulations/omb-circular-no-4-0

U.S. Department of Transportation. May 23, 2014. Transparency of Airline Ancillary Fees and Other

Consumer Protection Issues. https://www.federalregister.gov/d/2014-11993

U.S. Department of Transportation. September 19, 2017. Transparency of Airline Ancillary Service Fees.

https://www.federalregister.gov/d/2017-00904

U.S. Department of Transportation. 2021. “Airline Rules and Fares.”

https://www.transportation.gov/policy/aviation-policy/airline-rules-fares

U.S. Department of Transportation. 2021. “Buying a Ticket.”

https://www.transportation.gov/individuals/aviation-consumer-protection/buying-ticket

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 7

This section assesses the state of ancillary fees for the largest domestic carriers in the United

States. We examine carriers who must report certain financial data and on-time performance

data to the Department because they have at least 0.5% of total domestic passenger revenues.

4.1 Baggage fees

Baggage fees on domestic flights vary widely across airlines, even within the same flight class

(Table 1). Ultra-low-cost carriers (ULCCs), which have low base fares and rely on ancillary fees for

most of their revenue,

have the highest baggage fees and the most variation in fees. ULCCs

also charge for carry-on bags while most other carriers do not. Baggage fees can also vary by

individual: passengers with frequent-flyer memberships, credit-card bonuses, military or veteran

status, or other characteristics may have reduced fees or no fees.

Consumers can find baggage fee information on carrier websites, although accessing the

information may interrupt the booking process. Consumers may also need to enter information

in a baggage fee calculator. While most airlines charge the same baggage fee for an itinerary

regardless of connecting flights, at least one airline (Spirit) charged different fees on direct

flights versus flights with connections.

Table 1: One-way domestic baggage fees by air carrier (economy class), May 2022

Carrier

Carry-on (one bag)

First checked bag

Second checked bag

Alaska

Free

$30

$40

Allegiant

$10-$75

$18-$50

American

Free

$30

$40

Delta

Free

$30

$40

Frontier

$60-$89

$55-$89

$60-$79

Hawaiian

Free

$30

$40

JetBlue

Free-$65

Free-$35

Free-$45

Southwest

Free

Spirit

$35-$77

$30-$78

$54-$79

United

Free

$35

$45

Note: Includes all domestic carriers with at least .05% of domestic passenger revenues.

Bachwich, Alexander R., and Michael D. Wittman. 2017. "The Emergence and Effects of the Ultra-Low-

Cost Carrier (ULCC) Business Model in the U.S. Airline Industry". Journal Of Air Transport Management 62:

155-164. https://doi.org/10.1016/j.jairtraman.2017.03.012

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 8

Baggage fees vary more on international flights, as summarized in Appendix A. Moreover, the

systems carriers use to assess fees on these flights vary considerably. Among the nine carriers

reviewed which offer international flights, two do not charge baggage fees, three charge the

same baggage fees as they charge domestic flights, two charge by region and country, and two

require specifying an itinerary.

4.2 Ticket change and cancellation fees

Airlines charge varying fees for changing a ticket (Table 2) or cancelling a ticket (Table 3). Some

mainline carriers have introduced “basic economy” flights with cheaper airfares than regular

economy-class flights but with more restrictions on seat selection, ticket changes, and

cancellations. USDOT regulations require carriers to allow all consumers—regardless of flight

class—to cancel tickets for no charge within 24 hours of purchase or hold a reservation without

payment for 24 hours, depending on carrier policy.

In response to the COVID-19 public health emergency, airlines have also introduced new change

and cancellation policies allowing passengers to cancel or change flights for free. Some airlines

state that they have permanently removed change or cancellation fees for passengers in all

flight classes except basic economy. Instead, passengers can cancel flights and receive vouchers

for future travel in the amount of the original ticket price. Consumers can also purchase travel

insurance or a refundable class of airfare to avoid change and cancellation fees.

Table 2: Ticket change fees by air carrier, May 2022

Carrier

Change fee (main cabin)

Change fee (basic economy)

Delta

None

No changes permitted

Southwest

None

—

Alaska

None

No changes permitted

American

None

No changes permitted

Hawaiian

None

—

Spirit

$0-$99

—

Frontier

$0-$79 one way

—

JetBlue

None

$100-$200; based on route

United

None

No changes permitted

Allegiant

Up to $75 one way

—

Note: Includes all domestic carriers with at least .05% of domestic passenger revenues. “—” indicates that

a carrier does not have distinct “basic economy” fares and the listed main-cabin fees apply instead.

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 9

Table 3: Ticket cancellation fees by air carrier, May 2022

Carrier

Cancellation fee (main cabin)

Cancellation fee (basic economy)

Delta

None; full value converts to e-credit

$99; remaining value converts to e-credit

Southwest

None; refunds made to original form of

payment

—

Alaska

None; full value converts to travel credit

May only be cancelled under 24-hour rule

American

None; full value converts to travel credit

May only be cancelled under 24-hour rule

Hawaiian

$25-100; only applies to Restricted

Refundable Fares

—

Spirit

$0-$99; remaining value converts to

reservation credit

—

Frontier

$0-$79; remaining value converts to travel

credit

—

JetBlue

None; full value converts to travel bank credit

$100-$200; based on route

United

None; full value converts to flight credit

May only be cancelled under 24-hour rule

Allegiant

Up to $75 one way; remaining value converts

to credit voucher

—

Note: Includes all domestic carriers with at least .05% of domestic passenger revenues. “—” indicates that

a carrier does not have distinct “basic economy” fares and the listed main-cabin fees apply instead.

4.3 Seat assignment fees and family seating policies

Most carriers charge people to select seats before the flight if they fly basic economy or wish to

sit in certain main-cabin seats (Table 4). Seat assignment fees typically vary by seat location:

window and aisle seats cost more than middle seats, and seats closer to the front cost more

than seats toward the back. Some carriers also offer economy-class seats that are slightly larger

or offer extra leg room. Buying assigned seating for these seats may require passengers to

purchase a bundle with other ancillary services.

Table 4: Seat assignment fees for main-cabin seats on one-way domestic flights, May 2022

Carrier

Main cabin (regular seat)

Main cabin (seat with additional features)

Delta

Included in most fares

Additional purchase (~$100-$150)

Southwest

No assigned seating

No difference in seat types

Alaska

None

Additional purchase

American

$9-$10

$27 or more

Hawaiian

Included in most fares

$9-$399

Spirit

Up to $50

$12-$250

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 10

Carrier

Main cabin (regular seat)

Main cabin (seat with additional features)

Frontier

Up to $107

JetBlue

Included in most fares

Additional purchase (~$15-65)

United

$9-maximum unknown

$116-$169

Allegiant

None

Unknown

Carriers have different seating policies for families who travel together without buying assigned

seats. Most carriers try to place children next to parents using multiple methods. Carrier seat

assignment systems detect families traveling together if they are on the same reservation and

search for adjoining seats before the day of departure. If that method does not work, then gate

agents may be able to seat families together before the flight.

Carriers display information on family seating to different degrees. American and United, for

example, explicitly discuss their family seating policies on “traveling with children” pages.

Other airlines discuss their policies for traveling with infants, young children, and

unaccompanied minors but do not discuss how to ensure that families sit together.

The Department’s Office of Aviation Consumer Protection provides advice for families traveling

with small children on its website.

The website also provides detailed information on family

seating policies for individual airlines, including links to policies when available. However, the

information is limited to general guidance on how families can sit together and does not include

information on seat assignment fees.

4.4 Re-bundling of airfares

Some air carriers have moved toward re-bundling ancillary services in various combinations and

offering discounts for buying the bundled services. Appendix B describes how airlines have

created several types of bundled fares that incorporate ancillary services such as baggage

transport and seating selection. Bundles also offer varying options regarding ticket changes and

refunds. The availability of bundles depends on fare class. For “basic economy” tickets, some

carriers limit the services consumers can buy or allow bundle purchases only within 24 hours of

departure.

United. No date. “Traveling with children.” https://www.united.com/ual/en/us/fly/travel/special-

needs/infants.html.

U.S. Department of Transportation. 2021. “Family Seating.”

https://www.transportation.gov/individuals/aviation-consumer-protection/family-seating

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 11

Bundled services are tools for airlines to cater to specific consumers in a market.

Carriers that

offer bundles tend to offer them with fares included in the price. A consumer purchasing a

bundle receives only the included services and cannot select additional services for a fee. While

preselected services may reduce consumer flexibility, they may also save time and reduce

complexity for some passengers.

The proposed rule would allow a carrier or ticket agent to display the price of bundles with fares

included, but airlines might need to adjust how they display bundles to ensure that the

consumer understands which services are included in the bundles.

5 Requirements of the proposed rule

This section summarizes the provisions of the proposed rule (Table 5). The NPRM contains

authoritative descriptions of each provision and discusses them in detail.

Table 5: Provisions in the proposed rule

Category

Summary

Additional policies

•

Carriers giving fare and schedule information to ticket agents

must also give information on fees for carry-on bags, first and

second checked bags, ticket changes, ticket cancellations, and

seat assignments.

• Carriers and ticket agents must disclose to consumers

purchasing tickets offline that ancillary fees apply and must

provide exact fees.

• Carriers and ticket agents may display prices with ancillary fees

more prominently than prices with only mandatory charges.

• Terms like “ancillary service fee” are defined for rulemaking.

5.1 Baggage fee information

The proposed rule would require carriers and ticket agents to display the fee for a first checked

bag, a second checked bag, and a carry-on bag on the first page displayed after a search for

flights. The fees must reflect the selected itinerary and fare category and must show weight and

dimension limitations for each bag. Carriers and ticket agents could display the baggage fees

separately or combined with the fare. Carriers and ticket agents would no longer need to

provide the original accompanying notice.

If the carrier or agent website shows multiple fare categories for the same itinerary (Figure 2),

the proposed rule requires the carrier or agent to show the associated baggage fees beside

each fare displayed. Consumers would have the option to conduct a passenger-specific itinerary

search, which would adjust the fees based on passenger characteristics like frequent-flyer status.

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 13

Figure 2: Carrier website (United) showing multiple fare categories, May 2022

5.2 Ticket change and cancellation fees

Carriers and ticket agents may currently place ticket cancellation and ticket change policies on

various parts of their websites to meet disclosure requirements. The proposed rule would

require carriers and ticket agents to display applicable ticket change fees and cancellation fees

on the first page displayed after a search for flights. The carriers and ticket agents would also

need to provide summaries of their 24-hour hold and cancellation policies before the consumer

can buy or reserve tickets.

5.3 Family seating fees

Carriers and ticket agents are currently not required to inform consumers of the carrier’s family

seating policies. The proposed rule would require carriers and ticket agents to display fees for

seat assignments beside search results for fares if the passengers are traveling with children 13

or under and the carriers charge fees to select seats for passengers in that age group.

The provision also requires carriers to allow passengers to purchase seat assignments on ticket

agent websites displaying seat assignment fees. The ability to purchase an ancillary service

directly is known as transactability. The requirement for transactability applies only to non-free

seat assignments for families traveling with children. If airlines do not charge for seat

assignments for families traveling with children, or if airlines do not allow passengers to

purchase tickets through travel agents, then airlines would not be required to make seat

assignments available through ticket agents.

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 14

5.4 Additional policies

The proposed rule contains additional provisions related to ancillary fee information. These

provisions include requirements for ticket agents and options for displaying fees.

While carriers must provide ancillary fee information on their websites, they are not currently

required to provide information directly to ticket agents. The proposed rule would require

carriers to provide ticket agents with “useable, current, and accurate” baggage fee rules for a

first checked bag, a second checked bag, and one carry-on bag. Carriers would also need to

provide rules for change fees, cancellation fees, and family seat assignment fees.

For consumers buying tickets offline (by phone or in person), the proposed rule would require

carriers and ticket agents to disclose that baggage fees, change fees, cancellation fees, and

family seat assignment fees may apply. Carriers and ticket agents would need to state the

specific amounts for the fees, adjusted for passenger characteristics like frequent-flyer status,

and would need to allow consumers to purchase family seat assignments during the phone call

or in-person visit.

Finally, the proposed rule would allow airlines or agents to display a fare including all mandatory

and ancillary charges more prominently than a fare including only mandatory charges. In either

case, fares displayed must include the entire price paid by the customer for air transportation;

individual charges within the price cannot appear more prominently.

6 Travel booking industry structure

Air carriers sell tickets to passengers through multiple channels (Figure 3). Carriers sell some

tickets through direct channels but sell more tickets through travel agents and online travel

sites.

Carriers and travel agents typically interact in a two-sided market through an intermediary

platform offered by a Global Distribution System (GDS) company. Carriers provide fare

information to GDS companies through ATPCO (Airline Tariff Publishing Company). Ticket

agents use GDS to find and buy flights, as well as related items like hotels and rental cars. Online

travel agencies like Expedia or Travelocity use GDS to allow passengers to find and buy flights as

well. Carriers pay GDS companies to display their available seats in search results, while ticket

agents receive payment as incentive to use the systems. The systems used by carriers, ATPCO,

and GDS companies to exchange data may rely on legacy data formats that do not allow for

displaying information regarding ancillary services.

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 15

Figure 3: Airline ticket booking industry structure

Adapted from Daniel L. Rubinfeld. 2014. “Report of Daniel L. Rubinfeld [on behalf of Airlines for America].”

https://www.regulations.gov/comment/DOT-OST-2014-0056-0785

Technology companies that allow air carriers and ticket agents to buy and sell seats directly

from each other have emerged as competitors to GDS. We refer to these companies as “direct-

connect companies.” These companies can offer more capabilities than traditional GDS

companies, including support for displaying ancillary fees. Direct-connect companies have

contributed to an increase in tickets booked directly through carriers rather than GDS. A 2021

aviation industry consulting report estimates that direct-connect bookings will account for 56%

of total bookings by 2023.

The IATA (International Air Transport Association) has launched a data exchange framework

known as New Distribution Capability (NDC), which offers more capabilities than traditional data

formats used by GDS companies, including support for displaying ancillary fees.

Direct-connect

companies have used NDC to provide services to carriers. GDS companies have begun offering

NDC-enabled services to carriers as well, although the services are still in their pilot stages and

limited to selected airlines.

Currently, carriers and ticket agents negotiate contracts to allow for data exchange such that

passengers can buy ancillary services while booking. Individual airlines and major ticket agents

typically negotiate contracts among themselves and share data through third parties such as

Accelya. 2021. Airlines: A Path Back to Profitability. https://w3.accelya.com/news-

views/insights/report/airlines-a-path-back-to-profitability/.

International Air Transport Association (IATA). No date. “Distribution with Offers & Orders (New

Distribution Capability).” https://www.iata.org/en/programs/airline-distribution/retailing/ndc/

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 16

ATPCO. The provision on transactability would make these data exchanges mandatory if airlines

wish to charge fees for seat assignments involving children.

7 Economic effects of the proposed rule

The simple model of asymmetric information, described in Section 2 (Need for regulation),

provides a framework for assessing the potential costs, benefits, and transfers associated with

the proposed rule. The effects of the proposed rule depend on whether the rule increases the

amount of information consumers can access and whether the information improves consumer

comprehension of fees, facilitates comparison shopping, reduces search costs, or otherwise

allows consumers to make choices that increase their welfare. The proposed rule could increase

economic efficiency if it improves consumers’ price calculations and the reduction in deadweight

loss exceeds the cost of supplying the information. It may also facilitate price comparisons by

consumers, increase competition among sellers, and put downward pressure on prices for

airfares and ancillary fees. At the same time, the information could have unintended effects like

overwhelming some consumers or crowding out other information. Due to a lack of data, our

assessment is primarily qualitative.

7.1 Baseline for analysis

The baseline level of ancillary fee information available to consumers includes the information

currently provided by the airline industry, the government, and other third parties. Department

regulations already require carriers to display some ancillary fee information through a link on

the homepage. While information on family seating policies is not similarly regulated, the

Department and some carriers provide information on their websites, as discussed in Section 4.3

(Seat assignment fees and family seating policies).

In limited cases, carriers may display certain ancillary fees prominently enough to satisfy the

requirements of the rule already. Southwest, for example, advertises on its search results that the

first two bags are free and clearly states that it does not charge certain types of ancillary fees

other airlines charge.

Consumers also can book flights through third-party travel services, which provide varying

amounts of ancillary fee information. Some services provide information on ancillary fees more

readily than carriers do. On Google Flights, for example, a passenger can use filters shown after

the initial search to adjust prices based on the planned number of carry-on and checked bags

(Figure 4).

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 17

Figure 4: Google Flights search result incorporating baggage fees, May 2022

The degree to which consumers use existing information on ancillary fees is unknown. In some

cases, consumers may not know how to access the information, especially if it is not readily

available during the ticket booking process. In other cases, consumers may incur costs to search

for the information. For this reason, we primarily evaluate the proposed rule in terms of how it

may change comprehension of ancillary fee information and consumer search costs.

7.2 Benefits

While significant amounts of ancillary fee information exist in the baseline, the proposed rule

could yield societal benefits under two conditions. First, the required disclosures would need to

affect displays of information in ways that improve consumer comprehension of prices.

One

example is if consumers currently gain awareness of some fees, like cancellation or adjacent

seating fees, only after making their purchase decision. Second, even if the information is not

necessarily new, better and more timely comprehension could help consumers calculate prices

more accurately, which in turn would influence their purchase decisions. As described in “Need

for regulation,” economic efficiency could be improved if the disclosures reduce the deadweight

Arthur G. Fraas and Randall Lutter. 2016. “How Effective Are Federally Mandated Information

Disclosures?” Journal of Benefit-Cost Analysis 7, no. 2 (Summer 2016): 326-349,

https://doi.org/10.1017/bca.2016.8

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 18

loss created by asymmetric information or the resources spent to acquire information on

ancillary fees. In addition to efficiency effects, distributional effects favoring consumers could

occur if the better-informed consumers can purchase services at lower prices. These consumer

effects need to be compared with the resources needed to comply with the requirements of the

proposed rule to assess net impacts to efficiency, or net benefits.

USDOT has evaluated these types of expected benefits in the context of full-fare advertising for

Consumer Rule II, which requires carriers and ticket agents to show fares with all taxes and fees

included.

The economic analysis evaluated benefits for passengers who would improve their

price calculations with better information and for passengers who would spend less time visiting

websites to compare prices.

The ancillary fees considered in this proposed rule differ because

they may be more easily avoided than taxes and fees. Nonetheless, applying a similar analysis

for this rule is useful for identifying data gaps and benchmarking the level of potential benefits if

information on key parameters were available even if the results are too uncertain to apply in a

formal comparison of benefits and costs.

7.2.1 Reductions in deadweight loss

The analysis for Consumer Rule II used a consumer surplus methodology to approximate the

deadweight loss associated with consumers not incorporating full information about airfare

taxes into their purchasing decisions. The analysis estimated lost consumer surplus using a price

elasticity of demand calculated by IATA (International Air Transportation Association), average

airfares, and estimates of the fees. The analysis estimated that full-fare advertising would

eliminate about $5.8 million in deadweight loss (in 2011 dollars) if the disclosed taxes accounted

for 5% of total airfare.

Using the price elasticity of demand for air travel to calculate reductions in deadweight loss

assumes that consumers who make improved price calculations reduce purchases of airline

tickets instead of selecting a different, lower-priced itinerary. For this reason, this approach may

not accurately reflect the reduction in deadweight loss due to the full fare advertising rule.

For the proposed rule, we use the methodology from the Consumer Rule II analysis to provide a

hypothetical example of potential benefits from improved price calculations. The example in

Table 6 assumes that the proposed rule would encourage an additional 1% of passengers—

U.S. Department of Transportation. April 25, 2011. Enhancing Airline Passenger Protections.

https://www.federalregister.gov/d/2011-9736

U.S. Department of Transportation. May 24, 2010. Preliminary Regulatory Analysis: Enhancing Airline

Passenger Protections II. https://www.regulations.gov/document/DOT-OST-2010-0140-0003

Sebastien Bradley and Naomi Feldman. 2020. “Hidden Baggage: Behavioral Responses to Changes in

Airline Ticket Tax Disclosure.” American Economic Journal: Economic Policy 12, no. 4: 58-87.

https://doi.org/10.1257/pol.20190200

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 19

measured provisionally by enplanements

—to compare prices and reduce their consumption of

airline tickets as a result. It also assumes that the comparison improves their price calculation

such that the amount of ancillary fees “revealed” by the disclosure adds 5% to the fare those

consumers use to make their purchase decisions. In this hypothetical example, $1.1 million in

deadweight loss would be eliminated, for a benefit of $0.16 per passenger.

Table 6: Example annual benefits for consumers who improve price calculations

Item

Value

Domestic enplanements (2021)

674,000,000

Percentage of passengers who did not compare prices

Passengers benefiting from display of ancillary fees

6,740,000

“Revealed” ancillary fees as percentage of airfare

Revelation in price (“increase in price”)

$16.36

Percentage decrease in demand

-2.0%

Decrease in passengers

134,800

Benefits from eliminating lost consumer surplus in deadweight loss

$1,102,462

Benefits per passenger who did not compare prices

$0.16

While the example calculation shows how one can estimate benefits, we do not have

information to estimate the percentage of passengers who would benefit from comparing prices

or the percentage increase from the base fare the ancillary fee disclosure would reveal. Table 7

shows a matrix of annual estimated benefits from varying the two percentages.

Passenger enplanements measure passengers on individual flights and therefore treat a passenger

taking connecting flights on a one-way itinerary as multiple passengers. We do not have information to

estimate the degree to which passenger enplanements overestimate the number of one-way passengers,

although many passengers do not take connecting flights.

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 20

Table 7: Potential annual benefits based on percentage of passengers and percentage of fees

Addition to base fare “revealed” by ancillary fee disclosure

Percentage of

passengers

$44,098

$176,394

$396,886

$705,576

$1,102,462

$1,587,545

$88,197

$352,788

$793,772

$1,411,151

$2,204,924

$3,175,090

$132,295

$529,182

$1,190,659

$2,116,727

$3,307,385

$4,762,635

$176,394

$705,576

$1,587,545

$2,822,302

$4,409,847

$6,350,180

$220,492

$881,969

$1,984,431

$3,527,878

$5,512,309

$7,937,725

$264,591

$1,058,363

$2,381,317

$4,233,453

$6,614,771

$9,525,270

The potential per-passenger benefits range from $0.01 if the revealed ancillary fees add 1% to

the ticket price to $0.24 if the revealed fees add 6% to the price (Table 8).

Table 8: Potential per-passenger annual benefits

Percentage of ancillary fees “revealed”

Annual benefits per passenger

$0.01

$0.03

$0.06

$0.10

$0.16

$0.24

As noted, this calculation of reduced deadweight loss rests upon the assumption that the

ancillary services represent an inherent component of air travel and that the demand curve for

air travel is appropriate for measuring benefits. Once consumers purchase a ticket, however,

they may be able to avoid ancillary service fees in some circumstances by not using the services

after they become aware of the fees. As described in the NPRM, for example, the 2017 GAO

report found that, after airlines imposed checked baggage fees, the number of checked bags

per passenger declined and the number of carry-ons increased. The price elasticity of demand

for air travel is not the appropriate parameter for evaluating benefits for unpurchased ancillary

services. Instead, we would need data to estimate the demand for the individual ancillary

services themselves. Because we do not know how many passengers avoid fees by not using

ancillary services and lack other key data, these calculations are illustrations rather than

estimates.

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 21

7.2.2 Reductions in search costs

Consumers who search for full fare information and compare ticket prices among carriers

benefit if the proposed rule saves them search time. Such benefits are quantifiable when

information on time savings and the value of time for passengers is available. Our discussion of

potential time savings benefits is only illustrative, however, because we do not have an estimate

of the search time savings. Time savings for individual passengers would also differ based on the

websites used and the itineraries searched.

For full-fare advertising, the analysis for Consumer Rule II used a value of time for air travelers

derived from USDOT data and assumed a time savings of 5 minutes per online transaction. The

analysis calculated that, for an estimated 1.8 million online transactions, the rule would result in

time savings of $3.5 million (in 2011 dollars), resulting in an average savings of about $2.00 per

passenger search.

Table 9 shows example annual benefits for the proposed rule if 1% of passengers compared

prices before the proposed rule and those passengers save 2 minutes of searching after the rule.

We assume that passengers search for fares on their own time without compensation and

estimate the value of this time using the median post-tax wage for United States workers, which

was $22.00 per hour in 2021. In this example, the rule would result in $4.9 million in total search

cost savings, or $0.73 in time savings per passenger. This method of valuing a decrease in search

costs could be applied to an increase in search costs as well.

Table 9: Example annual benefits for consumers already comparing prices

Item

Value

Domestic enplanements (2021)

674,000,000

Percentage of passengers who compared prices

Passengers benefiting from display of ancillary fees

6,740,000

Average time saved per passenger who compared prices (minutes)

Passenger value of time per hour

$22.00

Value of time savings for passengers comparing prices

$0.73

Monetized time saved from reduction in search costs

$4,942,667

We do not have information to estimate the number of passengers who already compare fares

with ancillary fees included or the amount of time they would save due to the proposed rule.

Table 10 shows how estimated benefits would vary by time saved and the percentage of

passengers affected.

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 22

Table 10: Potential annual benefits based on percentage of passengers and time saved

Time saved (minutes)

Percentage of passengers

0.5%

$1,235,667

$2,471,333

$3,707,000

$4,942,667

$6,178,333

1.0%

$2,471,333

$4,942,667

$7,414,000

$9,885,333

$12,356,667

1.5%

$3,707,000

$7,414,000

$11,121,000

$14,828,000

$18,535,000

2.0%

$4,942,667

$9,885,333

$14,828,000

$19,770,667

$24,713,333

2.5%

$6,178,333

$12,356,667

$18,535,000

$24,713,333

$30,891,667

3.0%

$7,414,000

$14,828,000

$22,242,000

$29,656,000

$37,070,000

The potential benefits per passenger for passengers who were comparing fares range from

$0.37 for one minute of search time saved to $1.83 for five minutes of search time saved (Table

11).

Table 11: Potential per-passenger annual benefits

Time saved (minutes)

Annual benefits per passenger

$0.37

$0.73

$1.10

$1.47

$1.83

7.2.3 Other benefits

Consumer advocates have expressed concerns that the ancillary fees often surprise consumers.

Passengers who are surprised could experience disutility from the unplanned expenses and

could encounter delays when checking in at the airport if they are unprepared for the fees.

Better information would reduce surprises and their associated costs.

Similarly, passengers traveling with children 13 or under who do not purchase assigned seats

may experience stress prior to the flight due to uncertainty that a carrier will be able to

accommodate a need for adjacent seating. The transactability requirement will provide

passengers traveling with children 13 or under an additional opportunity to assure they are

assigned seats next to their children prior to departure, which will reduce this stress. Ticket

agents who book tickets for the consumers would also save time by being able to purchase the

assigned seating directly instead of contacting a carrier or visiting its website. The number of

potentially affected consumers or ticket agents is unknown.

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 23

Finally, consumer responses to improved fee information could serve as source of market

feedback that encourages producers to offer higher-quality products or produce at a lower cost.

7.2.4 Offsets to benefits

Circular A-4 from the Office of Management and Budget directs agencies to consider the

countervailing risks of a rule in addition to its direct benefits and costs.

A countervailing risk is

an adverse consequence of a rule not already accounted for in the direct costs of the rule. While

one can treat countervailing risks as costs, we treat them as offsets to benefits or subtractions

from benefits, as suggested by Circular A-4. If the offsets outweigh the benefits, then the

proposed rule would create disbenefits overall.

In the case of disclosures, more information is not always better. When consumers have access

to substantial amounts of information, there is a risk that mandated disclosures could displace

other information relevant to a consumer’s decision and increase search costs. In addition, if the

mandated disclosures lead consumers to make other mistakes in assessing prices, then the

additional information could create the same types of problems as a lack of information.

Industry commenters responding to the 2014 NPRM, which proposed to require disclosing

baggage and seat assignment fees on the first page of search results, raised concerns that the

requirement would crowd out information due to limited screen space, especially for mobile

phone users.

Requiring carriers to display ancillary fees prominently may reduce space to show

other items of interest, like alternative flight options (Figure 5). Reducing space could increase

search costs for passengers by requiring them to interact with the page and scroll down for

information. Other users could miss the information if they fail to scroll. However, a 2018 user

experience study from the Nielsen Norman Group collecting eye-tracking data from people

viewing websites shows that they are willing to scroll past the first screenful of content to gather

information, although they spend much less time on the following content.

We do not have information on the size of the potential offsets relative to the benefits of the

proposed rule. It is therefore not possible to determine whether the required disclosures, on net,

reduce deadweight loss or search costs.

Office of Management and Budget. 2003. OMB Circular No. A-4, p. 26.

https://www.transportation.gov/regulations/omb-circular-no-4-0

Airlines for America. 2015. “Airlines for America.” https://www.regulations.gov/comment/DOT-OST-

2014-0056-0785.

Fessenden, Therese. 2018. “Scrolling and Attention.” https://www.nngroup.com/articles/scrolling-and-

attention.

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 24

Figure 5: Sample JetBlue flight search result on mobile device, July 2022

We do not have information on the size of these potential offsets relative to the benefits of the

proposed rule. It is therefore not possible to determine whether the required disclosures, on net,

reduce deadweight loss or search costs.

7.3 Costs

Carriers, ticket agents, and other firms involved in ticket booking could incur costs due to the

proposed rule because they may need to reprogram booking systems to exchange and display

ancillary fee information. Carriers already provide information on ancillary fees but may need to

alter how they display the information—and, in the case of seat assignment fees for people

traveling with children, how they allow purchases as well. Carriers, ticket agents, and other firms

could also incur costs to renegotiate existing contracts for information sharing and

transactability.

7.3.1 Costs for carriers

For carriers, the costs of disclosing ancillary fee information include implementation costs and

ongoing costs to distribute ancillary fee information to ticket agents, whether through GDS via

ATPCO, NDC, or otherwise. The 2017 SNPRM analysis estimated that most carriers marketing to

customers in the United States in 2018 would incur start-up costs to distribute the information,

with a few having no costs because they already have the capability to provide ancillary fee data

via NDC. The number of carriers capable of providing NDC data has increased since 2017: as of

May 2022, at least 101 airlines around the world, including American, Delta, Southwest, Spirit,

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 25

and United, can provide NDC data.

Carriers would also incur costs to change the display of

their websites to meet the requirements of the proposed rule. Finally, carriers would incur costs

to share information on ancillary fees with ticket agents for consumers buying tickets in person

or by phone.

The provision would result in startup costs for carriers, ticket agents, and intermediary parties

like ATPCO to set up data exchanges if they do not already have agreements to exchange data

for seat assignment fees and selection. These startup costs include developing and testing

technology to exchange data, as well as costs to develop and test internal company procedures.

Airlines would also incur ongoing costs to maintain and update seat fare information.

The 2017 SNPRM analysis estimated total implementation costs for carriers if half or if two-

thirds had costs of $1,000,000 and the remaining carriers had costs of $500,000, although the

analysis did not provide a rationale for using those shares. The total estimated costs ranged

from $83 to $92 million. The analysis stated that the Department expected the amounts to be

lower and asked for comments because the original comments were in response to a proposed

rule involving transactability.

Another estimate of costs for disclosing ancillary fees comes from a study in 2014 prepared for

Airlines for America as part of a response to the Consumer Rule III NPRM.

The study surveyed

five major airlines about the costs they incurred to comply with the requirements of Consumer

Rule II, which requires airlines to distribute baggage fee information to travel agents and update

their websites to display baggage information. The five airlines were American, Alaska, Delta,

Southwest, and United, with Southwest excluded from the reported results because it uses a

different model for ancillary fees.

Carriers reported an average cost of $3.6 million in the first year and $7.2 million over a ten-year

analysis period to exchange baggage fee information with ticket agents. To update carrier

websites with baggage fee information, carriers reported an average cost of $7.0 million in the

first year and $18.4 million over a ten-year analysis period. The costs for exchanging and

updating ancillary fee information for seat assignments are likely to be higher because the

exchange also requires support for dynamic pricing, where pricing and availability change due

to other passengers buying seats.

These cost estimates related to the baggage fee requirement allow for a lower-bound estimate

of costs for setting up displays of ancillary fees and transactability for seat assignments.

Adjusting for inflation using the Consumer Price Index for All Urban Consumers (20% from

International Air Transport Association (IATA). No date. “NDC Registry.” https://www.iata.org/ndc-

registry/.

Daniel L. Rubinfeld. 2014. “Report of Daniel L. Rubinfeld [on behalf of Airlines for America].”

https://www.regulations.gov/comment/DOT-OST-2014-0056-0785

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 26

January 2014 to January 2022), the per-carrier costs to exchange information would be $4.3

million in 2022 dollars for the first year and $8.7 million for the ten-year analysis period. If the

nine largest domestic carriers excluding Southwest incurred similar costs, the total estimated

costs would be $38.7 million in the first year and $77.9 million over a ten-year period.

Intermediaries and ticket agents would also incur costs to process and display data.

A provision to transmit and disclose information on seat assignments for families may also

increase the time needed to process and load search results for passengers. This cost would

apply to all passengers until they disclose during the booking process that they are not traveling

with children. In some cases, passengers may disclose it before search.

The Airlines for America study estimated costs of wait time for seat assignment fee information

by assuming that such a provision would apply to all passengers and would add approximately

20-40 seconds to each itinerary search. The study estimated that a provision would cost

approximately $805 million per year. Because the current provision applies to fewer passengers

and because technologies to exchange information have evolved in the intervening eight years,

the degree to which the estimates of time costs remain applicable is unknown. The Department

seeks additional comment on this issue.

For ongoing costs of sharing ancillary fee information, the 2017 SNPRM analysis estimated that

each carrier in the United States would spend 8 additional labor hours a year providing

information on baggage fees. The estimated hourly labor cost was $94.57, based on an estimate

provided by a carrier in response to Consumer Rule II, for an estimated annual cost of

approximately $160,000. In the Airlines for America study, however, carriers stated that they

devoted “the equivalent of at least one full-time employee” to share baggage fee information.

Because we do not have further information to assess ongoing costs, we instead provide an

example calculation if carriers would need one full-time employee, working at 2080 hours a year,

to provide information for the new ancillary fee disclosures and assigned seat transactability.

Using these estimates and adjusting the 2017 SNPRM hourly labor costs for inflation (from

$94.57 in 2017 to $101.87 in 2021), the nine largest domestic carriers excluding Southwest

would incur an estimated labor cost of approximately $1.77 million (Table 12).

Table 12: Example ongoing costs of providing ancillary fee information

Item

Value

Carriers providing ancillary service fee information

Annual labor hours to provide change, cancellation, and seat assignment fee

information to ticket agents

2080

Hourly labor cost for reporting

$94.57

Labor hours for carriers to provide information

18,270

Value of labor hours for carriers to provide information

$1,770,350.40

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 27

7.3.2 Costs for GDSs and direct-connect companies

While the proposed rule does not impose direct requirements on GDSs, they would need to

upgrade their systems and data-sharing arrangements so that ticket agents using GDSs can

show ancillary fees on their websites as required by the proposed rule. Direct-connect

competitors would similarly incur implementation costs, but their costs would be lower if they

already exchange data with the NDC format, which supports ancillary fee information.

The 2017 SNPRM analysis noted that GDSs already began efforts to exchange ancillary fee data

with carriers for market reasons unrelated to the proposed rule. GDSs now tout their adoption of

NDC, and ATPCO advertises a platform to “accelerate NDC industry implementation.”

Because

GDSs are already starting to upgrade systems, the cost properly associated with the proposed

rule is the cost of requiring GDSs to upgrade earlier than they would without the rule, which is

less than the total cost of upgrading systems.

7.3.3 Costs for ticket agents and metasearch sites

Like carriers, ticket agents with websites displaying airfares would incur costs to modify or

upgrade systems to display ancillary fees and allow transactability. Metasearch sites that display

airline flight search options but do not sell airline tickets would incur costs to display the

ancillary fees but not to allow transactability. Ticket agents would also incur costs to maintain

usable, accurate, and up-to-date information on ancillary fees for consumers contacting them in

person or by phone. We do not have information to estimate these costs.

7.4 Comparison of benefits and costs

The societal benefits of the proposed rule depend on whether the proposed rule facilitates

consumer comprehension of ancillary fees or reduces their search costs. The degree to which

the proposed rule generates benefits is unclear due to a lack of information and due to

uncertainty regarding the existence or magnitude of potential offsets from potential crowding

out of relevant information.

While industry is already disclosing the required information required to a large degree, we

expect that carrier and ticket agents will need to adjust how they display price information. The

primary costs of the rule involve adjustments in programming and display of information. The

costs for GDSs and other ticket agents are highly uncertain because it is unclear how the rule

would change their displays of airline ticket prices and what types of upgrades they would need

to conduct.

Airline Tariff Publishing Company (ATPCO). No date. ATPCO/SITA NDC Exchange.

https://www.atpco.net/sites/atpco-public/files/all_pdfs/ATPCO_NDC_Whitepaper.pdf

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 28

7.5 Distributional effects

The basic model of asymmetric information also identifies a key distributional effect involving

producers and consumers. This effect arises because there is a transfer of consumer surplus to

producers who exploit an information advantage. When the information advantage is

eliminated, the captured surplus returns to consumers. Like societal benefits, the extent of the

transfer depends on whether the proposed rule improves information for consumers. More

specifically, improvements in information could allow consumers to reduce purchases of

ancillary services that they do not want or need or to uncover lower price options through

comparison shopping.

8 Uncertainties

The baseline level of information that passengers have on ancillary fees is substantial, but we do

not have information on how passengers use the information to calculate total prices or how

well they understand ancillary fees overall. Some consumers may have developed increased

awareness of ancillary fees due to experience with bookings and information from air carriers,

consumer advocacy groups, media, and government. An accurate assessment of the effects of

the proposed rule would consider a baseline that includes consumer adaptations to industry

practices, but we do not have data to measure how consumer awareness has changed.

Our ability to estimate benefits and costs is limited due to other significant uncertainties. We do

not have data on the amount of search time the proposed rule is expected to save or the

amount that consumers underestimate airfares due to the lack of information on ancillary fees.

We also do not have current information to assess the costs that carriers, global distribution

systems (GDSs), and direct-channel companies would incur to share ancillary fee data, modify

websites, and allow transactability for assigned seats for children 13 or under. The airline

industry may have some of this information from user experience research, market studies, or

previous technology initiatives.

Finally, because we cannot estimate overall benefits, costs, and net benefits, other potential

economic effects of the proposed rule are also unknown. These include the ultimate effects on

airfares as well as any secondary effects like impacts to ancillary fees, ancillary services, or

contracts between carriers, ticket agents, and other firms.

If the technology and search costs are high enough, then airlines may respond by ending the

practice of charging seat assignment fees for families. Airlines may further respond by changing

ancillary fee charges, changing base fares, or assessing new ancillary fees. We do not have

information on the amount of revenue airlines currently collect from seat assignment fees from

families traveling with children, although seat assignment in general is the second largest source

of ancillary fees after baggage. Information is not currently available to assess the potential

effects of such a shift in pricing on ancillary fees or base ticket prices. These changes would also

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 29

have distributional effects if they changed the amounts that different groups of passengers

(families with children; people traveling without children) pay in ancillary fees to airlines.

The effects of requiring transactability on contracts between airlines and ticket agents is

unknown. Airlines solicit bookings through travel agent services but also maintain their own

booking sites. Airlines collect fares, ancillary fees, and other ancillary revenues such as hotel

commissions from passengers who book directly through their website.

The Department seeks information to reduce the uncertainties in this analysis. In particular, the

Department seeks comments on the potential implementation costs of the proposed rule and

the potential changes on consumer search costs and decision-making.

Table 13 summarizes the key uncertainties for quantifying or monetizing the economic effects of

the proposed rule. The Department seeks comments and information that would help with

quantifying the effects. The same uncertainties that prevent estimating primary effects also

preclude assessing potential secondary effects, including effects on airfares, ancillary fees, or

GDS contracts with carriers and ticket agents. Given the overall lack of data, it is not possible to

make an economic judgment at this time about potential secondary effects.

Table 13: Summary of key uncertainties for quantifying economic effects

Item

Uncertainties

Benefits

Gross benefits

Reduction in deadweight loss due to

increased accuracy in consumers’ price

calculations

•

Amount of price mistake

• Number of passengers who do not incorporate full

information into price calculation

• Number of passengers who would choose not to

use ancillary services with full price information

versus those who would forgo air travel altogether

Reduction in search costs for consumers

seeking information on ancillary fees

• Amount of time saved

• Number of consumers who would save time

shopping for airline fares

Reduction in surprise costs

•

Number of consumers unaware of ancillary fees

Offsets to gross benefits

Increase in search costs for consumers

seeking information on items displaced by

new disclosures

• Increase in search time

• Number of consumers who experience increased

search time

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 30

Item

Uncertainties

Costs

Implementation and ongoing costs for

carriers, ticket agents, GDS companies, and

direct-connect companies to display ancillary

fees and allow transactability for assigned

seats for children 13 or under

•

Needed changes to websites

• Needed changes to programming

Ongoing costs for carriers and ticket agents

to exchange and maintain ancillary fee

information for offline and in-person

purchases

• Amount of training required to enable ticket

agents to use ancillary fee information

Transfers

Gains in consumer surplus (transfer from

airlines to consumers)

•

Extent to which existing industry pricing practices

increase producer surplus (profits)

9 Regulatory alternatives

In developing the NPRM, USDOT considered two alternative proposals. One proposal

considered an alternative display for family fees. Another proposal considered different display

requirements for baggage versus change and cancellation fees.

9.1 Displaying maximum seating fees for family seating

USDOT considered alternative family seating provisions that would require carriers and ticket

agents to show the maximum seat assignment fees that passengers could pay to ensure that

they had adjoining seats. If the fees increase after booking, carriers and tickets would need to

show the maximum fees at any point before the flight. Because these amounts may not reflect

what most consumers would pay in practice, such disclosures could be confusing to consumers.

For this reason, USDOT rejected this alternative in favor of a requirement that allows consumers

to purchase seat assignments directly from ticket agents.

9.2 Displaying fee information on the final page

USDOT considered displaying ticket cancellation and change fee information on the final page

before booking rather than the first page of search results. This regulatory alternative would

result in a smaller reduction of search costs for the information. At the same time, it would also

be less likely to displace trip information from the first page of search results. For this reason, it

is unclear whether the policy alternative would reduce overall search costs relative to the

selected policy. In addition, the alternative would not meet the policy objective of assuring that

that the consumer has information early in the purchase process.

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 31

10 Summary

Consumers have access to substantial amounts of information on ancillary fees and family

seating policies through carrier websites, ticket agents, and third parties, although the ease with

which they can access the information is unknown. The existence of this information suggests

that the potential for market failure due to a lack of information alone is limited. We therefore

evaluate the proposed rule in terms of how it may change consumer search costs and

comprehension of ancillary fee information. Table 13 summarizes the expected economic effects

of the proposed rule.

Table 14: Summary of economic effects of the proposed rule (2021 dollars)

Item

Annual amount

Benefits

Gross benefits

Reduction in deadweight loss due to increased accuracy in consumers’

price calculations

See illustrative example

Reduction in search costs for consumers seeking information on ancillary

fees

See illustrative example

Reduction in surprise costs and anxiety for passengers traveling with

children

Not estimated

Market feedback effects (enhanced price and quality combinations)

Not estimated

Offsets to gross benefits

Increase in search costs for consumers seeking information on items

displaced by new disclosures

Not estimated

Total benefits

Indeterminate

Costs

Implementation and contract negotiation costs for carriers, ticket agents,

GDS companies, and direct-connect companies to display ancillary fees

and allow transactability for assigned seats for children under 13

See illustrative example

Ongoing costs for carriers to provide data

See illustrative example

Ongoing costs for carriers and ticket agents to exchange and maintain

ancillary fee information for offline and in-person purchases

Not estimated

Total costs

Not estimated

Net benefits

Indeterminate

Transfers

Gains in consumer surplus (from airlines back to consumers)

Indeterminate

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 32

The primary costs of the proposed rule are the implementation costs that carriers and ticket

agents would incur to share ancillary fee data, modify websites, and allow transactability for

assigned seats for children 13 and under. These costs include startup implementation costs as

well as ongoing costs. Third parties involved in data exchange, such as global distribution

systems (GDSs) and direct-channel companies, would incur costs as well despite not being

directly regulated by the rule. Because these entities are already starting to upgrade systems for

market reasons, the cost properly associated with the proposed rule is the cost of requiring

them to upgrade earlier than they would without the rule.

Given the lack of current data, it is not possible to quantify benefits for consumers after

accounting for offsets. Potential benefits are from the reduction in deadweight loss due to

inaccurate price calculations and search costs. The potential for crowding out of relevant

information could offset these benefits. Because we cannot quantify benefits or disbenefits, it is

not possible to assess the net benefits at this time.

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 33

Appendix A International baggage fees by carrier

The Department collected baggage fee information for international flights on domestic carriers

with at least .05% of domestic passenger revenues. This appendix provides information on

baggage fees for individual carriers.

Alaska Airlines

International baggage fees were the same as those for domestic travel. Alaska noted via chat

that international taxes might result in a “nominal” increase to a baggage fee.

Allegiant Air

Allegiant does not offer international flights.

American Airlines

American’s fees vary by region and country, as well as by seasonal travel dates for destinations

in the Caribbean, Central America, and South America. Table 14 shows maximum fees based on

seasonal pricing.

Table 15: American Airlines maximum international baggage fees, one-way travel

Region

Bag 1

Bag 2

Domestic

$30

$40

Mexico

$30

$40

Haiti

$30

$65

Cuba

$30

$200

Caribbean (except Cuba and Haiti)

$30

$40

Central America

$30

$65

Guyana and Suriname

$30

$40

South America (except Guyana, and Suriname)

$45

$65

Transatlantic

$75

$100

Transpacific

$100

Delta Air Lines

Delta provides a fee calculator rather than a table of fees on its website. The fees vary based on

the destination, the cabin class, and whether passengers own an affinity credit card. In general,

first and second bags are checked free for passengers in the Delta One, First, and Premium

Select fare classes. For the main cabin fare classes, baggage fees vary based on the destination

and credit card. For instance, on a trip to Buenos Aires, the first checked bag is free and the

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 34

second bag costs $60. On a trip to London or Tokyo, in contrast, the first checked bag is free,

and the second bag costs $100. On a trip to Rio De Janeiro, the first checked bag is $60 for Basic

but free for gold card holders.

Frontier Airlines

Frontier’s website requires the traveler to select the origin, destination, and dates of travel to

display the baggage fees; fees vary based on dates, routes, and purchase timing and channels. A

search for a one-way flight from Denver to San Jose, Costa Rico on June 18, 2022, returning June

23, 2022, yields the following fees:

• For carry-on bag, the fee ranges from $60-$89

• For the first checked bag, the fee ranges from $55-$89

• For the second checked bag, the fee ranges from $60-$79

Hawaiian Airlines

Hawaiian does not charge fees for the first two checked bags.

JetBlue

JetBlue’s website presents two bag fee tables arranged by fare and region.

Fees for Latin America and Caribbean routes are the same as U.S. domestic routes and depend

on the fare type purchased:

• The first checked bag is either included (free) or $35

• The second checked bag is either included (free) or $45

Fees for travel between the U.S. and U.K. depend on fare type purchased:

• The first checked bag is included (free) for all fare types except Blue Basic, which costs

$65

• The second checked bag is either included (free) or $105

Southwest Airlines

Southwest does not charge any fee for the first two checked bags of international travel, as with

domestic travel.

Spirit Airlines

As with domestic travel, Spirit Airlines’ website requires the traveler to select dates of travel and

the origin and destination of travel to display the baggage fees, and notes that bag prices vary

based on dates of travel, route, and timing/channel of purchase (e.g., during online booking,

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 35

before online check-in, during online check-in, at airport / group desk / reservation center, or at

gate). For example, a search for a one-way flight from Baltimore to Medellin, Colombia on June

17, 2022, returning June 24, 2022, yields the following fees:

• For carry-on bags, the fee ranges from $45 to $76

• For the first checked bag, the fee ranges from $34 to $76

• For the second checked bag, the fee ranges from $58 to $79

United Airlines

Like with domestic travel, United requires travelers to use the online baggage calculator to

determine first and second checked baggage service charges. Table 15 compiles maximum

baggage fees for various itineraries using the calculator.

Exemptions or savings may apply based on fare type, frequent flyer status, affinity card

membership, pre-payment, and subscription plans. For Basic Economy fares, the first checked

bag will usually incur a fee.

Table 16: United Airlines maximum international baggage fees, one-way, Main Cabin class

Itinerary

Bag 1 (Main Cabin)

Bag 2 (Main Cabin)

Washington DC – Hong Kong

$100

Washington DC – Paris, France

$75

$100

Washington DC – Tel Aviv, Israel

$100

Washington DC – Sao Paulo, Brazil

$45

$65

Washington DC – Sydney, Australia

$100

Washington DC – Cape Town, South Africa

Washington DC – Mexico City, Mexico

$35

$60

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 36

Appendix B Air fare and ancillary service bundles

The Department collected information on ancillary services offered as bundles on domestic

carriers with at least .05% of domestic passenger revenues. This appendix provides information

on bundles for individual carriers.

Alaska Airlines

Alaska does not brand any offering as a “bundle” but offers three fare types in the main cabin

with varying levels of ancillary services : “premium class” (economy cabin seating with more

pitch and other attributes), “main cabin” (with no change fees and no charge for advance seat

assignments), and “saver fares” (a basic economy offering, with most seats assigned only at

check-in, and no ticket changes or refunds).

Most customers seated in the main cabin pay $30 and $40 for first and second checked bags.

Waivers may apply for certain fares or frequent-flyer program members, and flights within

Alaska include two checked bags in the fare.

Allegiant Air

Allegiant offers separate (à la carte) pricing for most ancillary services but has introduced

bundles of ancillary services in its booking process. Allegiant advertises the bundles as ways to

streamline booking and save time and money.

Passengers may choose not to purchase bundles and instead buy seat assignments and

baggage separately. Fees for seat assignments vary by flight, and fees for carry-on and checked

bags range from $10 to $75 based on routing.

Changes to tickets may be allowed for a change fee and difference in fare. Customers may also

purchase “Trip Flex,” which allows a one-time change for no additional fee.

American Airlines

America takes a hybrid approach to bundling products and services. American offers “premium

economy,” “economy,” and “basic economy” fare bundles in the main cabin. “Premium

economy” includes wider seats, food with free beverages, and free Internet access, among other

services. “Basic economy,” in contrast, has lower fares but does not allow for seat assignment

and is not eligible for ticket changes. The airline also allows passengers to purchase some

services separately, including checked bags, food, Internet access, and entertainment.

Delta Air Lines

Delta takes a hybrid approach to bundling products and services. It offers distinctly branded

bundles with varying levels of ancillary services, including “Basic Economy” (the lowest cost and

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 37

with the most restrictions), “Main Cabin” (standard economy), and higher-service classes (e.g.,

“Comfort+,” “Premium Select,” “Delta One”). Delta also offers separate pricing for items such as

bags.

“Basic Economy” tickets are non-changeable and non-refundable, although passengers may

cancel them for a fee to receive credit. The tickets also have restrictions on seat assignments,

earning miles, upgrades, and other aspects of air travel.

Passengers with “Main cabin” and higher bundles can change their itineraries. Same-day

changes typically have a fee of $75, waived for certain frequent flyer program levels. Earlier

changes are often free for domestic flights but may have fees up to $500 internationally. Main

cabin customers may select seats in advance for free and can purchase optional fare upgrades

for premium seating. They may also buy certain main cabin seats in favorable locations.

All customers seated in the main cabin pay $30 and $40 for first and second checked bags.

Waivers may apply for elite frequent flyer program members.

Frontier Airlines

Frontier offers a selection of separately purchased products and services such as seats and bags.

It also advertises two options to “Bundle and Save”:

1. The “Works” bundle, only offered for sale at initial booking on its website, includes a

carry-on bag, a checked bag, seat selection and priority boarding, flight flexibility and

refundability. The bundle applies to all passengers in the same round-trip booking.

Pricing for this bundle appears on the carrier’s site during booking and starts at $59 for

one-way travel based on the route.

2. The “Perks” bundle, which can be purchased after a trip booking, does not have flight

flexibility or refundability; prices also rise before the departure date. The bundle applies

to all passengers in the same round-trip booking as well, and generally starts at lower

prices than the “Works” bundle.

Hawaiian Airlines

Hawaiian offers no bundles per se but offers several fare classes and opportunities for main

cabin consumers to add or upgrade separate products. “Basic economy” fares are non-

refundable, with no changes allowed. Passengers may select seats only upon check-in and may

not upgrade seats. “Main cabin” fares can be changed for free, although a fare difference may

apply, and passengers may select seats before check-in.

Most customers seated in the main cabin pay $30 and $40 for first and second checked bags.

Waivers may apply for certain fares or frequent-flyer program members, and up to two checked

bags on intra-island flights within Hawaii receive a $5 discount.

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 38

JetBlue Airways

JetBlue has adopted a hybrid approach to bundling, offering several fare bundles while still

charging separately for common items like bags and refreshments on board.

JetBlue’s basic bundle (“Blue Basic”) allows for flight changes and refunds for travel credit,

although passengers pay $100 to $200 depending on the route. The bundle also allows for

advance seat assignments for a fee ranging from $5-$40 up to 24 hours prior to departure, at

which point passengers may select seats for free.

Most of JetBlue’s non-basic fares act like fare bundles and include a carry-on bag, ticket

changes, seat selection, earlier boarding, and higher rates for earning reward points. Main cabin

customers may select seats in advance without a fee and can purchase optional fare upgrades to

premium seating. Most customers seated in the main cabin pay $35 and $45 for first and second

checked bags. Waivers may apply for certain fares or frequent-flyer program members.

Southwest Airlines

Southwest has an all-coach cabin with no reserved seating assignments. In addition, it has never

unbundled the two free standard bags and fee-free flight changes it offers in every fare. Instead,

Instead, Southwest offers increasing levels of services via distinctly branded bundles. These

bundles offer higher frequent flyer earning levels, transferrable flight credits, boarding priority

(which effectively grant increased access to seating choice and carry-on space), and

refundability, among other attributes.

Below are sample differences in fare product services using Southwest’s booking tool for a

roundtrip Dallas-Baltimore itinerary in June 2022.

• $30 upgrade from “Wanna Get Away” to “Wanna Get Away Plus”: adds transferable flight

credits and same day flight changes and more points earning)

• $50 upgrade from “Wanna Get Away Plus” to “Anytime”: adds refundability, boarding

priority and early check-in, and more points earning)

• $40 upgrade from “Anytime” to “Business Select”: adds still earlier boarding and drinks on

board, and more points earning)

For an Orange County (CA)-Pittsburgh roundtrip itinerary in June 2022, the increments between

the different fare types are $30 (for “Wanna Get Away Plus”), $50-90 (for “Anytime” depending

on the departure and arrival times”), and $40 (for “Business Select”).

Spirit Airlines

Spirit advertises a “customizable” experience in which every attribute besides transportation

itself is charged separately, including bags, seat assignments, beverages, and boarding passes

Enhancing Transparency of Airline Ancillary Service Fees: Regulatory Impact Analysis 39

printed by an agent at the airport. Spirit lists at least 35 distinct fees apart from seat and bag

fees on its website fee reference page and does not appear to offer any form of bundling.

Spirit charges from $0 to $99 for modifying a ticket, depending on how far in advance of

departure the change is made.

Seating can be obtained at no additional charge for those consumers who wait for a randomly

assigned seat at check-in or boarding. Advance seat selection ranges from up to $50 for regular

seating and up to $250 for their larger seat product (“Big Front Seats”).

Spirit charges separately for carry-on bags and first and second checked bags, with prices that

vary by date and routing, and are charged per segment rather than one-way journey. These fees

also vary depending on the purchase channel and timing before departure and may be

discounted via purchased memberships. Although highly variable as described, these fees

appear to range from ~$30 to ~$84 on a selection of domestic itineraries.

United Airlines

United takes a hybrid approach to bundling products and services. It separates its “basic

economy” fare from other main cabin fares but also sells “United Travel Options” bundles, which

allow a consumer to select from a menu of options at a lower cost than buying services

separately. These bundle options include upgraded seating. seat assignments, baggage, Internet

access, airport lounge access, and higher mileage earning. United also offers subscriptions of

varying lengths for items such as lounge access, Economy Plus seating, baggage, or Internet

access.

United’s “basic economy” tickets cannot be changed or cancelled except under the

Department’s 24-hour rule, unless the passengers purchased one of the bundles. Seat

assignments are available upon check-in, or in advance for a fee starting at $9 one-way. “Basic

economy” passengers can bring a personal item on board but must check carry-on baggage.

Passengers with regular main-cabin tickets can change or cancel flights for free, with refunds

going to flight credit, although they incur a fee for changing a flight the same day if it does not

involve standby travel. They may select or change seats at or after booking for free, although

upgraded seats and seats in some locations may require a fee.

Most customers seated in the main cabin pay $35 and $45 for first and second checked bags.

Waivers may apply for certain fares or frequent-flyer program members.