On Wednesday, December 4th, the U.S. Senate Homeland Security Permanent Subcommittee on Investigations met for a hearing entitled “The Sky’s the Limit- New Revelations About Airline Fees.” Subcommittee members called on witnesses from various airlines to discuss the ongoing practice of collecting additional fees (known as ancillary fees), which connects to a recent Majority staff report on the same subject.

Witness List

Steve Johnson, Vice Chair and Chief Strategy Officer, American Airlines

Robert Schroeter, Senior Vice President and Chief Commercial Officer, Frontier Airlines

Peter Carter, Chief External Affairs Officer, Delta Airlines

Matthew Klein, Executive Vice President and Chief Commercial Officer, Spirit Airlines

Andrew Nocella, Executive Vice President and Chief Commercial Officer, United Airlines

Recent Investigations

Traveling by air is a common form of travel, providing people with connections to places across the country and globe. For the millions of people who travel by air each year, the additional fees that are associated with air travel have become as commonplace as air travel itself. Nowadays, there is a fee for checking a bag to the destination, a fee for selecting a seat rather than the airlines automatically assigning a seat, and a fee for changing or canceling a reservation.

In 2023, the Permanent Subcommittee on Investigations began an investigation into the practice of charging additional or ancillary fees among airlines. The investigation sought to reveal how airlines collect fees, how much the airlines benefit from collecting fees, and if the practice of charging additional fees is related to the costs of operating airlines. The investigation focused on three legacy air carriers: American, United, and Delta airlines. The investigation also focused on two ultra-low-cost airlines: Frontier and Spirit airlines.

The Subcommittee released its findings in a November 2024 report. The investigation found that the five airlines in question generated $12.4 billion in seat fees between 2018 and 2023. Revenue from seat fees was second only to baggage fees, which generated $25.3 billion over the same six-year period. Table 1 shows the portion of total revenue from seat fees for the five airlines.

Table 1. Portion of Total Revenue from Seat Fees

Source: The Sky’s the Limit: The rise of junk fees in American travel. Majority Report, November 2024.

Throughout the hearing, the senators pressed the witnesses on a variety of issues relating to the findings of the report. Subcommittee chair Sen. Richard Blumenthal (D-CT) noted that there is bipartisan frustration and demand for changes in how airlines approach ancillary fees. The tense and heated discussions throughout the hearing accurately reflected the chair’s observation of this bipartisan frustration.

Links between airline costs and ancillary fees 

The report found that charging additional fees is not associated with the airline’s cost of providing service and noted that the airline’s costs include fuel, human resources, and aircraft. While airlines have reported their costs over the years, the airlines reported to the investigation that any given additional fee is not tied to any cost of providing service. In fact, some airlines noted in the investigation that they do not track cost information that can explain the average cost per passenger given the presence of additional fees. During the hearing, Sen. Blumenthal suggested that the airlines could calculate the total cost of transporting baggage over the total number of bags moved, which gives a cost per bag. Comparing that figure to the cost charged to the customer to check in a bag would highlight any differences in additional fees charged and the actual cost for the airline.

Dynamic Pricing and Personal Information

The report noted that airlines use algorithms and customer data to set prices, leading to dynamic pricing when it comes to seat fees or baggage fees. During the hearing, the airline representatives pushed back on the finding that airlines use customer data specifically to set fee prices. Senators Margaret Hassan (D-NH) and Josh Hawley (R-MO) engaged in some tense back and forth with Klein and Schroeter on the issue of personal information in fee collection and the dynamic prices of additional fees. Both senators questioned the practice of entering in personal information before seeing the pricing for seating for example. In response, Klein noted that Spirit does not use personal information for pricing, except in the case of members of the military. At several points during the hearing, the senators asked for a commitment to not use personal information to determine the prices of seat, baggage, or other ancillary fees. The response from the witnesses was not in the affirmative nor was the witness response clear. The witnesses responded, but the senators did not find the witness responses on issues of dynamic pricing, collecting personal information, and collecting data on costs very convincing.

Sen. Blumenthal noted towards the end of the hearing, that Delta does not require the use of personal information to be collected before a customer sees a seat fee. The senator’s observation suggested that Delta not engaging in the same practice as the other airlines brings into question the overall practice of collecting personal information like zip code, gender, or date of birth before the price of a seat fee. Table 2 shows the required information for each of the five airlines.

Table 2. Customer Information Required by each airline website in order to view seat fee prices

Source: The Sky’s the Limit: The rise of junk fees in American travel. Majority Report, November 2024.

Employee Commission on Bag Enforcement 

Among the findings, the report noted that Spirit and Frontier airlines paid around $26 million to incentivize gate agents to collect bag fees. We all know the experience: having to check a carry-on bag at the departure gate because it exceeds the size, or the flight is full and there is little room for any more bags in the overhead space. Spirit and Frontier allow passengers to bring a “personal item” on board for free but charge a carry-on fee if a carry-on item is deemed too large for the permitted size of a “personal item.” According to the report, Frontier customer service agents at the departure gate receive $10 for each time they charge for a bag to be carried onto the plane. Senators Hawley and Blumenthal referred to this program as a “bounty program,” which several witnesses were quick to correct, noting that it is rather an incentive program. Klein noted that Spirit removed their version of the program in late September 2023. Furthermore, when asked to commit to not adopting an incentive program of this kind, Johnson, Carter, and Nocella affirmed that their airlines would not commit to adopting an incentive-based program to collect commissions on baggage fees collected at the gate.

Taxes, Families, and Credit Cards 

The report included another finding that taxes collected on airlines fees varied tremendously between the five airlines with some airlines classifying services as optional to avoid the federal 7.5 percent tax on passenger air transportation.

During the hearing, the Senators brought forth questions on additional issues including family seating and credit card rewards programs. The Department of Transportation proposed a rule that would require airlines to seat parents next to their young children for free when adjacent seating is available at booking. The department has a dashboard that displays which airlines guarantee fee-free family seating. Delta, United, and Spirit are among the airlines that do not provide the guarantee for fee-free family seating according to the DOT dashboard. In response to Sen. Hassan, Carter noted that providing a guarantee could be “unconditional and unfair.” While the airlines are committed to doing “everything in their power,” according to Klein, to have families sit together, there can be instances where it may be impossible. Sen. Hassan voiced her support for the proposed rule and the importance of finalizing the rule. The senator was clear to the airlines in her response: figure out how to follow the rule when it is in place.

Sen. Roger Marshall (R-KS) spent some time on the relationship between legacy air carriers and credit cards rewards programs. Carriers like American and Delta have credit cards that allow customers to accumulate miles or points, which can then be used on flights or other rewards. Responding to the senator, Klein noted that legacy carriers use their credit card programs to compete. Both Klein and Sen. Marshall suggested that legacy carriers are operating at a loss but make up for it in profits from credit card reward programs. Klein suggested that using credit card reward programs to compete hurts the ability for ultra-low-cost airlines like Spirit to compete with larger carriers like Delta or American.

Competition and Consolidation 

Towards the end of hearing, Sen. Blumenthal made a point to mention the lack of competition in the airline industry, providing Klein a chance to discuss the lack of access ultra-low-cost airlines have at certain airports and dominance of legacy carriers. The senator later added the observation that four airlines control around 70 percent of the market. This comes as a result of major consolidations over the years, as shown in table 3, which have allowed a few companies to dominate the market. A scenario where a small number of companies control a large portion of the market can provide those few companies with the ability to have significant power, for example, in deciding prices.

Table 3. Airline Consolidations 2008-2016 

Source: The Sky’s the Limit: The rise of junk fees in American travel. Majority Report, November 2024.

The Witness Perspective 

In his opening testimony, Klein referenced the Airline Deregulation Act of 1978 as an important law that allowed airlines to unbundle their services.  All of the witnesses discussed how the practice of unbundling services and adding additional fees is a way to provide options to customers. If someone wants to check a bag, they can do so for a fee, but they are not required to pay a fee if they do not wish to check in a bag. Unbundling, as Schroeter noted, reduces the cost of flying. The base fare can be much lower, and then if a customer wishes to check a bag or select their preferred seat, they can pay extra. The witnesses echoed the sentiment that providing options for customers to choose what services they want (i.e. what additional fees they want to pay) is the practice of “democratizing air travel.”