Delta Airlines increases its fee for checked baggage

CONSUMER AFFAIRS: “With more competition among airlines for routes and flyers, consumers, on the whole, are seeing a great trend in cheaper tickets,” Yaël Ossowski, deputy director of the Consumer Choice Center, a consumer advocacy group based in Washington, D.C., told ConsumerAffairs.

“But that means airlines are having to bump up prices for checked luggage to help recoup some of the costs, but it looks like loyalty to a specific airline is paying out dividends. Many airline customers are applying for airline-branded credit cards that offer free check-in bags and discounted second bags, while others are using the perks of airline status to opt out of the costs.”

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About Yaël Ossowski

Yaël Ossowski is a journalist and informational entrepreneur. He's currently deputy director at the Consumer Choice Center, and senior development officer for Students For Liberty. He was previously a national investigative reporter at Watchdog.org. He is currently seeking a Master’s Degree in Philosophy, Politics, Economics (PPE) at the CEVRO Institute in Prague. Born in Québec and raised in the southern United States, he currently lives in Vienna, Austria.

Senators receive award for trying to make flying more expensive

FLYERTALK: The Consumer Choice Center has awarded two senators with a sarcastic Bureau of Nannyism Award (BAN) for their attempts to re-regulate the air travel industry and make flights more expensive.

Two senators have been recognized by the Consumer Choice Center (CCC), a global consumer rights body, for their efforts in making air travel more costly. Senators Edward Markey (D-Mass.) and Richard Blumenthal (D-Conn.) have received September 2018’s Bureau of Nannyism (BAN) award, an accolade that, according a media statement by the CCC, wryly acknowledges, “…the work of an individual or organization that has made major contributions to advocating limits on consumer choice.”

The senators’ names are attached to a provision that is included within the Federal Aviation Administration reauthorization bill. The bill itself is currently with the U.S. Senate, but the provision supported by Markey and Blumenthal – referred to as Forbidding Airlines from Imposing Ridiculous (FAIR) Fees Act – could, according to the CCC’s Deputy Director Yaël Ossowski, “…force airlines to abandon the successful business model that has made commercial air travel the most affordable it has been in over 20 years.”

As Ossowski explains, this level of regulation would not only harm consumers, but alter the structure of the air travel industry itself.

“Deregulation of the airline industry helped countless Americans access affordable airline travel for business, leisure, and family obligations. FAIR Fees would be a re-regulation of the U.S. airline industry and would thus lead us back to a command economy in the skies, where flights are accessible to only wealthy passengers and business travelers. That’s the opposite of where we should be heading in the 21st Century,” he states.

The CCC hopes that this month’s prize, given to bring attention to the organization’s #FreeSkiesAreFAIR campaign, will “highlight how the setting of airline prices by politicians will only lead to higher prices for flyers and will be a huge detriment to consumer choice,” explains Ossowski.

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About Yaël Ossowski

Yaël Ossowski is a journalist and informational entrepreneur. He's currently deputy director at the Consumer Choice Center, and senior development officer for Students For Liberty. He was previously a national investigative reporter at Watchdog.org. He is currently seeking a Master’s Degree in Philosophy, Politics, Economics (PPE) at the CEVRO Institute in Prague. Born in Québec and raised in the southern United States, he currently lives in Vienna, Austria.

Governments are going after airline and credit card fees: why that will cost us more than it saves

You could think of add-on fees this way: they aren’t fees, they’re opt-outs.

Be it credit card fees or extra fees on airlines, politicians are trying to crack down on extra charges in the name of protecting the consumer. In reality, they do quite the opposite.

Since January of this year, credit card fees have been outlawed through a directive by the European Union. Well, that at least is what it said in the newspapers, when in fact the real story is a bit more complicated. The European Union made it illegal for retailers to charge extra when customers purchase with a credit or debit card while doing nothing to stop banks from charging a fee to the retailers. Until this directive, retailers were simply passing bank fees on to the consumer, but are now stuck with the bills. Good news for the consumer? Not quite.

On the other hand, those making purchases online (like airplane tickets), will notice that companies are still charging a general administration fee, which they are allowed to do as long as it is not directly associated with the mode of payment. This can then encompass the credit and debit card fees that companies have to pay to banks, but the slight twist is that now everyone will be charged the fee, regardless of how they chose to make their payment. It is either this option or generally including the fees in higher prices for goods and services. Those who previously tried to avoid the fee by using payment services associated with the company, or those who paid in cash in the store, will now generally be charged more.

And yet, even those who always paid by credit card should not be too hasty in believing that they will be better off on each purchase. If this directive generalizes the cost for each payment, then credit cards are likely to become the preferred option as they offer more purchase protection. Increased use of credit cards would then also lead to generally higher prices and more generalized distribution of costs. So, in essence, nobody wins from this apart from the banks who charge the fees.

The new FAA reauthorization bill in America includes a provision by Sens. Ed Markey, (D-Mass) and Richard Blumenthal, (D-Conn), that would effectively turn the entire business of air travel upside down. The so-called FAIR (Forbid Airlines from Imposing Ridiculous Fees Act) Fees Act targets any fee for a change or cancellation of a reservation for a flight in interstate air transportation, any fee relating to checked baggage to be transported on a flight in interstate air transportation; and any other fee imposed by an air carrier relating to a flight in interstate air travel.

Once again, this legislation appears to have a noble goal on the surface: no additional fees, so cheaper flights! Wrong again.

You could think of air travel fees this way: they aren’t fees, they are opt-outs. When you fly on a short-distance flight in order to visit a friend for the weekend, you might choose that you only need a carry-on, no wifi, and no meal or drinks on the flight. Instead of charging you for commodities you didn’t ask for in the first place, you’ll be exempt from all of them. In fact, fast check-ins or lounges are also services for which airlines and airports charge you a fee, and yet you’d never object to paying for an extra service like this, would you? The reason the two senators could pick up support with such a bill is some people will believe that it would lower their transportation costs when, in fact, it is likely to do the exact opposite.

As usual, it seems to be that the name of the bill is almost the opposite of what it contains. Banning airlines from charging any type of extra fee will lead the companies to re-incorporate all the charges into the average ticket price. Baggage allowances, Wi-Fi, or food and drinks will be available to those passengers who wouldn’t have used them anyway but will now be required to pay for them.

Adding to that: if all fares are fully refundable, airlines will see many last minute cancellations by passengers and we will see many empty seats on planes. Being unable to get a good estimate of how many passengers are actually going to fly (and pay) will lead airlines to increase the average ticket price to cover the inevitable losses.

Consider this: airfares have halved since 1978. This trend has made air travel affordable and therefore accessible to many low-income consumers who never had access to flights before. Uniquely, two senators have now found a way to revert this tremendous success.

Even to those aware of the consequences of banning fees, the word in itself doesn’t sound good. We notice this in our everyday life: paying $3 for Wi-Fi anywhere would be considered an offense, but once generalized in the price of the goods and services, we don’t seem to mind. We have to realize that every opt-out offered to us is actually a choice to consume or not consume, and that makes us freer and wiser in determining what we actually want and need.

Ultimately, those who were always able to afford every extra-service in the first place—such as the bureaucrats and politicians who make these laws—will now benefit even more from spreading extra costs among all consumers.

The EU’s directive wants to “protect” consumers, the FAIR Fees Act claims to be fair. Once again, it seems to be proven that when a piece of legislation has a certain descriptive name, the opposite is usually the case.

Originally published at https://fee.org/articles/governments-are-going-after-airline-and-credit-card-fees-why-that-will-cost-us-more-than-it-saves/

 

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About Bill Wirtz

Bill Wirtz is policy analyst for the Consumer Choice Center, based in Brussels, Belgium. Originally from Luxembourg, his articles have appeared across the world in English, French, German, and Luxembourgish. He is Editor-in-Chief of Speak Freely, the blog of European Students for Liberty, a contributing editor for the Freedom Today Network and a regular contributor for the Foundation for Economic Education (FEE). He blogs regularly on his website in four languages.

Price controls on checked bag fees will not make flying cheaper

The cheapest return flight from New York to Los Angeles is five times lower today than it was back in the 1970s, when airfares were regulated by the Civil Aeronautics Board.

Despite this massive decrease in fares and increase in consumer choice, some politicians are planning to re-regulate the U.S. airline industry and go back to the days when the government set prices.

The trigger for the revival of this bad idea came when JetBlue announced it will increase the fee for the first checked bag to $30, one of the highest fees for checked bags in the United States. In response, Sens. Ed Markey, D-Mass., and Richard Blumenthal, D-Conn., are pushing to re-regulate the U.S. airline industry through the so-called FAIR Fees Act.

While many passengers might be unhappy about JetBlue’s fee increase, you need to think about it in perspective. Not all passengers check bags. This change may let the company lower or keep lower its base fare, thus allowing for very price sensitive passengers to travel for even less when they make do with just a carry on bag.

On the other hand, if JetBlue merely adopts this as a strategy to increase its profit margin, it will find itself at a disadvantage against its competitors.

When Washington gets worried about airlines charging additional fees, they would do better not to blame the airlines, but the tax incentives that are set by the IRS. As airlines expert Gary Leff points out, checked bag fees are apparently not subject to the 7.5 percent excise tax Washington has imposed on airfares. This gives all airlines an incentive to shift as much of their costs as possible onto passengers who are laden with baggage.

So if Markey and Blumenthal are really worried about airline fees, they should work to scrap this excise tax.

Instead of abolishing government fees and taxes, their proposed amendment to the FAA reauthorization lets the FAA set price limits on checked bag fees and seat selection charges. It would also drastically limit how much airlines could charge for same-day ticket changes and cancellation fees. One likely result would be that airlines will stop offering flexible fares at all and raise prices across the board, because the premium that they can charge for flexible tickets would be too low to make this a viable business model.

We can clearly see that the deregulation of the airline industry allowed for low fares and the democratization of air travel. A limit on consumers to one-size-fits-all fare packages will lead to a one-size-fits-all fare schedule that will disproportionately affect price-sensitive consumers.

On most domestic routes, there is already tons of airline competition, such that if one airline starts to get too expensive, passengers will start flying with their competitors. Price and product differentiation has allowed consumers to choose among different airlines and products.

Overburdening regulation, on the other hand, has historically limited choice and competition in the airline industry. Flying can probably become even cheaper than it is right now, but that would require further deregulation and a reduction in government-imposed taxes and fees, not new price controls that will take us back to the days when flying was only possible for the affluent few.

Fred Roeder is managing director of the Consumer Choice Center.

Originally published at https://www.washingtonexaminer.com/opinion/op-eds/price-controls-on-checked-bag-fees-will-not-make-flying-cheaper

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About Fred Roeder

Fred Roder has been working in the field of grassroots activism for over eight years. He is a Health Economist from Germany and has worked in healthcare reform and market access in North America, Europe, and several former Soviet Republics. One of his passions is to analyze how disruptive industries and technologies allow consumers more choice at a lower cost. Fred is very interested in consumer choice and regulatory trends in the following industries: FMCG, Sharing Economy, Airlines. In 2014 he organized a protest in Berlin advocating for competition in the Taxi market. Fred has traveled to 100 countries and is looking forward to visiting the other half of the world’s countries. Among many op-eds and media appearances, he has been published in the Frankfurter Allgemeine Zeitung, Wirtschaftswoche, Die Welt, the BBC, SunTV, ABC Portland News, Montreal Gazette, Handelsblatt, Huffington Post Germany, CityAM. L’Agefi, and The Guardian. Since 2012 he serves as an Associated Researcher at the Montreal Economic Institute.

Sens. Markey, Blumenthal receive Consumer Choice Center BAN Award for trying to make flying more expensive

U.S. Senators Edward Markey (D-Mass.) and Richard Blumenthal (D-Conn.) receive the September 2018 BAN Award for proposing to make flying more expensive by re-regulating the airline industry and forbidding certain fees for better service and options on flights.

The U.S. Senate’s version of the FAA reauthorization bill includes a provision authored by U.S. Senators Markey and Blumenthal that would regulate airline pricing. The provision, already rejected by the Dept. of Transportation, is known as the Forbidding Airlines from Imposing Ridiculous (FAIR) Fees Act.

The Consumer Choice Center’s Deputy Director Yaël Ossowski said: “supporters contend the FAIR Fees Act will benefit consumers, but the reality is it would force airlines to abandon the successful business model that has made commercial air travel the most affordable it has been in over 20 years.”

The award is given to highlight the Consumer Choice Center’s new#FreeSkiesAreFAIR campaign to try to protect affordable ticket prices for flyers.

“The range of new flight options, cheaper regional air carriers, and no-frills flights are making travel cheaper and better for consumers. Bringing the federal government in to set prices will only end up hurting the very consumers and constituents politicians seek to help,” said Ossowski.

“Eliminating or dramatically altering the current change fee structure would take the power of choice away from the consumer and allow the federal government to implement a one-size-fits-all approach to airline pricing. Given that consumers have very different preferences when they fly, whether with flexibility or upgrades, a uniform solution to airfare pricing does not meet the reality of what consumers demand.

Every month the Consumer Choice Center awards an institution, person, or organization with the Bureau of Nannyism or short BAN Award. The BAN Awards recognize the work of an individual or organization that has made major contributions to advocating limits on consumer choice. This award serves to recognize extraordinary abilities in disregarding consumers and evidence-based public policy. The award was created by the Consumer Choice Center to draw attention to the important role politicians, lobbies, and advocates play in limiting consumers’ choice and ignoring them in the policymaking process.

Selection criteria: The Bureau of Nannyism (BAN) is a group of consumer choice advocates that discuss nominations on a monthly base and award the nominee with the most innovative or most blunt actions against consumer choice with the BAN award.

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org

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About Yaël Ossowski

Yaël Ossowski is a journalist and informational entrepreneur. He's currently deputy director at the Consumer Choice Center, and senior development officer for Students For Liberty. He was previously a national investigative reporter at Watchdog.org. He is currently seeking a Master’s Degree in Philosophy, Politics, Economics (PPE) at the CEVRO Institute in Prague. Born in Québec and raised in the southern United States, he currently lives in Vienna, Austria.

FAIR Fees Act would make air travel more unfair

The new FAA reauthorization bill includes a provision by Sens. Ed Markey, D-Mass and Richard Blumenthal, D-Conn., that would effectively turn the entire business of air travel upside down. The so-called FAIR (Forbid Airlines from Imposing Ridiculous Fees Act) Fees Act targets any fee for a change or cancellation of a reservation for a flight in interstate air transportation, any fee relating to checked baggage to be transported on a flight in interstate air transportation; and any other fee imposed by an air carrier relating to a flight in interstate air transportation.

This bill would be terrible news for consumers.

Over the past decades, air travel has revolutionized the way we go on holidays and visit friends and family. Especially for low-income consumers, the massive decrease in airfares has been a blessing. In fact, airfares have halved since 1978.

Another change in the way we book tickets was introduced during that time: instead of including all possible features during travel (food and drinks, checked bags, reserved seating, etc.) airlines have chosen to make those services optional. Those travelling with little to no luggage on short trips have made immense savings through this type of billing.

Unfortunately, politicians have exploited the language, notably that of calling it a “fee”, to tell consumers that they are the victims of greedy airlines. “With all the frills of flying already gone, airlines are increasingly resorting to nickel and diming consumers with outrageous fees. These runaway charges are anti-consumerism at its worst — in some cases doubling passenger fares despite plummeting fuel costs and soaring airline profits. A parent who wants to sit with his young child, a customer who wants to check or carry on a bag, or have Wi-Fi, or a traveler who needs to change or cancel a reservation should not incur exorbitant, unnecessary fees on the whim of an airline,” says Sen. Blumenthal.

But Blumenthal is wrong. Instead of considering them as fees for additional services, many consumers are happy to be able to opt out of services they weren’t going to use in the first place.

As always, it seems to be that the name of the bill is usually the opposite of what it contains. Banning airlines from charging any type of extra fee will lead the companies to re-incorporate all the charges into the average ticket price. Baggage allowances, Wi-Fi or food&drinks will be available to those passengers who wouldn’t have used them anyway, but will now be required to pay for them.

Adding to that: if all fares are fully refundable, airlines will see many last minute cancellations by passengers and we will see many empty seats on planes. Being unable to get a good estimate how many passengers are actually going to fly (and pay) will lead airlines to increase the average ticket price.

This bill would lead to higher air fares, which will particularly hurt low-income consumers, which were, up until now, benefiting from low fares. FAIR Fees will limit consumer choice and make air travel less affordable for the average American.

Bill Wirtz is a political commentator currently based in Belgium. His articles have been published by Newsweek, The American Conservative, the Washington Examiner, Le Monde, and Le Figaro. He is a Young Voices Advocate, a regular contributor for the Foundation for Economic Education, and works as a Policy Analyst for the Consumer Choice Center. To read more of his reports — Click Here Now.

Originally published at https://www.newsmax.com/billwirtz/blumenthal-consumer-faa-markey/2018/08/20/id/877894/

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About Bill Wirtz

Bill Wirtz is policy analyst for the Consumer Choice Center, based in Brussels, Belgium. Originally from Luxembourg, his articles have appeared across the world in English, French, German, and Luxembourgish. He is Editor-in-Chief of Speak Freely, the blog of European Students for Liberty, a contributing editor for the Freedom Today Network and a regular contributor for the Foundation for Economic Education (FEE). He blogs regularly on his website in four languages.

Canada’s Transport Minister: Expanded Egypt and UAE air agreement a win for consumers

ETN: David Clement, Toronto based North American Affairs Manager of the Consumer Choice Center (CCC), said that “The expanded agreement is a step in the right direction regarding air transport liberalization. That said, the next step here has to be further liberalization.”

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About David Clement

David Clement is the North American Affairs Manager for the Consumer Choice Center and is based out of Oakville, Ontario. David holds a BA in Political Science and a MA in International Relations from Wilfrid Laurier University. Previously, David was the Research Assistant to the Canada Research Chair in International Human Rights. David has been regularly featured on the CBC, Global News, The Toronto Star and various other major Canadian news outlets.

City of Hamburg receives BAN Award for Diesel bans

The City of Hamburg, Germany receives the May 2018 BAN Award for being the first city banning certain Diesel cars from some of its main streets. The Consumer Choice Center’s Managing Director Fred Roeder explains that only a few municipal governments have managed to discriminate that many consumers at once:

“Over 200,000 local Diesel drivers will have to find their way through Hamburg without being allowed on two of the main traffic arteries of the bespoke city. For decades consumers were incentivized to buy Diesel cars and now suddenly get punished by regulators for following their recommendations. The war against Diesel drivers is a war against consumers and will not help the environment. Health experts such as the previous president of the German Society of Pneumology even question if Diesel emissions play a significant role in affecting people’s health,” said Roeder.

“By awarding Hamburg with the tongue-in-cheek BAN Award we want to highlight how much the Diesel driving ban is an infringement on consumer choice.”

Every month the Consumer Choice Center awards an institution, person, or organization with the Bureau of Nannyism or short BAN Award. The BAN Awards recognize the work of an individual or organization that has made major contributions to advocating limits on consumer choice. This award serves to recognize extraordinary abilities in disregarding consumers and evidence-based public policy. The award was created by the Consumer Choice Center to draw attention to the important role politicians, lobbies, and advocates play in limiting consumers’ choice and ignoring them in the policymaking process.

Selection criteria: The Bureau of Nannyism (BAN) is a group of consumer choice advocates that discuss nominations on a monthly base and award the nominee with the most innovative or most blunt actions against consumer choice with the BAN award.

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org

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About Yaël Ossowski

Yaël Ossowski is a journalist and informational entrepreneur. He's currently deputy director at the Consumer Choice Center, and senior development officer for Students For Liberty. He was previously a national investigative reporter at Watchdog.org. He is currently seeking a Master’s Degree in Philosophy, Politics, Economics (PPE) at the CEVRO Institute in Prague. Born in Québec and raised in the southern United States, he currently lives in Vienna, Austria.

The U.S. Trade War with Bombardier

NORTH CAROLINA JOURNAL OF INTERNATIONAL LAW: Moreover, this ruling is also likely to negatively affect everyday consumers. “Such a high tariff will raise the cost of importing jets from the Montreal-based firm and deprive American consumers of the opportunity of efficient, low-cost travel.”

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About Yaël Ossowski

Yaël Ossowski is a journalist and informational entrepreneur. He's currently deputy director at the Consumer Choice Center, and senior development officer for Students For Liberty. He was previously a national investigative reporter at Watchdog.org. He is currently seeking a Master’s Degree in Philosophy, Politics, Economics (PPE) at the CEVRO Institute in Prague. Born in Québec and raised in the southern United States, he currently lives in Vienna, Austria.

Trade Panel’s Rejection of Trump’s Jet Tariff Is a Sign of Good Things to Come

MORNING CONSULT: As President Donald Trump schmoozed with economic titans in Davos, Switzerland, over the weekend, news from Washington indicated parts of his trade agenda won’t go forward as planned.

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About Yaël Ossowski

Yaël Ossowski is a journalist and informational entrepreneur. He's currently deputy director at the Consumer Choice Center, and senior development officer for Students For Liberty. He was previously a national investigative reporter at Watchdog.org. He is currently seeking a Master’s Degree in Philosophy, Politics, Economics (PPE) at the CEVRO Institute in Prague. Born in Québec and raised in the southern United States, he currently lives in Vienna, Austria.