Ask Skift: Why Are Junk Fees a Problem in the Travel Industry?

15.08.2024 - 18:38 / skift.com / Rashaad Jorden / Ask Skift

Junk fees — charges imposed by travel service providers that are seen as hidden, unnecessary, or excessive — are a constant source of frustration for travelers.

Why are junk fees a problem for the travel industry? 

We put the question to Ask Skift, our artificial intelligence chatbot. Ask Skift used information from our past news coverage and research, and we also did additional reporting on the subject.

Junk fees are problematic in travel for several reasons:

Lack of Transparency: These fees are often not clearly communicated to travelers upfront, making it difficult for them to understand the full cost of their travel plans. This lack of transparency can lead to unpleasant surprises when the final bill is presented.

Increased Costs: Junk fees can significantly increase the overall cost of travel. For example, a $270 flight to New York might end up costing $300 after additional fees, or a $450 hotel room could exceed $500 with added charges.

Erosion of Trust: The surprise and hidden nature of these fees erode customers’ trust in travel providers. This can damage the relationship between travelers and service providers, making customers less likely to return or recommend the services to others.

Regulatory Scrutiny: The U.S. government, under the Biden administration, has been actively looking to crack down on these fees, highlighting their negative impact on consumers. This regulatory pressure indicates that junk fees are not only a consumer issue but also a legal and compliance challenge for travel providers.

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The U.S. government has ramped up its efforts to combat junk fees. The Department of Transportation released rules this April requiring airlines to disclose junk fees upfront, including informing customers of the prices for checked baggage, carry-ons, changing a reservation or canceling one. It’s scheduled to go into effect this October.

However, trade group Airlines for America — along with several prominent athletes — sued the DOT over the junk fee rule, arguing it was a regulatory overreach that would create confusion for customers.  And in July, a U.S. appeals court temporarily blocked the rule  pending a full review of the rule. 

Meanwhile, a U.S. Senate committee passed a bill last month that would create national standards for pricing for hotels, short-term rentals and other lodging companies. Under the Hotel Fees Transparency Act, hotels, short-term rentals, and online travel players would all have to display the total price, including all mandatory fees, upfront. The bill is currently awaiting a full Senate vote.

FTC’s Imminent Rule: The Federal Trade Commission is expected to issue the final version of a rule