New rules for airline fees are a partial victory for travelers

By Jeremy Bryant

Starting Jan. 26, a new U.S. Transportation Department rule will require airlines to include all taxes and fees in their advertised fares. Other provisions of the rule -- banning post-purchase price increases and allowing passengers to hold certain reservations without payment or to cancel them without penalty for 24 hours after booking -- will take effect Jan. 24.

The DOT is also requiring airlines to disclose baggage fees when passengers buy a ticket, mandating that the same baggage allowances and fees apply throughout a journey, and stipulating that those fees be shown on electronic ticket confirmations.

As you can guess, the airlines aren't thrilled about these new rules. The industry's stated reasons for these objections are not political but technical. It says that the systems aren't yet in place to offer such disclosure. "Critical sources of information needed to comply with these rules do not yet exist," says Steve Lott, a spokesman for Airlines for America. "This extension would give carriers essential time to overcome fundamental changes in baggage rules that require substantial investment and re-engineering of carrier reservations, check-in and baggage information systems, in addition to retraining of airline employees."

An extension might also allow airlines to continue earning more money from baggage fees until 2013. Even a small rule change could interfere with a revenue stream (in the billions) that has by most accounts allowed the industry to remain profitable in recent years.

The DOT hasn't made a decision on the extension yet. But some believe that regardless of how it rules, the government needs to do more.

The problem is that airlines continue to remove fees from their fares -- a process called unbundling. For example, the first checked bag, a confirmed seat reservation, even the ability to carry a bag onto the plane all used to be included in a base fare but now might not be. Breaking them out leads to confusion and ultimately to customers paying more than they thought they would.

Until now, airlines have claimed that their baggage fees are simple and that normal travelers can easily figure them out. But it turns out that the system isn't that straightforward, even for the airlines that run it. All the exceptions and reservation rules make it kind of complex, actually.

As the battle continues in the courts, who will win? My hope is for the consumers.