WASHINGTON — President Joe Biden’s administration is pursuing new rules to crack down on fees enforced by airlines that travelers have long complained are costly tack-ons for sometimes lackluster services.
Transportation Secretary Pete Buttigieg said Friday his department will propose new rules requiring the refund of fees when baggage is delayed or when services such as the plane’s Wi-Fi or in-flight entertainment system are malfunctioning or not provided.
The move acts on a directive from Biden, who also ordered the department to consider rules that would require airlines to clearly disclose baggage, change and cancellation fees for consumers.
“Consumers deserve to receive the services they pay for or to get their money back when they don’t,” Buttigieg said.
Biden’s crackdown on airline fees came in a sweeping executive order that he signed Friday afternoon taking aim at monopolies in industries that also include agriculture, technology, health care, banking and shipping. The order includes 72 initiatives, regulations and directives involving more than a dozen federal departments to promote greater economic competition.
“Let me be very clear: Capitalism without competition isn’t capitalism,” Biden said before signing the order in the White House State Dining Room. “It’s exploitation.”
Luggage didn’t make it? US plans to make airlines refund fees if bags are delayed
Prescription drug prices, non-compete agreements targeted
Existing federal law says passengers are entitled to a fee if their checked bags are lost. The Transportation Department’s proposal would also require airlines to refund checked bags when delays go beyond 12 hours for domestic flights and 25 hours for international flights.
Another proposed rule would require airlines to “promptly provide” a refund when ancillary services such as Wi-Fi aren’t provided.
If approved after a lengthy regulation-writing process, the new policies could go into effect next year.
Other directives in Biden’s order seek to reduce the price of prescription drugs. That includes directing the Food and Drug Administration to work with states to safely import prescription drugs from Canada and new rules that would allow hearing aids to be sold over the counter at drug stores.
The president also encouraged the Federal Trade Commission to eliminate certain employee licensing requirements – often burdensome to workers – and to ban or limit companies from forcing employees to sign non-compete agreements that prevent them from exploring other employment.
“At least one in three businesses require their workers to sign a non-compete agreement,” Biden said, arguing it’s done “for one reason” – to keep wages low. “Let workers choose who they want to work for.”
The U.S. airline industry is dominated by four companies: American, Southwest, Delta and United.
“Reduced competition contributes to increasing fees like baggage and cancellation fees,” the White House said in a statement. “These fees are often raised in lockstep, demonstrating a lack of meaningful competitive pressure, and are often hidden from consumers at the point of purchase.”
The top 10 airlines collected $35.2 billion in fees in 2018, according to the White House, a massive increase from the $1.2 billion collected in 2007.
A lack of competition in the airline industry “reduces incentives to provide good service,” the White House said, noting airlines were late delivering 2.3 million checked bags in 2019, according to data from the Transportation Department.
Airlines push back, arguing competition is ‘robust’
Travel Fairness Now, a consumer advocacy group, said Biden’s executive order will help curb airlines’ appetite for “pricing chicanery and surprise fees.’’
“After years of the powerful airline industry getting everything it wants at the expense of consumers, the administration and DOT’s actions are a long-awaited breath of fresh air for the flying public,’’ Kurt Ebenhoch, the group’s executive director, said in a statement. “The airline industry is less competitive than at any time since deregulation and these commonsense consumer protections will start us down the path of restoring fairness for travelers.’’
Airlines pushed back at the White House’s characterization that the airline industry gives consumers few options.
Airlines for America, which represents seven major U.S. airlines, including Southwest, Delta, American and United, called competition in the airline industry “robust’’ and said few industries offer consumers so many choices. It noted that two new airlines, budget carriers Avelo Airlines and Breeze Airways, debuted in a pandemic this year.
“Robust competition in the U.S. airline industry has generated unprecedented levels of affordability and accessibility, benefitting the customer at every level,’’ spokeswoman Katherine Estep said in a statement.
The trade group said airline competition has created “historically low airfares,’’ with inflation adjusted ticket prices down 24% over the past decade.
Contributing: Staff writer Dawn Gilbertson; Associated Press.
Reach Joey Garrison on Twitter @joeygarrison.