my check one two three four five six seven eight nine ten some good statement and then call on mr p try to give an opening statement or his remarks i might mention that we have we're going to have votes at two forty five we were just notified so what i think i will do is first welcome everyone to the hearing today secondly i want to especially recognize in thank the families of colgan flight thirty four zero seven for being with us today and for their steadfast support for improving pilot training and safety in the industry with that mr p tryon ardor to move things along so that we can get to our witnesses i will enter my statement in my entire statement into the record and then but before i recognize you for your opening statement i would ask unanimous consent to allow two weeks for all members to revise and extend their remarks and to permit the submission of additional statements and materials by members and witnesses with that my entire statement will appear in the record without recognize our witnesses today first dr gerald dillingham who's the director of civil aviation issues with the u s government accountability office mr robert rivkin who's a general counsel with the united states department of transportation mr ben baldwin moldau so who's the president and c e o of spirit airlines mr david readily who's a senior vice president marketing and revenue management southwest airlines mr kevin mitchell chairman business travel coalition mr coll morris a vice president marketing saber holdings and on behalf of the interactive travel service association american society of travel agents  dry members of the subcommittee my statement today summarizes the findings of g a o study of aviation related and the potential impact on the airport and airways trust fund and the flying public our full report was published this morning on the website this study addressed four questions first what are the nature and scope of these fees including the in ship for the cost of the services provided and their degree of transparency second what is the potential impact of such fees on revenues used to help fund f a a through the trust fund and third how have the fees affected the number of checked bags and airline policies associated with checked and mishandled bags and lastly what processes are available for refunding government imposed taxes and fees to passengers who do not use it non refundable tickets with regard to the nature and scope of the fees starting in about two thousand and seven airlines began to charge for many services for which separate charges did not previously exist such as first and second checked baggage carry on bags meals blankets and seat selection practice two thousand and seven the flying public generally consider these kinds of services were included in the price of the ticket since the services were on bondo and fees establish the revenues from these fees have become an important part of the profit and loss statement of many airlines during two thousand and eight and two thousand and nine u s passenger airlines posted operating losses of about four point four billion dollars however during that same period airlines reported fee revenues of at least seven point nine billion dollars this seven point nine billion dollars represents only a portion of the revenues that were generated from optional fees according to airline officials the fees are based on a combination of factors including the cost of providing the services competition and consumer demand i think it's worth noting that the fees are not assessed equally for example some passengers such as business class and elite frequent flyers do not pay for certain services such as check bags and early boarding in addition airline optional fees are not fully transparent specifically the o t does not require this closure of most of the fees by airlines or ticket attributes in channels that are used by consumers therefore consumers cannot readily compare the total cost of flights offered by different areas with regard to the potential impact of the speeds on the trust fund the i r s says determine that many of the fees that have been established by airlines are not related to the transportation of a person therefore they are not subject to the seven point five percent excise tax which would be deposited into the trust fund however if checked bag fee revenue that airlines reported in fiscal year two thousand and nine had been subject to the excise tax on domestic travel it would have generated about one hundred eighty six million dollars with somewhat less than two percent of the trust fund revenues for two thousand and nine with regard to our question on check baggage issues since the airlines establish checked baggage fees the number of checked bags per passenger and the rate of mishandled bags have both decline according to airline officials that we talked to there airlines have generally not change their baggage handling policies or their compensation methods consequently it would be reasonable to conclude that the decline in the number of checked bags was likely a factor in the decline in the rate of mishandled bags finally regarding the process is available for refunding government taxes and fees to passengers who do not use it non refundable tickets government taxes and fees include a seven point five percent excise tax a september eleventh security fee and various inspection fees we found that the refund ability of these taxes and fees on a new nonrefundable tickets varies depending on the tax and the fee we also found that clear information was not generally available to consumers about the eligibility of refund for these fees and taxes mr chairman and members of a subcommittee to address the issues that we had jennifer through this study our report contains a metaphor can national consideration on the taxation of ripken german castello ranking member p try and members of the committee thank you for the opportunity to appear before you to discuss airline fees secretary ray la hood is committed to protecting the interests of airline consumers during this administration the department implemented a number of initiatives to further that commitment last december we established a new foundation in consumer protections for a rule that attacks several persistent pernicious practices including lengthy tarmac delays chronically delayed flights and lack of consumer information about on time performance in the last year we issued thirty seven cease and desist orders against airlines and agents assessing more than three million dollars and civil penalties and we are very focused on the impact of new airline fees on consumers we believe that the proliferation of these fees and the manner in which they are presented to the traveling public can be confusing and in some cases misleading many travelers still expect that the basics of air travel are included in the ticket price but that is no longer the case the published fare used by many consumers to choose flight does not clearly represent the actual cost of travel once the new fees are added fees for services that used to come included in the fare like checking bags carrying bags on board and now even getting soft drinks as a result it is difficult for consumers to compare fare offerings and make rational economic decisions based on the full cost of travel we believe consumers should have complete information about the full cost of their trip at the time they make their decision it is about travel we believe that information should be presented in a clear straightforward way so that consumers can make informed decisions the department recently issued a notice of a proposed rule making that would apply these basic principles of transparency in fairness to the airline industry's new fee structure among other consumer protections proposed on fees here's what we proposed first we would require true full price advertising advertise tickets would be required to include all mandatory taxes fees and charges if you have to pay a charge to fly like what some airlines call a fuel surcharge or a convenience fee it must be included in the total price presented to the consumer second we propose that airlines optional fees be fully disclosed on airline websites by optional fees we mean charges for things like checking baggage or seat assignments that passengers can choose to avoid and yet still fly we would also require more detailed and prominent disclosure for fees related to carry on and check bags and that such fees be affirmatively agreed to by the consumer with no opt out requirements or shenanigans third we proposed to require reimbursement of baggage fees when the bags are not delivered or not delivered on time forth we're seeking comment on a proposal that airlines report both a full fare the carriers base fare plus the mandatory charges as well as what we've referred to as full fare plus which would be the full fare ticket price plus the cost of baggage charges that consumers are traditionally used to seeing included in the price of the ticket we're seeking comment on that we haven't made any determination of what the department thinks is appropriate and fit the department proposes to require airlines to provide their agents and global distribution systems complete accurate and up to date information on ancillary fees so the the information  readily available to consumers among other key provisions of the rule unrelated to fees we also proposed to increase compensation and transparency for bumped passengers and to require airlines to allow cancellation of a reservation without penalty within twenty four hours of booking a flight our proposed rule addresses most but not all of the recommendations of the general accountability office report that was released today one recommendation in the report involves the t s a two dollars fifty cent security fee that is imposed per flight segment up to ten dollars to cover the cost of screening and related services as well as other fees imposed by government agencies although these fees are beyond the scope of our current rule making we would be happy to work with you and the o on this issue we're committed to acting swiftly to try to complete the rulemaking by the end of this calendar year in closing i want to thank this committee for invigorating our consumer protection program your leadership and support have enabled us to redouble our efforts to protect consumers were committed to the mission you have given us and we look forward to continuing to work with you i'd be happy to answer any questions you may have and i ask that my written statement be made part of the record thank you thank you mr rivkin you made in the subcommittee thank you for the opportunity to appear today in connection with a review of airline fees spirit airlines is based in fort lauderdale florida we currently have a fleet of thirty one aircraft serving forty four cities in the u s the caribbean central and south america we carry approximately six and a half million passengers a year and over the next five years will add thirty five new aircraft to to meet the growing demand for our unique ultra low cost carrier service spare believe that unbundling and by that i mean separating out optional customer services from the fare that are not essential to transporting a passenger allows the customers the choice to purchase services or not and this benefits the traveling public through lower total cost this approach generates increased tax revenue by stimulating more travel these unbundled services do not impose any cost on airport infrastructure on the nation's air traffic control system or any other government services funded by the aviation federal excise tax as such no additional tax burden should be imposed on the cost of these an ary services over the past decade the u s airline industry has lost approximately sixty billion dollars in light of continuing weak economy and reduced demand for transportation as well as volatile and uncertain fuel prices in both an additional taxes on the industry and passengers will be counterproductive and result in less rather than more tax revenue in one hundred seventy eight congress passed the airline deregulation act with stress competition is the way to stimulate efficiency innovation and low prices spirit airlines take this policy to heart our goal is to offer consumers a real choice in selecting an airline for their travel needs since two thousand and seven when we adopted our unique ultra low cost carrier you l c c business model to provide basic air transportation at the lowest possible price in every market spirit serves it provides an important public interest service by disciplining fares spirits impact was clearly demonstrated when our pilots went on strike last month and other carriers including low fare carriers immediately raised prices for example jet blue raised its round trip fare in the fort lauderdale san juan puerto rico market we and jet blue are the only chairs who serve that market nonstop they released their fare from under two hundred dollars to over six hundred dollars one of the same time putting out a press release saying that they were helping spirits customers in an effort to make air fares as low as possible in two thousand and seven spirit unbundled the charge for checked bags and despite rising fuel costs lowered our base fare to adjust for the  we announce our decision to charge for carry on luggage that is too big to fit under the seat beginning on august first this charge is not applied to such items as medical equipment baby strollers in the like carry on bags have become a nightmare for passenger boarding and deplaning they create a safety risk for both passengers and flight attendants and lead to costly flight delays carrying more than one bag is not necessary for all travelers and we believe it is unfair to charge those customers for extra services they do not use the carry on fee for most passengers twenty to thirty dollars and spirit reduce its base fares by about forty dollars to offset these charges spirit also lowered its checked bag charge to encourage passengers to check their bags the carry on fee is not affected spirits bookings because the total cost to customers for travel and spirit remains far lower than on other airlines as a group low fare carriers already pay a greater percentage of the total ticket cost in taxes then due to higher fare legacy carriers this is because much of the tax burden on airlines is in fixed charges on a domestic flight these include in addition to the seven m percent excise tax of three dollars seventy cents segment fee two dollars fifty cents september eleventh fee p f c that airports of up to four dollars fifty cents and a four point three cents per gallon commercial fuel tax so for example on a three hundred mile trip one hundred eighty dollars round trip fare the customer could pay a total of about thirty five dollars and forty cents in taxes or twenty percent of the fare including the federal excise tax since spirit has the lowest fares in the industry are lower income passengers are already effectively playing the highest taxes as a percentage of the total failure this is an unfortunate and highly regressive result of the existing tax structure our average fare is under eighty five dollars most of the industry is well over one hundred dollars and our pastors pay over eleven dollars in federal excise tax between the ticket price and the fuel or thirteen percent on this amount just for the ticket tax and fuel the primary impact of charging for non essential ancillary services will be to raise prices for all consumer and thereby dampen travel demand and likely result in less total government excise tax revenue at a time when the industry has serious financial issues and the secretary of transportation has formed a commission and out of strength in the industry for the benefit employees consumers and shareholders it would be counterproductive to impose yet another tax burden as noted the spirits the services spirit is unbundle do not involve activities that drive up the cost of air traffic control or other services paid for by the aviation trust fund they are not charges for the transportation of any person for example the handling of check bags impose highlevel costs on the airline but doesn't touch air traffic control another non transportation ancillary fee for flight charges involving nonrefundable tickets covers the cost imposed on the airline by such a change these include both the direct cost for the time direct cost of the time of the reservation agents and the potential lost revenue from empty seats passengers who want to avoid such fees can purchase a higher price refundable ticket or purchase low cost travel insurance recent articles in the press that based based on a first quarter d o t report said spirit had the highest in fillery revenue as a percent of total revenue we believe this comparison is highly misleading spears percentage of ancillary revenue to total revenue is higher than other carriers simply because our fares are so low for example a spirit had the same average fares american airlines are percentage eventually fees would only be forty percent over seventy percent of spirit revenue comes from ticket sales is subject to the aviation excise tax of the twenty five percent of the revenue that could be labeled and celery about sixty percent is related to an itinerary of this about fifty percent is from baggage fees and ten percent from seat selection fees so in total only about fifteen percent of spirit total revenue is from and still are in fees selected by passengers in connection with air travel we are certain that spirit's decisions on bundle services not essential to the transportation of passengers have had minimal if any negative impact on the total excise taxes paid for travel on spirit this is because our lower fares have been able to more people to fly despite the difficult economy of the last several years imposing excise taxes on the fees will simply raise fares in the public's ability to afford travel and thereby result in lower overall tax revenue lastly spirit firmly believes that customers deserve to have acts of access to as much information is reasonably available on the cost of their travel experience website provides information on all of its charges and customers can see the total cost of their flights including all option or services they have selected before confirming their purchase this makes it easy for customers to comparison shop to confirm that spirit's total price is still the lowest unfortunately under the d o t policy airlines must include the federal excise tax as part of the base fare so this tax is hidden from the customer we are not aware of any retailer retail product where by government fiat merchants are prevented from showing customers how much of their payment is for that in closing i'd like to know two of the particularly onerous proposed new rules recently announced by the d o t first after decades of permitting airlines to list certain government taxes and fees separately from the base fare in advertising the department proposes to require airlines include all applicable taxes and fees in the advertised fare this new requirement will further obfuscate the portion of the ticket price going to the government we believe congress should direct the department to permit airlines to display fares on their websites in a totally transparent way so customers can immediately see the full tax component of their fare secondly the department proposes to require that all airlines allow customers to hold a booking without payment or allow booking to be canceled out charge for at least twenty four hours even for non refundable tickets many of our promotions are for one day sales only allowing a twenty four hour hold with circumvent the sale resulting in a churn which adds lower revenue and means higher fares also holding the fare for twenty four hours allows customers to take away valuable selling time eventually resulting in an empty seat most low fare carriers including southwest do not permit either of these options for non refundable tickets such a rule riddick are substantial and costly changes in our id reservation system as well as changing the contract with our credit card processing agent as noted on spirit pastors can shop compare prices before they buy in conclusion we believe ancillary fees other consumer protections congress must be guided by the objectives of stablish by the airline deregulation act namely the encouragement of innovation competition and the expansion of low fare service tax revenue should be generated by promoting economic expansion and taking steps to encourage more people to fly in both the new taxes and fees for not essential customer services unrelated to cost imposed by the system must be avoided such taxes would surely harm competition raise costs and slow the industry's recovery from a decade of losses in addition congress should look carefully at the new rules proposed by the d o t rules that benefit few customers but raise costs for all should not be imposed on the industry such rules create inefficiency reduce innovation and lead to higher fares thank you for your consideration thank you the chair now recognizes mr redlich chairman costello ranking member and members of the subcommittee thank you for inviting southwest airlines to testify at today's hearing my name is dave ridley and i'm senior vice president of marketing and revenue management i've been to southwest employ seen eighty eight in my role i am accountable for the company's top line revenue performance my responsibilities include among other things pricing advertising in the maintenance of our brand image as america's leading low fare high customer service airline today southwest is the nation's largest airline in terms of domestic passengers hearing more customers than any other u s airline we now carry over one hundred million passengers a year serving sixty nine cities in thirty five states were the most heavily unionized airline in the country and we're the only airline that has not had an involuntary furlough of an employee since our hundred seventy one after thirty nine successful years the airline business southwest continues to look for ways to differentiate ourselves from other airlines beyond our consistently low fares and our great customer service most recently we chose to make our affordable transparent and easy to understand pricing structure a focal point in winning the hearts and minds of the flying public by not following the industry t nickel and dime ing of our customers our overriding philosophy at southwest airlines is to not charge customers for things they have historically received for free that is why southwest is committed to low fares with no hidden fees what you see is what you pay when you look at ticket on southwest you will not pay at the check your first or second bag or to carry on a bag for that matter you will not pay a fee to check your bags curbside you will not pay up to one hundred fifty dollars to change your reservation you will not pay a fee to sit in a window or aisle or an exit seat you will not pay a fee to make your reservation over the phone and you will not pay a fuel or peak travel surcharge the either and as always snacks soda smiles and the occasional bad jokes are all complimentary a southwest airlines our position on fees aligns our corporate to generate positive financial results with the passion of our people to provide good customer service we listen to our people they in turn do not shy away from telling us exactly what they think  people told us that they don't want to nickel and are their cut their customers allowing our people to do what they do best in a customer friendly way is just one reason why since one thousand nine hundred eighty seven when the department of transportation began tracking customer satisfaction to statistics southwest has consistently led the entire airline industry with the lowest ratio of complaints per passenger boarding this is further evidence that our policy of not nickel and dime ing is not a gimmick it's good business and it makes our people feel better about who they are and what they do do in large part to our bags free campaign southwest is experiencing domestic market share shift worth close to a billion dollars since the introduction of this campaign as a result our customers employees and shareholders have been the beneficiaries of this decision while we're not fans of fees for services that historically have been part of the base fare we believe strongly that the decision on whether or not to charge a fee for an airline product or service is a business decision best made by h individual airline southwest made the conscious decision to limit our customer's exposure to what we view as unreasonable and annoying fees that was our choice and other airlines have chosen a different business model and should have every right to do so however we do think the federal government should focus on ensuring the full disclosure of any and all these to consumers making sure that air fares are advertised fairly and honestly only an informed consumer can make apples to apples fair comparisons which allows them to shop for a flat that this goal on behalf of southwest airlines thank you for this opportunity to testify and i'll be happy to answer any questions thank you mr ridley and the chair now recognizes mr mitchell that you chairman ranking member to try and members of the sub committee thank you for inviting the business travel coalition to appear before you today to represent passenger and corporate managed travel interests on airline product on bundling and fees today's hearing is critically important because of the potential for consumer abuse in this fast changing on bundled marketplace for airline services the g c is not against on bundling as a matter of principle but rather is opposed to the absence of full disclosure of all add on season charges such that all consumers cannot make genuine apples to apples comparisons of all in airline fares without timely incomplete airline disclosure of an increasing  add on charges to global distribution systems and the travel agencies that they automate consumers the private of all information will become is economically trapped by airlines as they would be physically trapped during a seven hour tarmac delay the need for consumer protection in this area is acute but the remedy need not be burdensome the highlights of the t c survey results of a one hundred eighty eight travel industry experts released yesterday are revealing of a sea change in thinking about government oversight and commercial air transportation consider one hundred percent of corporate travel managers indicated that on bundling an extra fees have caused serious problems in their managed travel programs eighty six percent believe that airlines absent government rules will not make fair adequate and readily accessible disclosure of their add on fees and charges so that travel managers and air travel management companies can do comparison shopping of the all in prices for air travel across carriers and ninety five percent support the proposal that the u d o t require airlines to make add on data available and easily accessible to the travel agency channel through any g d s in which that airline mine or an airline has agreed to participate in the survey participants i should point out are business people who do not generally favor government intervention in a marketplace however they see a market failure coming at them with the speed and impact of a stephen stephen strasburg fastball to the side of the head with across the board on bundling of air travel services and absent government the government empires that stepping in consumers will not have the ability to evaluate the full price of their travel options available to them for decades transparency of their fair information through all channels has been a marvel of modern technology and has benefited consumers in measurably unbundling without disclosure threatens to catapult us out of the twenty first century and back into an opaque stone age where a telephone calculator pen and paper and a lot of unproductive time were needed to figure out how to compare airline services add on's like check bags are material to air transportation the way a chair is material to a restaurant meal what some airlines are doing is akin to a restaurant advertising a twenty dollar business persons lunch in special and then surprising the patron with a ten dollar ad on c for use of a chair when handed the menu the patron is given partial information and essentially tricked into coming to the restaurant the stakes of course are much higher at the airport for families and businesses on tight budget which is why you're having this hearing today of significance is that major airlines remain at a thirty to thirty five percent cost disadvantage these are the the low cost carriers and as such cannot offer the kinds of across the board low fa that the low cost carriers do there is therefore a motivation present to obfuscate the true all in price by keeping fares opaque and especially resisting efforts to have fees and fares displayed transparently for travel agents by the global distribution systems importantly the air traffic tariff publishing company as a new airline fast a data system ready to facilitate the loading of add on fares in the global distribution systems however not a single major u s airline has signed on to be t c s knowledge to permanently use this new system because the first airline to do so would likely show all in higher airfares of thirty percent or more compared with its competitors this is an industry where a few dollars can make a difference for a consumer in choosing one airline over another so no one airline can rationally be expected to make the first but sensual potentially suicidal move that's why a reasonable measure of government help is needed to ensure that all airlines jump together for the benefit of consumers moreover except to the extent that congress or duty mandates specific consumer protections airline passengers are without legal rights and remedies because preemption federal preemption and the lack of the f t c oversight in this area in conclusion mr chairman the international airline passengers association i oppa and its four hundred thousand members join b t c n n karajan this committee to urge the d o t and its n p r m to require airlines to make ad on their data accessible not only on their own websites but also to the travel agency channel through any g d s it which an airline has agreed to participate congress could also provide this relief in the f a a reauthorization act to senator menendez is a sensible disclosure proposal either way consumers would finally have the batting helmet needed to step up to the plate confidently in today's bundled market please thank you and i look forward to your questions thank you mr mitchell now recognizes mr moore thank you mr chairman saber holdings owns both saber travel network the part of our business that runs the saber e d s and travelocity one of the nation's largest and most popular online travel companies today in my testimony i am representing three groups the interactive travel services association the trade association for online travel companies and g d s is the american society of travel agents the largest association of  professional travel retailers in the world and the consumer travel alliance a nonprofit member of the legislators and regular a nonprofit member member of the consumer federation of america credit to inform and educate legislators and regulators about policy issues and consumer travel i'm responsible for the systems that manage the sale of air travel across all channels where airlines distribute through saber which is recently been heavily focused on airline and bundling up until recently air travel shopping in the u has been one of the closest things you'll find to an adam smith perfect marketplace consumers have enjoyed access to near perfect information on air products and prices through the internet travelers can shop anytime day or night and the prices while constantly changing are also constantly updated they can book when they feel the product is appropriately price for themselves and travelers are extremely price sensitive the vast majority of travelers select air travel at or very near the lowest  offered unfortunately that perfect model is now broken mr mitchell and the rest of the panelists outlined this very well but in short with the removal or repackaging of many services from what has traditionally been included in the shoppers have a very difficult time finding out the true cost of travel for their proposed trips they are left to find out the true cost only when their completed trip return flight for their trip when they paid for the last baggage fee and pick their seats for themselves and their families to the painful surprise and blown budgets consumer travel alliance has just released information that outlined the impact on consumers from hidden fees with effective price increases of twenty forty sixty percent and higher but it doesn't have to be this difficult or harmful solutions are coming online that will bring back transparency for the consumers but this can only happen if the airline community makes information on an readily available let me repeat that it can only happen if the airline community makes information on ancillary fees readily available something that it's it's asked and the c t a strongly believe the airline should be compelled to do a broad collection of airlines agency's g d s and standards setting bodies such as a t p co arc and i add have outlined how the information for ancillaries can be shared within the industry a t p co the airline owned fair clearinghouse has adapted their systems to support ancillary fee information with the same level of specificity that airlines have for base fares targeting the ancillaries to specific dates routes flights fares travel groups corporations or agencies and many many many other variables at sabor we are on the cusp of being able to make this information available to the shopper as they shop whether online or through a traditional travel agent at the end of this month saver is poised to introduce the ancillaries and their prices into the shopping workflow of the traditional travel agents and representing the graph you see in front of you next month we will take this a step further a big step and able ing it in the low for search process low fare search is something you would liken to online shopping where you ask for flights and fares for your desired departure and return dates next month we will allow shoppers to choose what a important to them for their trip if they believe they're going to need to check a couple of bags they can specify that up front if they're traveling with their family they can indicate the need to be able to select seats together the system then finds the lowest fares that meet those specific needs inclusive of the ancillaries giving the consumer the total price for their trip with no surprises at the airport the standards can still solve yet another problem that today's corporations and agencies have virtually no ability to manage where the money is going the systems can fix that too and it is important to note that saver and the rest of the industry are all going down this path concurrently of course all of this only happens if the airlines are compelled to provide that information to the channels that represent approximately half of the air travel sold in the united states absent this consumers will invariably end up selecting flights only to find that things weren't as they appeared on their screen and to be clear this isn't about compelling an airline to participate in the g d s is airlines have the choice to participate or not this doesn't change that at all this is unequivocal about the consumer if the airline chooses to sell to the g d s is the airline should show the consumers their full prices not something that dramatically understates the real price travelers pay finally airlines have a powerful disincentive to actually provide this information to consumers as this gives that last holdout airlines the added advantage of appearing lower price than their competitors who might actually be providing the information on their full cause this is why the government must step in we don't believe airlines will do this on their own we it it's the ass in the c t a believe it is important that those airlines selling the g d s is provide the information in a way that allows consumers to shop with full knowledge of and confidence in the travel costs in total as you can see about at this time at the same time consumers deserve the opportunity to know what to expect when they're buying in this matter the cost of compliance for the airlines are negligible and the benefits are enormous and i to thank you for your time jared thank you mr moore and now recognizes the distinguished chairman of the full committee chairman oberstar greatly appreciate you holding this hearing mr chairman just patients of mr p try as well there's very few issues of more lively interest to air travelers than the checked baggage fees and other fees that airlines are charging and i hardly weekend goes by my travels that i'm not asked by passengers  very thorough report to evaluate and report to us i would say if it looks to me like the airlines are learning from units of a tax so you cannot impose these taxes with impunity by calling them a fee that's just backdoor financing and look passengers are paying for meals for pillows blankets headphones for beverages to check the luggage and some are at least one airline proposed to carry on luggage in europe the low fare carrier proposed a fee for using the potty on board the airplane that didn't last very long but at least they propose that up front and then you have the premium services early boarding and act early access to overhead space and but there's never anybody onboard those planes fly down others say no no you're in row twenty four you can't park your bag and roll three you know  they can do these things themselves but they are doing it and in two thousand and nine seven point eight billion dollars in fees two point seven billion dollars of which is baggage first quarter of this year seven hundred seventy million dollars in checked baggage fees while the network carriers are losing money and the industry as a whole report a profit of only twelve million dollars so look you have to have additional effect and i make it make appointments chairman in every airport i go through i talk to the t s a agents what does this mean for you they feel for checked baggage well it means more carry ons more densely packed carry ons and carry ons that are more difficult to screen that's taking us longer to screen and more difficult to find things that are jammed in and packed then we frequently have to have backup t s a persons to read and back up the primary screener i've found all around the country  bags and then those fees are not subject to the airline ticket tax and as the g a o report indicated that could be the equivalent two percent of the revenues into the aviation trust fund which benefits primarily the airlines air traffic control they facilities and equipment account airport construction and improvement programs all of that would benefit but but you have the airlines saying well we've got lower ticket prices if you add in the cost of all these charges that i listed a moment ago ticket prices are back up where they were before before the fees so and probably higher i think the g a o reports recommendations of disclosure in some of the testimony heard today at least as a starting point but i just want to say that the airlines who are i'm sure in great number here or back in their offices listening in if they don't exercise restraint that there's going to be a continuing outcry from the traveling public and you're going to have some kind of regulation that you won't like so if you don't exercise self restraint then you're going to get  pushback from the traveling public they will come to the congress and then the congress will act and that's not a threat that's history  on fees and disclosure of fees on airlines what about discounts and undisclosed isco it's i mean i mean the strategy of a lot of these airlines seems to have all have all these fees and then to have a synergy programs with lots of discounts so if you belong to the thing you don't pay for the behavior you get into a fast finder you get free drinks or you get a one hundred one different  so to speak or upgrade and all i guess i mean is it legitimate to have a strategy that differentiates in that way and bundles so that customers more or less get the benefits of charges that they want to pay for rather than one size fits all thank you for the question mr peter congress of the the focus of the department of transportation since deregulation has been to ensure to the extent we are able with the great support of this committee in the congress that can guard against unfair and deceptive practices unfair methods of competition and to ensure safe and adequate transportation all we are trying to do is to fulfill that charge we have as you know a current rule making proposal which i can't discuss beyond describing it under the rules related to regulatory proposals but if there are other suggestions that are not included within the scope of the rule that we've put forward which is moore or someone else and you knew you flew four times with air tran you could get a free a first class upgrade or you could could save bigot's charges or god knows what or some other airline that might make a difference because you might figure well we're taking several trips and it would be better to go with the airline that would charge five dollars more but would give us all these extra discounts and so i mean you're looking at extra charges but you're not looking at the other side of it in this disclosure and and it seems to me a lot of these airlines have a strategy to try to capture the business in a higher price customer by giving the individual business traveler all kinds of perks through these affinity plans that the boss is paying for and might not even realize is going into this because he's making the decisions he has to choose between two trips and he'll choose the one that gets him the extra  personal perks that he'd like is that what they are doing or is this a problem is this something we should be addressing here in this congress i think it's a wonderful observation i think it's exactly right but i also believe that this was an unintended consequence out of this you had airlines that were introducing ishmael fees but they did not want to anger their most loyal and highest revenue driving passenger so they were waving and that that actually drove greater loyalty for those most loyal passengers because now they had even greater differentiation in the products and services that they could expect relative to some we were not a loyal traveler and that really just kind of speaks to while the stuff is so important this is made it even more complex than it used to be and so trap that's why consumers run happy that you know this is an incredibly complex process and that's why we believe it's incredibly important for the airlines to provide the information so that you can differentiate between those that may be frequent travelers versus not in comparison shopping the systems are ready to do that we need the data thank you i just have one other quick question  slightly unrelated to the subject for us but as long as mr rivkin is here we do have a pretty strong rule currently to protect the traveling public which says if look if airline stays more than three hours i guess holds passengers on the ground for more than three hours there's a tremendous fine and we're starting to hear from various carriers that to avoid that there has been people after about two hours to get off the plane even though there might actually mean flights are more delayed than they would otherwise be and people are overall more inconvenienced so i'm just curious as to whether you're the department people dealing with this rule and it's meant to be open to sitting down and reviewing various ideas for fine tuning it with the idea of ending up convincing rather than inconveniencing the traveling public so far as on it's just updated delays are concerned of course we would be congressman we just got our first full month of comparative data which showed that three hour tarmac delays are down substantially from i believe thirty four a year ago to five this last may we are investigating those five at any that we've become aware of that have occurred since then we're always looking for ways to improve responsibilities me very happy to work with you yes just wanted to let you know that the g a o it's been asked by committees of the congress to evaluate the impact and implementation of the rule and as mr rifkin say there's only been a month of data to this point and we are waiting on a little more time to pass so we can have something to base our study on so we will be looking at that as well we're just hearing from various people in the industry who a big find concentrates the mind and and then there are some ideas that people think they have that they would like evaluated to improve to implement not to suffer the side rule but to implement in a way that would benefit the traveling public more than a rigid one size fits all approach which they currently fear is the case where there's some unanticipated consequences in airlines behavior because facing a big rule they when they get near the three hours or fear they might get everyone back in the airport and then maybe they'll have to sit there for six hours or eight hours waiting for another flight whereas they could have if they they'd rather save that money and inconvenience the customers than give them true convenience anyway this is a concern that they have that it's not a it's not a voluntary delay they're trying to work with some real world working so far is because finally the airline senior management teams have been made to prioritize this problem one month of data six months of data will not really matter what's going to matter is that the airlines will have a period of time over the next twelve months  to do the enormous work required in their systems in their operations to make this work for the passenger i would virtually guarantee a year from now this will be a non issue the airlines will adjust mr ripken to follow up the model we can only compare that month to may of two thousand and nine at the mr peatross point of the industry raising concerns about consumers conversely have you had any complaints to the department have you received any complaints from passengers or consumers yes of course we have sir we receive we have a staff of of lawyers and investigators that reveals complaints every day specifically about the bible delays during that period of  time we we take the report to make sure we're investigating those five delays but we also in addition investigate media reports call in complaints so yes we are investigating whether those zero seven for checked bags and lowered base fares was that a net to the airline did you did you lower base fares as much as your revenue or did you actually increase revenue although you want bottled mr overhead are you going to lower fares again we already have that's good now why would you object to a system where a customer you know tell you what in the end you  have flown about four million miles since i've been in congress had a hell of a lot of conversations with people get between here and there in this first thing they care about is whether they get there alive and safely but the second thing is the conditions under which they travel and what they paid for their ticket now they don't care where that money goes they don't care where that money goes they just want to know how much is the ticket going to cost them so why would you object to a system where people would be able to meaningfully compare what they are going to pay in total to go from a to b we don't object to that system in fact we have spent a lot of money changing our website so that it is fully disclosed when you buy a ticket on spirit airlines you know exactly what you're in the choices i'm sure on the first page or when i finally get to the point before you pull out your credit card and put your money well then but you're not providing the data to the marketers absolutely because  customers go through the shopping process they say i want to fly from a to b then maybe i want to check two bags maybe i want to buy travel insurance or not maybe i want to join this club or not or whatever and at the end they see the whole piece of what they're going to have  excuse me just to reclaim my time mr work could you comment on this i saw you shaking your head and i thought i understood from dr dillingham and from your testimony that they are not cooperating with the secondary marketers in terms of these fees and charges and never going to the stand thank you for the question in terms of the data that we would need that a consumer would need to to say up front i'm going from point a to point b as you said and i'm going to check a couple of bags and i want to be able to pre s that type of information is not made available today and there has been no airline that has said that they are that they are going to do this permanently i mean there's been no airline that said that we're doing this you know expressly right now and i think you said that there's a system that could accommodate absolutely and i think you said that airlines some are more or less interested but they're worried about the effect of if they go first and consumers are getting fully honest what's it going to cost me in total for this trip for me and my kids you know and get a meaningful comparison of the bottom line across all the airlines that you report on as opposed to when you go to a captive site maybe they give you the information but you don't you can't compare it unless you want to close that down go over to another site and  comparison there and then go to another site do a comparison there they can't go to a one stop shopping site and get this information that's correct absolutely correct that that's absolutely correct all right this kind of reminds me of one where i was trying to ban smoking in my early days on this committee on airplanes and i would have i would love to do it but if we would be at a competitive disadvantage if i tried to convince of the competitive advantage that smoking but that if we did that if we stepped out so we had the government had to stand in and say we're not going to allow smoking now you have a level playing field so i guess my question of the why wouldn't we create a level playing field here and specially since what half the tickets are purchased through secondary marketing not principally through airline sites that's right why wouldn't we create a level playing field there by requiring the meaningful transfer customers buy from third party intermediaries well that's only ninety two percent of our customers buy direct from our airline we fully disclose one hundred percent of that qatar but so are you right now that you're not answering my question why if the government orders you to do this is this going to be a big imposition on you know because if we would do it for ninety two percent of our customers why wouldn't we do it for eight percent well that's true then why well because maybe you get more customers if you are marketed more honestly on those other sites or the ninety two percent of the know based on the work that we've done we do not think that it would be a tremendous burden on the airlines to provide the kind of information in a way that customers could make meaningful comparisons airlines already have administrative mechanisms in place that would facilitate doing this kind of thing it would not be free but it would not be overly burdensome either ok mr rivkin why wouldn't we have a comprehensive rule to require that as opposed to you're sort of picking around the edges with what you're proposing we have asked that question in our current rule making and proposed that it be a government mandate and we're awaiting comment ok thank you thank you mister thank you the chair  being developed and put out to the public is closer to or at least we would consider it a first step in terms of making it more transparent so that the consumers can in fact compare what they're going to be buying from we are mandated is unfair or deceptive practices that is similar to state consumer protection rules around the country where there is a body of case law that describes when there is a misrepresentation or a misleading assertion in our current rule making which is now out for comment we've set forth a whole series of proposals that ancillary fees as i went through in my oral testimony baggage must be fully and prominently disclosed other ancillary fees and the key disclosure is that the total mandatory price must be disclosed the same way by every airline and agent so that the direction of the the o t s n p r m will solve several problems for corporate travel departments first of all build with the knowledge of the fares and the fees they will be able to budget more effectively they will be able to administer the programs do the accounting and the audit thing correctly they will be able to enforce travel policy currently a fee is indistinguishable between a checked baggage fee or an upgrade to business class for example so there's a whole host of benefits including their travelers not being surprised at the airport by these fees and confused so there are great benefits that would come from full disclosure and transparency as laid baldwin i realize you're the president of spirit but i'd appreciate not being yelled out like you just did with my colleague here so let me just laid out out on the front here you're in congress and i'm going to talk to you with respect and i'd like for you to do the same with me  first question is and let me ask this to mr dillingham when a plane is unloaded is it generally done by a general employee on an airport or is it done by a specific carrier i seem to recall and i fly two times a week i don't always see that it's a specific carrier so could you clarify that for me mr richardson when you say when a plane is unloaded like for example in spirit airlines if they're unloading their passengers in florida let's say we get off the plane is it the florida airport their employees that are unloading it or is it spirits employees that vary from up airport to airport i think the latter it varies from airport to airport ok that's an important point because i think it gets to the question of well why are we charging more fees my next question is spirit collecting how do you collect the data on your passengers and what do you know in terms of the number of packages has it increased or and your evaluation what i see on the plane and i can tell you is that i've noticed a dramatic increase of with people who have on bags how much longer it takes to get everybody on board and it does become dangerous you have people  here and i think when we talk with the flight attendants for example they're really concerned because they are usually the ones that are trying to lift those heavy bags over into the into the bin as well there's also the issue of flight delays that are associated with trying to get all the bags on and then you have situations where people for a while they would bring a big bag that wouldn't fit they didn't have to pay for it by checking it in but then they could get it free by taking the down to the gate so there are all kinds of sort of unintended consequences and gaps that are going on at this point in time ok and then  mr i have two quick last questions and i realize we're calling for a vote so the answers if we can have them be brief i believe you had said they had not responded to the recommendations mr dillingham is it that they didn't respond or just that they have not agreed or disagreed the recommendations in our report they have not responded it wasn't to agree or disagree and usually you know they have sixty days to fully comply in one way or another so it is not unusual that we're in this situation since we just ok and then my last question is back to you again mr ball down i apologize if i but your  name i understand and i read in your testimony that the information is available on your web site however the committee that i have not the committee the community that i represent not everyone has a computer not everyone has access and many people are utilizing services as mr moore has mentioned calling your local travel agent who helps them to answer all the questions so if you're providing the information on the web site really what is your objection to providing the information to the agencies and to the g d s system we don't have that objection what i have said is you don't have the objection why aren't you doing it then simply because we've not had the ability to see how the system works yet and we won't put ourselves at the competitive disadvantage yet and again only as your money i'm reclaiming my time that's how it works here so are you saying to me that neither two of these element here mr mitchell or mr moore have provided you an example of how you could provide that information no what i'm saying is that yes or no had no has anyone supplied you with the information of how you could incorporate it not that i'm aware and if you were provided it would you be open to jesting that system for consumers we would be open to considering it top priorities what are the top priorities in the current role making yester well we don't list them in order of priority but this is a rulemaking that encompasses a broad number of consumer issues that we issued in the wake of our last rule making so we tried to be as comprehensive as we could be understanding that there are always going to be other issues got proposed increased compensation for in voluntarily bumped passengers cancellation of a reservation within twenty four hours without charge so there are a number of additional  provisions and in fact we've tried with this rule making to to make the maximum public involvement we could by partnering with cornell university regulation room dot org so that the public might find it easier to go to that website and actually comment on the proposal and then cornell will summarize those comments and place it on the roll making docket so you don't you don't really then feel that certain as slaves should be included in the base very you're not you're not going that way with the room we do not have the authority to regulate these routes or service and so we are trying to discharge our mandate to just ensure that what the airlines do they do openly and transparently when do you think the final rule be issued it's we are hoping but we can never be sure to issue the final rule before the end of this calendar year and i guess the thing and we've only got literally just a minute or so but is there in separating out the baggage and again i'm a guy that all the time and that's an extra fee   i guess what i'm saying is are there any are there any positive consequences as a result of people not having two bags every time they go someplace does that make sense i'm i'm sure there are arguments and i've heard some of them on different sides of that issue we just heard some cons from mr bellingham that more carry on bags could be dangerous could delay flights loading and unloading on the other hand you know perhaps people are incented to carry less with them that they don't actually need i personally really don't have an opinion how about you mr gillingham as i guess what i'm saying is do you carry more people on top is white a factor so that you can actually carry more people in the us there are radically you're not having as many planes in the air to the environment and fuel and all of those kind of things is that a factor in reducing the and as you have indicated weight is a factor in terms of flight and therefore you could you could make that argument and weight taken all together we haven't done any work that would indicate sort of what the anchorman is between baggage and persons but the logic is there ok thank you very much thank the sheriff thanks a gentleman and we'll announce that we have three boats pending on the floor right now we will return members have questions and i have some questions as well i would ask everyone to be back in the room in your chairs if you will by three forty three forty the subcommittee will stand in recess until three forty seven point five how much did you say it would generate for the trust fund two hundred million around two hundred million yes or ok and obviously it's not in a trust fund while the airlines have made a substantial amount of money off of these fees and the trust fund has shown a deficit in the same period of time is that correct the the i'm committed and the trust fund has in fact been going down and mr chairman i want to point out is that part of what we say in be determined but it's clear from what you have seen that revenue for the airlines as a result of these fees obviously the revenues gone up while at the same time the trust fund is going down that's correct but i'm not sure i would link them but both of those statements are true but we would generate two hundred million dollars more if in fact the  collected were in fact part of the tax and going into the trust fund yes sir ok let me ask you and there are a number of recommendations several recommendations that you have made to the secretary to improve disclosure and information on airline impose and government impose fees to improve airline reporting of revenues to the department of transportation can you walk us through just for the record to be clear what some of those recommendations are in the g a o report yes are they they fall into into two basic categories of the first one is a matter for consideration that we offer it to the congress in the sense of if the congress wants to consider taxing the fees and that is a policy decision that the congress needs to make but with regard to the of let those departments to let the d o t know what their refund policies are let the airlines know what those refund policies are across the agency again it's it's an attempt be transparent and disclose to the flying public mr rivkin in your testimony you state that in the proposed rulemaking that you're asking for comments on the cost and benefits of requiring the two prices be provided in a certain air for advertising i wonder if you might explain that certainly mr chairman we the basic principle is we want there to be a full fair price that includes all the non optional prices so that it really apples to apples could be compared we are seeking comment really in an agnostic way and hoping that we can become educated and  rn through the rule making process what would be useful is whether in addition to that price the mandatory price that includes fees it would be helpful to the public to have another price that would be essentially the bare minimum price plus what people normally do and what they're normally used to being included so a bag or two perhaps a seat being selected and see if there might be some standardized way of kind of complaint comparing that notional price as well to give more information to consumers i mentioned earlier when i recognize you i commend the department of transportation and the secretary for being proactive and taking regulatory actions concerning consumer protection issues and i'm pleased that you are moving forward with addition regulatory protections i don't think regarding deceptive fares and deceptive advertising and greater transparency for airline fees i frankly do not believe that we are going to get where we need to be unless we do this either through rulemaking are through action taken by the congress mr ball danza said earlier that he did not object i think he said talked about an unfair competitive advantage if one airline does it and the other one doesn't obviously if you do not have an objection to posting all of the fees if everyone has to do the same and he said he wouldn't have an objection i assume mister ridley you would say the you indicate that spirit believes it is unfair to charge passengers for extra services that they do not use what do you mean by that thank you chairman what i mean by that is that different customers ask for different things in terms of their air travel and we think it's unfair to presume that a customer might want might need to check two bags or might need to have a certain service on board so it's spirit we think it's very important to only charge them what is necessary for their trip but then make available in an optional basis other services and options that they may be able to use we think this benefits consumers we think this results in lower fares and it gives customers the option to say this is valuable to me so i'll pay for it or it's not valuable to me and i can save the money you also indicated in your written testimony that unbundled services do not impose any cost on our on airport infrastructure that there is no cost imposed on airport costs of transporting the passenger are all included in the base fare and the things we charge extra for we don't believe add to the burden that the aviation trust fund funds so check bags for example add cost to the airline but they don't particularly use air traffic control they don't particularly add airport related cost to the airport they add to the airline i would respectfully disagree with you i think it's pretty clear that it does but at this point i'll recognize the ranking member mr duncan will thank you mr chairman and thank you for calling this hearing and i just have a couple of that the decision on these charges should be a business decision and left up to the airlines anybody disagree with that statement yes  i'm not sure that i would disagree the statement that what i what i felt like i heard mr ridley say is that it should be left to the airlines as to how they actually market their products and services whether they choose to bundle or not i'll i to believe that that's an airline decision  the thing that i think was important is that i believe that mr ridley also with support is transparency and so that means that that the you know that the if you've got an airline that is bundling and one that is not it just needs to be made clear to the consumer about you know how you compare those apples and apples did i characterize that right the day i think that's fair yes let me ask mr dillingham  in our briefing it says through various rulings and guidance the d o t has required that airlines and ticket agents disclose the following for these in air fare advertisements fuel surcharges peak travel and how they surcharges and governments among airline travel if the airlines were required to disclose these things like extra charges for for banks and things that the kind of fees we've been talking about here today mr know from the work that we've done we've seen no indications that the showing of fees and and transparency of fees and disclosure would decrease travel and  well would it would it be substantial cost for the airlines to do that in some ways it's again based on the work that we've done we do not think that it would be a substantial cost for the relatively easy and as you heard some of the witnesses today the market is beginning to rev up to produce all kinds of mechanisms that will make this an easy thing to do it then becomes the airline's choice short as the chairman said short of congressional action then it becomes the airline's choice whether they want to participate mr  suggested of course the committee needs no reminding that every roll making goes through a rather rigorous cost benefit analysis and it won't get through and be if it doesn't have benefits commensurate with its costs let me  what is the problem with the travel agents they say that their lands won't give the information about these additional fees to them and it's caused some problems for them but what mr b and mr really what do you say about that in response to the travel agents well this may be a bit of a clarification on my earlier testimony as well but i can confirm that spirit provide full details about its fees and services to all of our g d s partners today and perhaps we're not providing it in a format or or timeliness or way that they can use it properly but if we're not doing it that way we just need to no one will do that because we're very open to that idea duncan i'm not sure that mr moore might be the better one to answer this but i but since you asked the airlines perspective and southwest in particular where we sell less than five percent of our bookings through either an  online travel agent or a travel agent this is kind of a minimal issue that i'm really not it's is your main concern that you you don't mind disclosing all these and civil rights charges but you just don't want to be taxed on disclosure we still will often have the lowest total price but in regards to tax we don't believe it's appropriate to tax the ancillary fees because in most cases they do not use the infrastructure that the tax is intended to pay for they and if they help you make any profit you're going pay taxes in that way anyway that is correct and it also allows lower fares to the consumer which generates more travel which also generates more tax revenue mr hadley well  in particular we're talking about one hundred million dollars which is a lot of money in this town that's a lot of money but compared to the billions of dollars of b s that are subject to perhaps this we really just don't take a position on whether this should be taxed or not because it's just not that relevant to southwest airlines the industry is overtaxed i'll make that point but in terms of whether whe wanted to come you there on my earlier questions or the later parts too so go ahead doug thank you my on my comment that i wanted to make just surrounded the the question you rapid acting on difficulty and the what i would suggest  is today there are a number of airlines twenty six airlines that are testifying this information through a t p co they are they're experimenting with if you know if i have this ancillary fee how would i you know how would i file it all that kind of stuff so they've done some some good work to lay the laid a ground work even internally for this those twenty six airlines represent eighty six percent of the u s point of sale bookings in saber meaning from today the  airlines that actually know how to do this represent the vast majority of bookings that we already that where we do airlines can do this it doesn't have to be that difficult all right mr mitchell yes congressman i think that there's five five her the second reason is that there is great profitability from complexity and confusion when you purchase a fare you purchase it thinking and many times that that's what my all and price is going to be then you get to the airport you're paying thirty percent or forty percent more had you known about that earlier you may have made different choices of airlines or transportation so there is money to be made in complexity the third point is that by withholding this information isn't the end the travel agencies it's common view of this of many industry participants of what the airlines are endeavoring to do is force the agencies to actually pay them for this content what that will do in effect is shift the cost of diving and distribution on to the backs of consumers and finally or or fourth you know let's move passengers in droves to airline dot com where they do not have comparative shopping capabilities and where they're going to get higher yields and higher fares and finally there's the tax avoidance issue all right well let me ask you this has the as mr rivkin has has the department  transportation received a large number of complaints about these extra fees what's the young thousands of complaints or hundreds of complaints or what's the situation where we do get complaints i can get back to you with the numbers if you like congressman duncan i don't have those with me but we do get complaints about a lot of people that are unhappy with these they just are all right thank you very much would be that and i shop spirit dot com it's a it's a it's a more arduous process than i would like as a consumer i have to take my city pare i didn't get what i feel like is a fair that i have that i can rely on and then i find out there's taxes and fees that get added on top of that that's not the answer the fees we're talking about just basic you know security fees those kind of things that it won't disclose initially and then i'm going to have to put in my my personal information on you know where i live all that kind of stuff actually get what i believe is a is the true price and then after after all of that i find out that there might be a c p a and that actually might take place after i paid it troublesome to me as a consumer mr mitchell as chairman i think that  the way i would answer that is that i think spirit should be free to on bondal until the cows come home and price to their heart's content but so long as a carrier is in a g d s and providing agencies with fair data they need to provide complete data and they need to do it in a way that is very transparent i think the marketplace will reward or punish spirit airlines based upon you know how they conduct their business well and that is what we hear from consumers is that look you know they set the prices and as you said they're setting fees just tell us what we're getting and what's the price going to be so we don't have to spend a half hour or an hour shopping around on a website and as i see it as you said mr mitchell the first airline who jumps out there and does this and shows thirty percent increase over the cost in comparison to other airlines they're not going to do it voluntarily and they're not going to do it in a uniform manner that consumers can easily understand unless they are required to  do would you disagree with that i would agree with that one hundred percent and i'm going to file with the d o t a comment on behalf of a major corporation whose travel manager came here last month with a family friend and took a flight from boston to l a the surprise at the airport on baggage fees increased their total trip cost by twenty percent he went back to belgium and looked through the g d s to find any mention whatsoever of these fees went back to the major the travel management company and law there was no mention anywhere and this is a professional corporate travel manager if it can happen to him what does that portend for the average consumer myst make a comment yes thank you the booking process that mr moore described for spirit air dot com was accurate as of you know six months or so ago but spirit has invested hundreds of thousands of dollars to change our website to where today you don't go through the arduous process he described which again was accurate in the way we used to work today the process is very simple and fully disclosed wouldn't be in the best interest of your consumers your passengers as well as southwest and every other airline out there if there was a uniform way of posting prices if they go to spirit or they go to united are delta are southwest airlines all the same easy to find and easy to understand isn't that in the consumer's best interest well it may be and that's interesting and i would like to be able to buy a refrigerator that way too when i go to sears know what it costs me at lowe's and at home depot the reality is that different airlines offer different things to customers and that diversity is a wonderful thing the world wouldn't be a great place if every airline were like spirit i would also argue it wouldn't be a great place if everyone was like southwest the world a better place because customers have the choice of airlines like spirit and southwest and many many other airlines one of the problems when it comes to pricing know is that many people do not understand what their choices are and number two that they are getting services that they didn't know paying for services that they didn't know that they want and nor did they ask for so i think i've made my point i think you've made your point final question that as i think all of you know we passed in this committee in one of the house of representatives an airline safety bill where we increased the requirements for pilots both in training and in number of hours in the cockpit and also a number of other things in conditions and so on and so forth just out of curiosity since we have both of you here what is the starting pay the entry level pay for first officer w spirit airlines the i don't i don't know the starting pay i can give you the average pay and we tend to be a very pretty low seniority airline so our average first officer is about three years senior with the airline and last year they aren't about seventy thousand dollars a year on their w two our average captain is about eight years senior and last year learned about one hundred forty five thousand dollars on their w two but you don't know what the starting salary is of the first officer of the tired they're the starting wage rate and how that translates to their w two i don't have that information with me right now but we can certainly provide that we would request that information and mr gridley that's not my area of expertise but we'll get to answer soon as possible because you know when i when i read and i understand the business model where we have i think in your written testimony  r ball dance and you say that since two thousand and seven when we adopted our ultra low cost carrier business model our goal has been to provide basic quality air transportation at the lowest possible cost i understand what that means my concern is about safety and that's why i'm interested to know the lowest possible cost of water we hear a line in other airlines paying a starting first officer the entry level we found with a number of regional carriers that in at least one instance that we know that the first officer was hired and paid less than twenty thousand dollars a year i'm certain it's not the case southwest and hopefully it's not that spirit but i would like to have that information if you would supply it to the committee staff the chair now recognizes mr petri thank you and i just had one question that posting all this information on its website and presumably other airlines postage and maybe somewhat different formats and so on you can't the burden shouldn't be on you to just visit their websites every  upgraded and say what's available and if you want to matrix and that airline does not provide that information but the next there is something in the public would be informed as to but they would then have the diversity of choice  or is this a legal issue i mean are the lawyers for you saying you want it provided by the airline so that if there is a confusion or some difference the liability is on them and you can show a piece of paper or something that that is just what we're really talking about because the information is there on different websites so it must be someone is trying to shift legal liability to the airlines from themselves who wants to present that information or misunderstood misrepresenting the situation so i appreciate the question mr petrie and it's it's one of those things where i look at it that i don't look at as a legal issue at all and i do look at it as a question of complexity when you've got you know six hundred airlines in the world that have their schedules and saber and to actually try to go out and gather all this information on it in a very laborious fashion it would it would be incredibly challenging to try to keep that stuff fresh because soon as you do it's been  stale the things change and it and the other thing that makes this incredibly hard or impossible basically is that these charges are often applied and in many times aren't and in those kind of that level of granularity is just not made available on the web site so it's if if one of mr mitchell's corporate customers has negotiated away a baggage fee well that's not posted on the website we have no means to know that this it isn't is an imperative for the airline to provide that information because we have no no knowledge of that level of granularity and particularly that those things might apply at very low fares but perhaps they don't apply at the higher fares and and the fees are applied for seat fees but perhaps not sites are being hit automatically by google or someone and they have ways of updating this practically instantaneously and people may want to change their business model or make it if you had to go through a government regulatory process it could take months  and there are seasonal differences and hundred do you buy a new airplane may have different requirements as to what type of bundling or on bundling would be appropriate i mean this could card a lot of flexibility in the industry  it's not handled right or am i misunderstanding situation i would believe it actually introduces the flexibility that we would need to allow a consumer to shop in the way they want you know when you when you think about some of the stuff i was discussing earlier around how a consumer can can can suggest up front i'm an elite frequent traveler on on united as an example i'm flying from new york to l a and and in that i go and shop when perhaps i'm not a lead on anybody else fees that might apply to me those aren't available on the website i don't know that they're certainly not applicable to me and so the and particularly the fact that they may be applied for one corporation or and not just based on the negotiated agreement that i have with those that there is no there is no level of specificity that would be required in order for that shopping mechanism to really work for the traveler it's just way too much data that changes far too rapidly i mean when you when you think about the the way a consumer shops in this speaks to something you were talking about earlier mr chairman fully half can have to consumers that shop in the online space buy at the lowest fare and if an asymptotic occur on on on total price so in other words you get to about seventy percent of the seventy percent of travelers they will have bought within a hundred twenty hundred thirty percent of the lowest fare but half of those people if they've missed that that twenty dollars charge that may have been incurred they might have made a very different decision and so there's a there's a level of information that just going to be lost that consumers would benefit from tremendously and would all actually change the way they the the price of the products they may be buying because they're better informed and it's just too much information to try to be gathering you know laboriously all the time anyone else  hundred ancillary fees that's what they're ready to go to market with so if you do the possible combinations just with one airline you do the math one hundred times one hundred that means that a consumer has a possibility of ten thousand combinations for that one airline perhaps nine to eleven o'clock on a wednesday morning if you're comparing against nine other airlines that's one hundred thousand possible combinations this is orders and orders in orders of magnitude more complex than anything this industry has ever known or faced before and it strongly begs for the technology and the standards to get in the place so that the consumer has the full disclosure he or she needs i think mr p try and mr mitchell you in fact state in your testimony that airlines often have a strong incentive to mislead consumers on prices mr chairman that that is correct i mean whether it is looking trying to look in the g d s in the travel agent as if you are matching a southwest or or an air tran or whether it is just simply misleading the consumer to think he or she has it all in price and then they get to the airport and they're surprised but in addition to that this is the no man's land for consumer protection mr ball dance of mention going to the store for a refrigerator well luckily for him and the rest of us we're protected in large part by the f t c the f t c has no oversight responsibility here and the consumer has no rights or legal remedies because of federal preemption which the airlines have fought and championed and fought to expand so that is central to this idea that the consumer needs protection here we we know that there's  one person at the witness table that recently went through and examined all of the airlines and the fees that they charge and the g a o submitted this report to us so i would ask dr dillingham  was it a simple process to go in understand what each airline charges would be if you just went through this you and your staff pretty simple for the average consumer to understand trying to achieve here and i think what senator menendez and his amendment what he is trying to achieve is transparency so people understand you know what they're getting for the money and they can compare one price to another and what their options are mr p try to have any further questions if not i will ask very quickly if anyone on the panel has anything to there's confusion there's a chance for profit i would argue that whether simplicity there's a chance for profit and that's the tack southwest has taken so i don't want to be lumped in with all my brother and mr mitchell's description anyone else i would as well chairman thank you i would like to say that this is going to interesting to us and i think the whole industry and while there may be differences among spirit and and many other airlines in fees that measure generally in the tens or twenty's of dollars the real outrage we think it's beer it should be on the fares where the difference is measure in the hundreds and thousands of dollars and when customers are paid are made are asked to pay enormously high fares and taken advantage of because the supply demand relationship or their inability to be flexible takes advantage of them that is a more outrageous  consumer exploitation that is in charge in a fisa and that's an issue for a different hearing that's right let me just thank all of you for being here today and offering your testimony and answering questions of the members of the sub committee and mr rivkin i hope you will go back and pass on to the secretary and the administrator as well that we encourage the department to stay on schedule and move quickly with the rule making i certainly