COMMERCIAL 

AVIATION

Information on Airline 

Fees for Optional 

Services

Report to Congressional Requesters

September 2017

GAO-17-756

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-17-756, a report to 

congressional requesters

September 2017

COMMERCIAL AVIATION

Information on Airline Fees for Optional Services

What GAO Found

Since 2010, selected U.S. airlines have introduced a variety of new fees for 

optional services and increased some existing fees. For example, each of the 11 

U.S. airlines that GAO examined introduced fees for “preferred” seating, which 

may include additional legroom or a seat closer to the front of the economy 

cabin. Some of these airlines have also introduced new fees for other optional 

services, such as fees for carry-on baggage and priority boarding. Since 2010, 

many of the selected airlines have also increased existing fees for some optional 

services, including fees for checked baggage and for changing or cancelling a 

reservation. From 2010 to 2016, U.S. airlines’ revenues from these two fees—

the only optional service fees for which revenues are separately reported to the 

Department of Transportation (DOT)—increased from $6.3 billion in 2010 to $7.1 

billion in 2016 (in constant 2016 dollars).

Airline officials cited competition from other airlines and customer demand, 

among other things, as factors they consider when deciding whether and how 

much to charge for optional services. According to officials from 9 of the 10 

selected airlines GAO interviewed, the process of “unbundling” allows 

passengers to customize their flight by paying for only the services that they 

value. Airline officials said that charging fees for optional services allows the

airlines to offer lower base airfares to customers. For customers traveling with 

bags, however, GAO’s review of airline-related economic literature showed that 

on average customers who paid for at least one checked bag paid more in total 

for the airfare and bag fees than they did when airfares included checked 

baggage. Officials from the 10 airlines said they also consider customer demand 

and willingness to pay when setting prices for optional services, and officials 

from 8 of these airlines noted that competitors’ prices for similar services are

another factor used in determining the amount of fees. 

Since 2010, DOT has taken or has proposed a range of actions to improve the 

transparency of airlines’ fees for optional services. These actions include: (1) 

monitoring and enforcing airlines’ compliance with existing transparency 

regulations; (2) collecting, reviewing, and responding to consumers’ complaints; 

(3) collecting additional data on revenue generated from fees; and (4) educating 

airlines and consumers about existing regulations and consumer rights related to 

optional service fees. Consumer and industry stakeholders, such as online travel 

agents’ representatives, told GAO that DOT’s regulations requiring certain 

airlines to disclose optional service fees on their websites have improved 

consumer transparency. However, these stakeholders also told GAO that there 

are additional transparency challenges, such as when consumers search for and 

book flights through online travel agents. Because optional services are not

always available for purchase and because fees for such services are not always 

disclosed through online travel agents, these stakeholders argue that consumers 

are not always able to determine the full cost of their travel and compare costs 

across airlines before they purchase their tickets. While transparency challenges 

still exist, DOT has ongoing regulatory proceedings, some in response to prior 

View GAO-17-756. For more information, GAO recommendations that may resolve some of these issues. contact Gerald Dillingham, Ph.D., (202) 512-

2834 or dillinghamg@gao.gov.

Why GAO Did This Study

Since 2008, U.S passenger airlines 

have increasingly charged fees for 

optional services that were previously 

included in the price of a ticket, such 

as checked baggage or seat selection.

Consumer advocates have raised 

questions about the transparency of 

these fees and their associated rules.

In April 2011, DOT issued a final rule 

requiring, among other things, that

certain U.S. and foreign airlines 

disclose information about optional

service fees on their websites.

GAO was asked to review issues 

related to optional service fees in the 

U.S. aviation industry. This report 

describes: (1) how selected U.S. 

airlines have modified their offering 

and pricing of optional services since 

2010, (2) the factors that selected U.S. 

airlines consider when determining 

whether and how much to charge for 

optional services, and (3) actions DOT 

has taken since 2010 to improve the 

transparency of optional service fees

and views of selected aviation 

stakeholders about these actions.

GAO reviewed 2010 and 2017 airline 

data on optional services fees charged 

by the 11 largest U.S. passenger 

airlines; analyzed airline financial data 

from 2010 to 2016 reported to DOT; 

reviewed economic studies examining 

the effects of bag fees on fares; and 

reviewed applicable laws. GAO 

requested interviews with 

representatives of all the 11 selected 

U.S. airlines; 10 agreed to be 

interviewed and one airline declined.

GAO also interviewed DOT officials, 

consumer advocates, and other 

aviation industry stakeholders. DOT 

reviewed a draft of this report and 

provided technical comments that GAO 

incorporated as appropriate.
Page i GAO-17-756 Airline Optional Service Fees

Letter 1

Background 4

Selected Airlines Have Continued to Introduce New Fees for 

Optional Services since 2010, while Increasing the Price of 

Some Existing Fees 10

Selected Airlines Consider Competition and Customer Demand 

Among other Factors When Making Decisions About Optional 

Services 19

DOT Has Made Progress in Increasing Transparency of Optional 

Service Fees, but Consumer and Industry Groups Raised Some 

Challenges 24

Agency Comments 36

Appendix I Information from Selected Countries on Increasing the 

Transparency of Airline Optional Service Fees 37

Appendix II Objectives, Scope, and Methodology 42

Appendix III GAO Contact and Staff Acknowledgments 49

Tables

Table 1: Department of Transportation’s Consumer Protection 

Regulations Related to Airlines’ Optional Service Fees 8

Table 2: Selected U.S. Airlines’ Approaches to Charging Fees for 

Preferred Seating, as of April 1, 2017 12

Table 3: Selected U.S. Airlines’ Fees for Checked Baggage and 

Other Optional Services on Domestic Flights, as of July 1, 

2010, and April 1, 2017 16

Table 4: Laws with Provisions Related to Optional Service Fees 

as Reported by Selected Countries 38

Table 5: List of Aviation Stakeholders GAO Interviewed 45

Figures

Figure 1: Examples of Airline Optional Service Fees 6

Figure 2: Airline Passengers Purchase Optional Services as a 

Bundled Package or Individually, or Both 14

Contents
Page ii GAO-17-756 Airline Optional Service Fees

Abbreviations

A4A Airlines for America 

ACPD Aviation Consumer Protection Division

BTS Bureau of Transportation Statistics

DOT Department of Transportation 

EU European Union

FKGL Flesch-Kincaid Grade-Level 

GDS global distribution system 

IATA International Air Transport Association

OAEP Office of Aviation Enforcement and Proceedings 

UK United Kingdom

UK CAA United Kingdom Civil Aviation Authority

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-17-756 Airline Optional Service Fees

441 G St. N.W.

Washington, DC 20548

September 20, 2017

The Honorable Bill Nelson

Ranking Member

Committee on Commerce, Science, and Transportation

United States Senate

The Honorable Richard Blumenthal

Ranking Member

Subcommittee on Consumer Protection, Product Safety, Insurance, and 

Data Security

Committee on Commerce, Science, and Transportation

United States Senate

The Honorable Edward Markey

United States Senate

Since 2008, U.S. passenger airlines have increasingly “unbundled”

optional services, charging fees for a variety of services that were 

previously included in the price of the ticket. For example, optional service 

fees can include charges for such things as checked bags, early 

boarding, seat selection, meals, or other amenities. In addition to these 

services that were previously included in the ticket price, the airline 

industry has long charged fees for other optional services, such as 

unaccompanied minors, or changing or canceling a reservation. Optional 

service fees are an important source of revenue for airlines. According to 

the Department of Transportation’s (DOT) Bureau of Transportation 

Statistics (BTS), from 2010 to 2016, U.S. airlines generated more than 

$44 billion in revenues from baggage fees, reservation-change fees and 

cancellation fees alone. Over the same period, the number of passengers 

traveling on U.S. airlines increased by 14 percent.

With airlines’ increased practice of charging fees for optional services, 

consumer advocacy groups have raised concerns about the lack of 

transparency regarding optional service fees and the full price of airline 

tickets. In July 2010, we reported that information about airlines’ optional 

service fees and their associated rules are not fully disclosed to 

consumers, making it difficult for consumers to compare the total cost of 

Letter
Page 2 GAO-17-756 Airline Optional Service Fees

flights across different airlines.1 We made four recommendations to DOT 

to improve the transparency of information on airline-imposed fees, 

including that DOT require airlines to disclose certain airline-imposed 

optional service fees, and disclose applicable government-imposed fees 

that may be eligible for refunds on unused nonrefundable tickets. DOT 

has implemented both of these recommendations but has not yet 

implemented our recommendations to require airlines to disclose 

baggage fees and policies along with fare information across all sales 

channels used by the airline, and to separately report to DOT the 

revenues from all optional service fees paid by passengers.2 However, 

DOT has initiated several rulemakings that may address these open 

recommendations.3

You asked us to review issues related to optional service fees in the U.S. 

aviation industry. This report describes: (1) how selected U.S. airlines 

have modified their offering and pricing of optional services since 2010; 

(2) the factors that selected U.S. airlines consider when determining 

whether and how much to charge for optional services; and (3) the 

actions DOT has taken since 2010 to improve the transparency of 

optional service fees and views of selected aviation stakeholders about 

these actions.

To determine how U.S. airlines have modified their offering and pricing of 

optional services, we selected the 11 largest U.S. passenger airlines (in 

terms of reported revenue and number of passengers) that fly under their 

 1

GAO, Commercial Aviation: Consumers Could Benefit from Better Information about 

Airline-Imposed Fees and Refundability of Government-Imposed Taxes and Fees, 

GAO-10-785 (Washington, D.C.: July 14, 2010). 

2

In total, we made six recommendations. One recommendation was to the Department of 

Homeland Security to issue guidance regarding the refundability of the customs and 

immigration inspection fees to U.S. and foreign airlines collecting these fees. Another 

recommendation was to the Department of Agriculture to determine whether a passenger 

is eligible for a refund of the animal and plant health-inspection fee and convey this 

determination to U.S. and foreign airlines collecting these fees. Both of these 

recommendations were implemented. We also included a matter for congressional 

consideration regarding amending the Internal Revenue Code to make mandatory the 

taxation of certain or all airline imposed fees and to require that the revenue be deposited 

in the Airport and Airway Trust Fund. Congress has not yet taken action regarding this 

matter.

3

Transparency of Airline Ancillary Service Fees, 82 Fed. Reg. 7536 (Jan. 19, 2017) and 

Reporting Ancillary Airline Passenger Revenues, 76 Fed. Reg. 41726 (July 15, 2011). 
Page 3 GAO-17-756 Airline Optional Service Fees

own brand.4 These airlines transported over 80 percent of U.S. domestic 

passengers in 2016.5 We obtained 2010 and 2017 airline data and 

analyzed how these fees have changed since 2010. Specifically, we took 

screen captures of airlines’ webpages listing optional services and fees 

on March 31 and April 1, 2017. We then compared this information to the 

2010 optional services and fee information that we collected as part of our 

2010 review of airline fees. We requested interviews with representatives 

of all the 11 selected U.S. airlines; 10 airlines agreed to be interviewed 

and one airline declined.6 We interviewed these airline officials about their 

optional service fees and bundled fare products introduced since 2010 

and obtained related documentation.7 We obtained 2010 through 2016 

data from BTS on airlines’ revenues from baggage and reservation 

change and cancellation fees and analyzed how this revenue has 

changed since 2010. We determined that these data were sufficiently 

reliable to report on airlines’ revenues from baggage and reservationchange fees since 2010 by reviewing quality control documentation and 

interviewing BTS officials. We also reviewed available economics 

literature on the extent to which baggage fees, introduced by U.S. airlines 

around 2008, affected ticket prices.

To determine the main factors that airlines consider when determining 

whether and how much to charge for optional services, we asked 

representatives from the 10 airlines that agreed to be interviewed about 

the factors their airline considers when deciding to charge separately for 

an optional service. To determine what actions DOT has taken since 

 4

We originally selected 12 U.S. passenger airlines for our review: Alaska Airlines (Alaska), 

Allegiant Air (Allegiant), American Airlines (American), Delta Air Lines (Delta), Frontier 

Airlines (Frontier), Hawaiian Airlines (Hawaiian), JetBlue Airways (JetBlue), MN Airlines 

LLC dba Sun Country Airlines (Sun Country), Southwest Airlines (Southwest), Spirit 

Airlines (Spirit), United Airlines (United), and Virgin America. During the course of our 

audit, Alaska Air Group, which owns Alaska Airlines, purchased Virgin America. As a 

result, we eliminated Virgin America from our selection. 

5

We used DOT T-100 data on U.S. airlines to determine the share of passengers on the 

11 airlines in our selection. The share of passengers on these 11 airlines does not include

passengers who flew on flights marketed by one of the selected airlines but operated by 

another airline. For example, SkyWest Airlines, the largest airline excluded from our 

selection, flew over 31 million passengers in 2016 on flights marketed by Alaska,

American, Delta, and United. 

6

Sun Country declined our request for an interview; however, we included relevant 

information about Sun Country in parts of the report that relied on publicly available 

information, such as information from the airline’s website. 

7

Delta provided written responses to our interview questions.
Page 4 GAO-17-756 Airline Optional Service Fees

2010 to improve the transparency of optional service fees, we reviewed 

DOT regulations and proposed rules, along with DOT policies, directives, 

guidance, and other documentation related to monitoring, investigating, 

and enforcing airline compliance with optional service fee regulations. We 

interviewed DOT officials and selected aviation stakeholders—including 

three airline trade associations, four consumer groups, and six other 

industry stakeholders—about DOT’s actions. We interviewed BTS 

officials about their guidance and process for collecting optional service 

revenue data from airlines. We also discussed DOT’s actions and BTS’s 

data collection with officials from the 10 selected airlines that agreed to be

interviewed. In addition, we examined the “contract-of-carriage”

documents from all 11 selected U.S. airlines.8

Last, we obtained documents and interviewed officials from four selected 

foreign governments (the European Union, Canada, the United Kingdom, 

and Malaysia) that have taken actions to improve consumer transparency 

related to airline fees; information from these interviews is presented in 

appendix I. All information regarding foreign laws, regulations, and cases 

is based on responses by the applicable foreign officials to interview 

questions. More detailed information on our scope and methodology is 

presented in appendix II, including a list of the selected aviation 

stakeholders we interviewed and specific information about how we 

selected the stakeholders, airlines, and foreign governments for our 

review.

We conducted this performance audit from November 2016 to September 

2017 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

In recent years, airlines have increasingly charged fees for optional 

services. Since the U.S. airline industry was deregulated in 1978, the 

industry’s earnings have been volatile. In calendar years 2008 and 2009, 

the U.S. passenger airline industry incurred nearly $4.4 billion in 

 8

A “contract of carriage” is the legal agreement between the passenger and the airline and 

typically defines all the contractual rights, liabilities, and duties of the two parties to the 

contract.

Background
Page 5 GAO-17-756 Airline Optional Service Fees

operating losses, due largely to high jet fuel prices—airlines’ biggest 

operating expense in 2008—combined with a severe economic downturn 

that reduced passenger traffic. In response to these and other economic 

challenges, airlines began in 2008 to “unbundle” optional services from 

the base ticket price, thereby charging separate fees for services that 

were previously included in the ticket price.9 Revenues from fees for 

optional services continue to grow. In fiscal year 2016, airlines reported 

$200 billion in revenue, about $7.1 billion of it from the two optional 

services fees for which revenues are separately reported to DOT—$4.2 

billion in baggage fee revenue and $2.9 billion from fees for changing 

reservations.

The passenger airline industry is primarily composed of network (or 

“legacy”), low-cost, and regional airlines. Network airlines were in 

operation before the Airline Deregulation Act of 1978 and support large, 

complex hub-and-spoke operations with thousands of employees and 

hundreds of aircraft. These airlines provide service at various fare levels 

to a wide variety of domestic and international destinations.10 Low-cost

airlines generally entered the market after deregulation and tend to 

operate less costly “point-to-point” service using fewer types of aircraft.11

Regional airlines generally employ much smaller aircraft (up to 100 seats) 

and provide service under “code-sharing” arrangements with larger 

network airlines for which they are paid on a cost-plus or fee-fordeparture basis to provide network capacity.12 Both network and low-cost 

airlines charge fees for a variety of optional services. Regional airlines 

may also charge optional fees, such as baggage fees; however, those 

fees are generally determined by the network airline in the code-sharing 

partner agreement. While charges for some services—such as 

unaccompanied minors, reservation changes or cancellations, and 

oversized or overweight baggage—have existed in the airline industry for 

many years, other services, such as wireless internet access and on-

 9

“Unbundling” refers to charging fees or ancillary fees for optional services or offering a la 

carte pricing for different services.

10For purposes of this report, we defined Alaska, American, Delta, Hawaiian, and United 

as network airlines. 

11For purposes of this report, we defined Allegiant, Frontier, JetBlue, Southwest, Spirit, 

and Sun Country as low-cost airlines.

12A “code-sharing” arrangement is a marketing arrangement in which an airline places its 

“designator code” (e.g., UA for United) on a flight operated by another airline and sells and 

issues tickets for that flight.
Page 6 GAO-17-756 Airline Optional Service Fees

demand entertainment access, are new. See figure 1 for examples of 

optional service fees.

Figure 1: Examples of Airline Optional Service Fees

Some optional services can be purchased in advance when booking 

airline tickets. For example, customers can purchase optional services 

when booking tickets directly from the airline (i.e., from the airline’s 

website, by calling the airline’s call center, or from the airline’s ticket 

counter at the airport). Customers who purchase tickets from third parties, 

such as online travel agents (e.g., Priceline or Expedia) and traditional or 

corporate travel agents, may also have the option to purchase some 

optional services when booking tickets, but this option varies depending 

on the airline and third party. Customers may also obtain some 

information about flight schedules, fares, and some optional services from 
Page 7 GAO-17-756 Airline Optional Service Fees

metasearch companies (e.g., Google or Kayak); however, the information 

on optional services available through these websites varies.13 Generally, 

online travel agencies, traditional or corporate travel agents, and 

metasearch companies obtain airfare and optional service fee information 

from global distribution systems, which are companies that package 

airline information so that travel agents can query and “book” (i.e., 

reserve and purchase) flights for airline customers.14

DOT has authority to investigate whether a U.S. air carrier, foreign air 

carrier, or ticket agent has been, or is engaged, in an unfair or deceptive 

practice or an unfair method of competition in air transportation or the 

sale of air transportation. Upon finding that a U.S. air carrier, foreign air 

carrier, or ticket agent is engaged in such a practice or method, DOT has 

the authority to order the regulated entity to stop the practice or method.15

Under this authority, in April 2011, DOT issued “Consumer Rule 2” which 

included several provisions related to increasing the transparency of 

airfares and optional service fees for consumers.16 This rule—which 

became completely in effect in January 2012—requires, among other 

things, that certain U.S. and foreign air carriers disclose information about 

their optional service fees on their websites and refund passengers’

 13Metasearch websites provide consumers with information about different airline prices 

and schedules to enable customers to comparison shop across multiple airlines and 

online travel agent websites. Metasearch websites do not sell tickets but direct customers 

to airline or travel agent websites to book their tickets.

14The three main global distribution system companies are Amadeus, Sabre, and 

Travelport. Airlines provide airfare information to the Airline Tariff Publishing Company, 

the tariff publishing house, which is owned by a consortium of airlines and which in turn, 

provides the fare information to the global distribution system companies. Once an airline 

ticket is purchased, the financial transaction is reconciled by the Airlines Reporting 

Corporation, another company owned by an airline consortium, which offers payment and 

settlement services.

1549 U.S.C. § 41712(a).

16Enhancing Airline Passenger Protections (Consumer Rule 2), 76 Fed. Reg. 23110 (Apr. 

25, 2011).
Page 8 GAO-17-756 Airline Optional Service Fees

baggage fees if their bags are lost.17 The transparency regulations that 

went into effect after the issuance of Consumer Rule 2 are summarized in 

table 1.

Table 1: Department of Transportation’s Consumer Protection Regulations Related to Airlines’ Optional Service Fees

Regulationa Requirementsb Citation 

Full fare price advertising • Advertisements in the United States by an air carrier or ticket agent for 

air transportation within, to, or from the United States must include the 

entire price for air transportation, including government taxes and 

mandatory fees.

14 C.F.R. § 399.84(a)

Opt-in requirement • Consumers must affirmatively “opt-in” (i.e., agree) to purchase optional 

services before such fees are added to the total price of the air 

transportation-related purchase.

14 C.F.R. § 399.84(c)

Disclosure of fees for 

optional services 

• U.S. and foreign air carriers with websites marketed to U.S. consumers 

must promptly and prominently disclose on the homepage of their 

website for at least three months after the change becomes effective, 

any increase in carry-on or checked baggage fees or change in carryon, first, or second checked bag allowances. 

14 C.F.R. § 399.85(a)

• U.S. and foreign air carriers and ticket agents with websites marketed to 

U.S. consumers must clearly and prominently disclose on the first 

screen in which the ticket agent or carrier offers a fare quotation for a 

specific itinerary selected by a consumer that additional airline fees for 

baggage may apply and where consumers can see these baggage fees.

14 C.F.R. § 399.85(b)

 1776 Fed. Reg. 23110, 23165, 23166-23167 (codified as amended at 14 C.F.R. §§ 259.5, 

399.85). As part of this review, we examined optional service fee refund policies of the 

airlines in our selection and found that these policies differed across the selected airlines. 

Of the airlines we interviewed, 7 of the 10 stated that if an airline cancels a flight, it will 

provide an automatic refund of the fare and all fees. Eight out of 10 airlines stated that the 

airline will provide a refund if the customer cancels the ticket, but that it depends on the 

type of fare purchased by the customer. For example, according to one airline official, if a 

customer purchases a refundable ticket, then any optional services that the customer 

purchased with the ticket will also be refunded automatically if the customer cancels the 

ticket. However, if the customer purchased a non-refundable ticket, then any optional 

services purchased with that ticket are also considered non-refundable. In the case of a 

late or a lost checked bag, 8 of 10 airlines said that they would refund the baggage fee, 

but that the refund is not automatic and the customer would have to request the refund. 

The FAA Extension, Safety, and Security Act of 2016 required DOT, by July 17, 2017, to 

issue final regulations requiring air carrier or foreign air carriers to promptly provide 

passengers with refunds for baggage fees when the passenger’s bag is not delivered 

within specified time periods after arrival of the flight. Pub. L. No. 114-190, § 2305, 130 

Stat. 615, 640 (2016). In October 2016, in response to this mandate, DOT issued an 

advance notice of proposed rulemaking seeking comment on the appropriate length of 

delay, within the statutory parameters, that would trigger the refund requirement, among 

other things. See Refunding Baggage Fees for Delayed Checked Bags, 81 Fed. Reg. 

75347 (Oct. 31, 2016).
Page 9 GAO-17-756 Airline Optional Service Fees

Regulationa Requirementsb Citation 

• U.S. and foreign air carriers and ticket agents that advertise or sell air 

transportation in the United States must include information about the 

free baggage allowance, and/or applicable fees for the first and second 

checked bag and carry-on baggage, on the e-ticket confirmation 

provided to the customer for air transportation within, to or from the 

United States. The baggage fee information must be expressed as 

specific charges.

14 C.F.R. § 399.85(c)

• U.S. and foreign air carriers with websites marketed to U.S. consumers 

must prominently disclose fees for all optional services—including 

baggage charges and items such as upgrades, meals, and drinks—in a 

single place, accessible through a conspicuous link on the home page 

of the website. Fees for particular services may be expressed in ranges, 

except for baggage fees which must be expressed as a specific charge.

14 C.F.R. § 399.85(d)

• For air transportation within, to or from the United States, a carrier 

marketing a flight under its identity that is operated by a different carrier 

(also known as a code-share flight), must disclose on its website any 

differences between its optional services and related fees and those of 

the carrier operating the flight. 

14 C.F.R. § 399.85(e)

Prohibition on post-purchase 

price increases for airfare and 

baggage

• Any seller of scheduled air transportation within, to or from the United 

States cannot increase the price of airfare or baggage if the consumer 

has already paid the full amount, except in the case of an increase in a 

government-imposed tax or fee. However, post purchase price 

increases for government-imposed taxes or fees are only allowed if the 

seller notifies the consumer of the potential for such an increase and 

obtains the consumer’s written consent to the potential for such increase 

prior to the purchase of the air transportation. Additionally, any seller of 

scheduled air transportation within, to or from the United States must 

notify a consumer of the potential for a price increase that could take 

place prior to the time that the full amount has been paid by the 

consumer and must obtain the consumer’s written consent to the 

potential for such an increase prior to accepting any payment for the air 

transportation.

14 C.F.R. §§ 399.88, 

399.89

Refunding fees for optional 

services

• When a consumer is voluntarily or involuntarily denied boarding, the 

carrier must refund all optional service fees paid for by the consumer 

that are not available on the alternative flight. The carrier must also 

refund passengers the baggage fee if the bag is lost.

14 C.F.R §§ 250.5(f), 

259.5(b)(3), (b)(5)

Source: GAO review of DOT regulations | GAO-17-756.

a

The regulation column does not reflect the title provided in the Code of Federal Regulations. Instead, 

we included the name by which DOT commonly refers to the regulations.

b

The requirements column for each regulation is a summary based on both the regulatory text of the 

citation provided, and DOT’s guidance provided in its “Answers to Frequently Asked Questions 

Concerning the Enforcement of the Second Final Rule on Enhancing Airline Passenger Protections 

(EAPP #2),” most recently revised on December 12, 2016.

DOT’s Office of Aviation Enforcement and Proceedings (OAEP), and its 

Aviation Consumer Protection Division (ACPD), monitor and enforce 

airline compliance with economic regulations, such as advertising 

requirements related to the disclosure of airline fares and optional service 
Page 10 GAO-17-756 Airline Optional Service Fees

fees, among others.18 Consumers may file air-transportation-related 

complaints with DOT.19 Consumers may also file air-transportation-related 

complaints with airlines, and airlines are required to acknowledge and 

respond to each complaint.20 Additionally, DOT may require airlines to file 

reports and keep records.21 DOT is authorized to inspect regulated 

entities’ records and collect transportation information from regulated 

entities.22 DOT may assess civil penalties against airlines for violating the 

statute prohibiting unfair and deceptive practices and unfair methods of 

competition, and any regulations promulgated under that authority.23

Since 2010, U.S. airlines have introduced a variety of new optionalservice fees and bundled products and increased the price of some 

existing fees. Some fees for optional services, like first and second 

checked bag fees on network airlines, have not changed considerably 

since 2010. However, some airlines increased other fees, such as fees 

for overweight and oversized bags and reservation changes and 

cancellations. According to DOT data, from 2010 to 2016, airline 

revenues from baggage fees and reservation-change and cancellation 

fees increased as did the number of passengers.

Several U.S. airlines have introduced new fees since 2010 for services 

that used to be included in the ticket price, notably “preferred” seats within 

the economy cabin. For example, several network airlines—including 

Alaska, American, and Delta—created fees for upgrading to preferred 

seats, which are more desirable seats in the economy cabin of the 

aircraft, such as those located in an exit row, toward the front of the 

 18Both OAEP and ACPD are housed within the Office of the Secretary of the Department 

of Transportation.

1949 U.S.C § 46101(a).

2014 C.F.R. § 259.7(c).

2149 U.S.C. §§ 41708, 41709 (a).

2249 U.S.C. §§ 329 (a), 41709(b). 

2349 U.S.C. § 46301(a).

Selected Airlines 

Have Continued to 

Introduce New Fees 

for Optional Services 

since 2010, while 

Increasing the Price 

of Some Existing 

Fees

U.S. Airlines Have 

Introduced New Fees and 

Products for Optional 

Services since 2010
Page 11 GAO-17-756 Airline Optional Service Fees

aircraft or with additional legroom.24 Preferred seats may also include 

priority boarding or food and beverages, depending on the airline. The 

characteristics of preferred seats differ among airlines, even when the 

products’ names sound similar. For example, both American and 

Hawaiian have a product called Preferred Seating, but American’s 

product refers to standard legroom in more favorable locations, whereas 

Hawaiian’s product refers to more legroom and priority boarding, among 

other things. In addition, some airlines offer more than one type of 

preferred seat. For example, in addition to its Preferred Seating product, 

American also offers a product called Main Cabin Extra, which includes 

additional legroom and priority boarding. As of July 2010, Frontier, 

JetBlue, and Spirit had already instituted fees for preferred seats, and 

Allegiant started offering preferred seats to its passengers in 2014. 

Southwest, however, does not have any assigned seating and therefore 

does not sell preferred seating. Instead, Southwest allows some 

customers to pay for early boarding, which increases the customer’s 

ability to select a desired seat. Table 2 shows airlines’ different 

approaches to charging fees for preferred seating.

 24Some airlines, including Delta, place preferred seats in a separate cabin, as opposed to 

designated areas within the economy cabin. 
Page 12 GAO-17-756 Airline Optional Service Fees

Table 2: Selected U.S. Airlines’ Approaches to Charging Fees for Preferred Seating, as of April 1, 2017 

Airline Product Description

Alaska Premium Class 3-4 inches more legroom than standard seats, priority boarding, and 

complimentary beverage

Seats with more legroom 4-9 inches more legroom than standard seats

Allegiant Legroom+ More legroom than standard seats

Giant Seats Wider seats and more legroom than standard seats

American Main Cabin Extra 3-5 inches more legroom than standard seats and priority boarding

Preferred Standard legroom in more favorable locations of the aircraft

Delta Comfort+ 1-4 inches more legroom than standard seats, priority boarding, and 

complimentary food and beverages

Preferred Standard legroom in more favorable locations of the aircraft

Frontier Stretch seats 5-10 inches more legroom than standard seats

Hawaiian Extra Comfort More legroom than standard seats, priority boarding and security 

screening, entertainment pack, and use of pillow and blanket

Preferred More legroom than standard seats and priority boarding 

JetBlue Even More Space More legroom than standard seats and priority boarding

Southwest Upgraded Boarding Allows passengers to board earlier and select a more desirable seat

Spirit Big Front Seats Larger seat with more legroom than standard seats

Sun Country Preferred Seats located in the front of the coach cabin

United Economy Plus 3-8 inches more legroom than standard seats

Source: GAO analysis of selected airline websites | GAO-17-756

Notes: With preferred economy seating, a customer may pay to reserve a more desirable seat, such 

as a seat toward the front of the aircraft or with extra legroom. More legroom refers to increased seat 

pitch, which is defined as the distance between a point on a seat and the corresponding point on the 

seat in front of or behind it.

The pricing of preferred seats is not always apparent to customers on 

airlines’ websites, unless the customer selects or begins to book a 

specific flight. For example, some airlines, like Spirit and United, specify 

the range of prices, which may vary based on the route. Other airlines, 

like Alaska and Frontier, provide the minimum possible price but do not 

specify the maximum a customer might pay for the preferred seat. One of 

the selected airlines in our review, Delta, did not have preferred-seating 

prices available to customers browsing the website. All of the selected 

airlines provide detailed pricing on preferred seats if the customer selects 

or begins to book a specific flight.25

 25Although Southwest’s Upgraded Boarding is not available for purchase until the day of 

travel, its website states that the fee is either $30 or $40 depending on the flight.
Page 13 GAO-17-756 Airline Optional Service Fees

From 2010 to 2017, U.S. airlines introduced other new fees such as fees 

for carry-on bags, beverages, wireless internet access, and priority 

boarding. For example, three low-cost airlines implemented new fees for 

carry-on bags. Spirit introduced a fee for bringing a large bag into the 

cabin in 2010, as did Allegiant in 2012 and Frontier in 2013. None of the 

network airlines currently charge for carry-on bags. Allegiant and Frontier 

also began to charge customers for non-alcoholic beverages in 2012 and 

2013, respectively, while Spirit already charged for these products. Since 

2010, some U.S. airlines began charging for services that were not 

previously available. For example, Southwest first offered and charged for 

wireless internet access in 2011, and JetBlue began charging for 

expedited security screening and early boarding in 2011.

While some customers are electing to pay extra for optional services, 

others are purchasing tickets that are priced lower and include optional 

service restrictions. For example, since 2015, American, Delta, and 

United have introduced Basic Economy fares. Passengers choosing to 

purchase Basic Economy tickets are assigned seats after checking in, 

meaning that they might not be seated with the rest of their travel group; 

board the aircraft last; cannot upgrade seats or class of service; and 

cannot change their flights. In addition, American and United Basic 

Economy passengers may not stow belongings in overhead 

compartments and are limited to one carry-on bag that fits under the seat 

in front of them.

In yet another purchasing option, since 2010 several U.S. airlines have 

introduced packages of optional services that are sold together as a 

bundle instead of individually and can be purchased on top of or along 

with the base fare. The contents of these bundles vary greatly among 

airlines. For example, Frontier has two packages that include carry-on 

and checked bags, seat selection, and priority boarding; one of the 

packages also allows customers to change or cancel their tickets for full 

refunds. Other airlines’ bundles include the base ticket as well as other 

optional services, such as JetBlue’s “Blue Plus” that adds one checked 

bag to the basic fare. On some airlines, bundled packages also overlap 

with preferred seating; for example, on Hawaiian, an Extra Comfort seat 

provides a seat with additional legroom, priority boarding and security 

screening, entertainment pack, and the use of a pillow and a blanket. 

Figure 2 illustrates different ways that airline passengers can elect to 

purchase optional services, depending on the airline.
Page 14 GAO-17-756 Airline Optional Service Fees

Figure 2: Airline Passengers Purchase Optional Services as a Bundled Package or Individually, or Both
Page 15 GAO-17-756 Airline Optional Service Fees

From 2010 to 2017, fees for first and second checked bags on U.S. 

network airlines generally remained unchanged, while low-cost airlines 

generally increased these fees (see table 3).26 Among the five network 

airlines in our selection, only Alaska increased its first bag fee—from $20 

to $25, which is the same price charged by other network airlines.27 Delta 

and Hawaiian did not increase their fee for first and second checked 

bags; however, they eliminated a $3 discount that was previously 

available for paying bag fees online in advance of a flight. Among lowcost U.S. airlines with which we spoke, Allegiant, Frontier, and Spirit each 

increased the fee range for the first and second checked bags from 2010 

to 2017. These three airlines charge varying baggage fees based on 

when the passenger pays the fee; specifically, paying a bag fee online 

and in advance of the flight is less expensive than paying the bag fee at 

the airport on the day of travel. Southwest does not charge for a first or 

second checked bag, opting to use “bags fly free” as part of its marketing 

strategy.

 26The fees detailed in this section only apply to U.S. domestic flights. Fees on 

international flights may be higher or lower depending on the airline and destination and 

origin countries. We examined these seven fees in our prior report in 2010, which allowed 

us to compare prices from 2010 and 2017 in this report.

27All of the network airlines in our selection allow several groups of passengers to check 

bags at no cost, including passengers with certain frequent-flyer statuses, passengers 

who booked tickets with airline-branded credit cards, U.S. military members, and first- and 

business-class passengers.

Network Airlines Have 

Generally Not Increased 

Baggage Fees, but Some 

Fees for Other Optional 

Services Have Increased 

since 2010
Page 16 GAO-17-756 Airline Optional Service Fees

Table 3: Selected U.S. Airlines’ Fees for Checked Baggage and Other Optional Services on Domestic Flights, as of July 1, 

2010, and April 1, 2017

Year

First 

bag

Second 

bag

Overweight 

bags

Oversized 

bags

Reservation 

change or 

cancellation

Unaccompanied 

minor

Pet in 

cabin

Network airlines

Alaska 2010 $20 $20 $50 $50-75 $75-100 $25-50a $100

2017 $25 $25 $75 $75 $125 $25-50a $100

American 2010 $25 $35 $50-100 $150 $150 $100 $100

2017 $25 $35 $100-200 $200 $200 $150 $125

Delta 2010 $23-25 $32-35 $90-175 $175-300 $150 $100 $125

2017 $25 $35 $100-200 $200 $200 (each way) $150 $125

Hawaiian 2010 $23-25 $32-35 $50 $100 $150 $100 $175

2017 $25 $35 $50-200 $100 $200 $100 $175

United 2010 $25 $35 $100 $100 $150 $99 $125

2017 $25 $35 $100-200 $200 $200 $150 $125

Low-cost airlines

Allegiant 2010 $15-35 $25-35 $50-100 $35 $50 (per 

segment)

n/a n/a

2017 $18-50 $18-50 $50-75 $75 $75 (per 

segment)

n/a $100

Frontier 2010 $20 $20 $75 $75 $50-100 $50-100a $75

2017 $30-40 $40-45 $75 $75 $99 $110 $75

JetBlue 2010 $0 $30 $50-100 $75 $100 $75 $100

2017 $25 $35 $100 $100 $75-150 $100 $100

Southwest 2010 $0 $0 $50 $50 $0 $50 $75

2017 $0 $0 $75 $75 $0 $50 $95

Spirit 2010 $19-25 $25 $50-100 $100-150 $100-110 $100 $100

2017 $25-

50b $35-60b $30-100 $100-150 $90-100 $100 $110

Sun Country 2010 $20-25 $30-35 $75 $75 $75 $75 $100

2017 $25 $35 $75 $75 $50 $75 $125-

199

Source: GAO analysis of airline information. | GAO-17-756

Notes: n/a = service not available on this airline. This table includes fees for passengers in economy 

cabins; optional services for passengers who are in first class or business class, have certain 

frequent-flyer statuses, booked tickets with airline-branded credit cards, or are members of the U.S. 

military may have different fees. This table excludes intra-Hawaii and intra-Alaska flights for Hawaiian 

and Alaska, respectively. All fees except reservation change and cancellation fees apply to one-way 

trips. Reservation change and cancellation fees apply to entire booking unless otherwise indicated.

a

The fee for unaccompanied minors is higher if the trip includes connecting flights than if the trip is 

direct or non-stop.
Page 17 GAO-17-756 Airline Optional Service Fees

b

Spirit’s first and second bag fees may be up to $9 lower if the customer has joined the airline’s 

membership program for an annual charge.

Fees for other optional services—namely, fees for overweight and 

oversized bags, reservation changes and cancellations, and 

unaccompanied minors—generally increased from 2010 to 2017 on both 

network and low-cost U.S. airlines, as shown in table 3. Notably, roughly 

half of the airlines in our selection increased the overweight bag and 

unaccompanied minor fees, while a majority of the airlines in our selection

increased reservation change or cancellation fees. Specifically, from 2010 

to 2017, 7 of the 11 selected airlines increased their fees for checking 

overweight bags. In 2010, overweight bag fees ranged from $50 to $175, 

and in 2017, they ranged from $30 to $200.28 In addition, 6 of the selected 

airlines increased oversized bag fees, while the rest of the selected 

airlines either narrowed the cost of checking an oversized bag (e.g., Delta 

charged from $175 to $300 in 2010, but later switched to a flat $200 fee) 

or did not change the fees.29 In 2010, oversized bag fees ranged from 

$35 to $300, and in 2017, they ranged from $75 to $200. Six of the 10 

selected airlines that charged reservation change and cancellation fees 

increased those fees from 2010 to 2017. (Southwest does not charge a 

reservation change or cancellation fee.) In 2010, the selected airlines 

charged from $50 to $150 to change or cancel a domestic reservation; in 

2017, this fee ranged from $50 to $200.30 Five of the 11 airlines increased 

unaccompanied minor fees.

According to airline financial data submitted to BTS, U.S. airline revenues 

from baggage fees and reservation change and cancellation fees—the 

only fees for which revenues are separately reported—increased from a 

total of $6.3 billion in 2010 to $7.1 billion in 2016 in constant 2016 dollars. 

Specifically, revenues from baggage fees rose from $3.7 billion in 2010 to 

 28Nine of the selected airlines charged overweight fees for bags over 50 pounds, while 

Allegiant and Spirit charged for bags weighing more than 40 pounds.

29Most of the selected airlines charge oversized bag fees for bags that are greater than 62 

or 63 linear inches, which is the sum of the width, depth, and height of the item. Some of 

these airlines charge set fees for specialty items, such as sporting equipment; fees for 

specialty items are not included in this report. 

30Reservation change and cancellation fees generally apply to entire booking, but some of 

the selected airlines charge for each segment or each direction of a trip. Customers who 

purchase refundable tickets are generally exempt from reservation change and 

cancellation fees. 

Total Revenue from Fees 

Increased as the Number 

of Passengers Also 

Increased
Page 18 GAO-17-756 Airline Optional Service Fees

$4.2 billion in 2016 in constant 2016 dollars, an increase of nearly 12 

percent. Similarly, revenues from reservation change and cancellation 

fees increased from $2.5 billion in 2010 to $2.9 billion in 2016 in constant 

2016 dollars, an increase of more than 14 percent. Combined revenue 

from bag and reservation change and cancellation fees made up 3.3 

percent of airlines’ operating revenues in 2010 and 3.5 percent of 

operating revenues in 2016.

While revenue from baggage and reservation change and cancellation 

fees has increased, so has the number of passengers traveling on U.S. 

airlines. From 2010 to 2016, the number of passenger enplanements and 

the revenue from these optional services increased at similar rates. As 

discussed earlier, total enplanements on U.S. airlines increased by about 

14 percent, from about 721 million in 2010 to 825 million in 2016. It is 

worth noting that, unlike the revenues from domestic airfares, revenues 

from most optional service fees are not subject to the excise tax that 

helps fund the Airport and Airway Trust Fund, which partially supports the 

Federal Aviation Administration and the operation of the air traffic control

system.31 This issue was discussed in depth in our 2010 report and 

remains relevant as the amount of airline revenue generated by optional 

service fees increases.32

 31The Internal Revenue Code imposes a 7.5-percent excise tax on amounts paid for the 

taxable transportation of any person by air, the revenue from which is deposited into the 

Airport and Airway Trust Fund. Additionally, Treasury regulations and Internal Revenue 

Service guidance set parameters for which airline-imposed fees are subject to the 7.5-

percent excise tax; generally, all mandatory charges necessary to transport passengers 

are taxed but fees for optional services are not. Treasury regulations have specifically 

exempted payments for baggage fees from the tax. If baggage fees in 2016 had been 

subject to the 7.5-percent excise tax, we estimate that up to approximately $309 million in 

excise taxes would have been credited to the Airport and Airway Trust Fund. This amount 

is approximately 2.1 percent of the approximately $14.4 billion in revenue that the Trust 

Fund received during fiscal year 2016. For this analysis, we are making the simplifying 

assumption that the additional tax due would not have caused any passengers to choose 

not to purchase tickets. Any such reduction in purchases presumably would have been 

small and would have had the effect of making the increase in potential taxes collected a 

little smaller than our estimate. This figure is also based on total baggage fee revenues, 

including international baggage fees that would presumably not be subject to the 7.5-

percent excise tax. The reported data do not allow us to identify the portion of baggage 

fee revenues collected on international flights. Moreover, we also note that airline officials 

stated that the introduction of separate fees for optional services have enabled them to 

lower base airfares. If this trend continues, it would continue to erode the base to which 

the 7.5-percent excise tax is applied.

32GAO-10-785.
Page 19 GAO-17-756 Airline Optional Service Fees

Airline officials said that airlines charge separately for optional services to 

better compete with other airlines. Officials from 9 of the 10 airlines with 

whom we spoke said that selling optional services separately from the 

base fare allows airlines to reduce the base ticket price. One airline 

official explained that customers make purchasing decisions based 

primarily on the base ticket price—the cost of flying from one point to 

another. According to this airline official, lowering the base fare therefore 

helps an airline compete with other airlines. Some airline officials cited 

other ways in which unbundling can lower ticket prices. For example, one 

airline official said that baggage fees have prompted customers to travel 

with fewer bags or no bags. As a result, the plane weighs less, which 

reduces fuel costs and, in turn, can allow the airline to reduce the base 

ticket price. Four other airline officials said that the lower base fares 

resulting from unbundling optional services have made flying more 

affordable to more people, thereby increasing the number of people who 

decide to travel by air.

Officials from two airlines said that airfares have decreased over time, 

and an official from Airlines for America (A4A)—the U.S. airline trade 

association—cited BTS data during a May 2017 congressional hearing to 

show that consumers are paying less for airfare than they had previously; 

however, these data have some limitations. Data compiled by BTS 

indicate that the average domestic airfare decreased from $370 in 2010 

Selected Airlines 

Consider Competition 

and Customer 

Demand Among other 

Factors When Making

Decisions About 

Optional Services

Airlines Said That They 

Charge Separately for 

Optional Services to 

Compete with Other 

Airlines and Respond to 

Customer Demand
Page 20 GAO-17-756 Airline Optional Service Fees

to $349 in 2016 in constant 2016 dollars, a decrease of 5.6 percent.33 But, 

the fares include only base fares plus applicable government taxes and 

do not include all optional service fees. As a result, they do not represent 

the total amount that some customers may be paying to travel. In 

addition, according to DOT officials, DOT does not weight one-way tickets 

differently than round-trip tickets when calculating the average fares. DOT 

officials told us that customers are more likely to purchase one-way 

tickets now than they were 10 years ago because airlines no longer 

charge a premium for one-way tickets. As a result, a higher share of oneway tickets would result in lower average fares. Lastly, it is difficult to 

determine all the factors that could have caused this decrease in airfare, 

as several economy-wide changes, including those in energy prices,

affect fares.

However, some studies have examined the effect bag fees may have had 

on ticket prices. To examine this issue, we conducted an economic 

literature search for any published, peer-reviewed studies that examined 

the introduction of bag fees by U.S. airlines and the effect on fare prices. 

The three studies that met our criteria (as described in appendix II) found 

that although the introduction of bag fees may have led to a decrease in 

average fares, the total price paid by customers who checked a bag may 

not have decreased on average. Specifically, these studies found that 

charging separately for bags reduced fares by less than the new bag fee 

itself. As a result, customers who paid for checked bags paid more on 

average for the combined airfare and bag fee than when the airfare and 

bag fee were bundled together. Conversely, passengers who did not 

check bags paid less overall. The results of these three studies are 

summarized below.

• The authors of a 2012 study measured the impact of baggage fees on 

airline fares using DOT data from 2006 to 2009.34 They noted that 

airlines introduced bag fees to generate additional revenues without 

increasing fares, which would adversely affect demand. They found 

 33Average domestic fares, as reported by BTS, are based on the total ticket value and 

include round-trip fares unless the customer did not purchase a return trip, in which case 

the one-way fare is included. These data are available at 

https://www.rita.dot.gov/bts/airfares/programs/economics_and_finance/air_travel_price_in

dex/html/AnnualFares.html.

34Kevin E. Henrickson and John Scott, “Baggage Fees and Changes in Airline Ticket 

Prices,” in Pricing Behavior and Non-Price Characteristics in the Airline Industry 

(Advances in Airline Economics, Volume 3), ed. James H. Peoples, Jr, (Emerald Group 

Publishing Limited, 2012), 177–192.
Page 21 GAO-17-756 Airline Optional Service Fees

that for an airline charging a bag fee, a one-dollar increase in those 

fees resulted in a $0.24 decrease in fares, which means that a 

passenger checking one bag, would pay $0.76 more on these airlines. 

According to the authors, these results imply that airlines with bag 

fees lower fares to appear more competitive and then make up the 

lost revenue when passengers pay to check bags.

• In a 2015 study, the authors analyzed DOT quarterly data from 2008 

to 2009 and found that adoption of a bag fee resulted in about a 3 

percent reduction in average airfares.35 Analyzing non-stop flights and 

those with connections separately, they found that a bag fee led to a 

2.7 percent and a 2.4 percent average-fare reduction for non-stop and 

connecting flights, respectively. The authors pointed out that, since 

these declines translated into an amount that was less than the bag 

fee, on average the combined total of the fare and bag fee 

increased.36 However, according to the authors, the decline could be 

greater than the bag fee for some passengers because the decline in 

average fare varies with route characteristics.

• In another 2015 study, the authors studied a sample of U.S. domestic 

routes over the period 2007–2010, which covers the period when bag 

fees were first introduced (in 2008) and when many carriers increased 

bag fees (in 2010).37 To analyze the effect of bag fees on passenger 

demand and fares, the authors focused on a set of domestic airportto-airport routes where passengers could choose between airlines 

that charged fees for checked baggage and Southwest, which allowed 

passengers one or two “free” checked bags. The authors found that a 

one-dollar increase in bag fees led to an $0.11 reduction in fares and 

a loss of 0.6 passengers. On the other hand, they found that a onedollar fare increase resulted in a loss of seven passengers. Thus, they 

determined that bag fees allowed airlines to increase their revenues 

with a much lower reduction in passenger demand than a fare 

 35The authors analyzed DOT’s Origin and Destination Survey data, which include fare and 

itinerary information on every tenth airline ticket sold. Jan K. Brueckner, Darin N. Lee, 

Pierre M. Picard, and Ethan Singer, “Product Unbundling in the Travel Industry: The 

Economics of Airline Bag Fees,” Journal of Economics & Management Strategy, vol. 24, 

no. 3 (2015).

36The authors calculated that average one-way, non-stop fare on a network airline was 

$196; therefore, the 2.7 percent reduction translates into a non-stop fare decrease of 

$5.30. They also calculated that average one-way, connecting flight on a network airline 

was $229; therefore, the 2.4-percent reduction translates into a fare decrease of $5.50.

37Davide Scotti and Martin Dresner, “The Impact of Baggage Fees on Passenger Demand 

on US Air Routes,” Transport Policy, vol. 43 (2015): 4–10.
Page 22 GAO-17-756 Airline Optional Service Fees

increase. Finally, their evidence suggests that there is an overall 

increase in total fares for passengers checking bags.

Airline officials also said they charge separately for optional services to 

meet the needs of their customers. According to officials from 9 of the 10 

selected airlines we interviewed, unbundling allows passengers to 

customize their flights by paying for only the services that they value—a 

benefit that one official cited as the overriding impetus for unbundling. 

That official described unbundling as an effort to make the airline’s entire 

product line of services available to customers and provide passengers 

with the ability to tailor their travel experience. Similarly, another airline 

official explained that they aim to cater to a broad range of customers and 

unbundling allows passengers to decide on the price and service level 

that is right for them.

Airline officials from the 10 U.S. airlines that we interviewed cited various 

factors that contribute to their decisions about how to price optional 

services.

• Customer demand and willingness to pay: Officials from all 10 

airlines that we interviewed said that customer demand and the price 

that customers are willing to pay for an optional service are important 

factors in pricing an optional service. Customers’ willingness to pay 

varies. Hence, when the price rises, some consumers who are not 

willing to pay a higher price stop purchasing, resulting in some loss of 

demand. Higher prices may thus result in higher or lower revenue 

depending on the extent to which the demand is reduced. For 

example, one airline official described how the airline would consider 

increasing the price for a preferred seat if the demand were high 

enough, indicating that there may be some customers willing to pay 

more for a preferred seat. An official from a different airline said that it 

conducts market testing to determine what optional services 

customers are interested in, and it may test products at different 

prices to determine the optimal price.

• Competitors’ prices for similar services: Officials from 8 of the 10 

airlines that we interviewed said that they consider competitors’

pricing for similar services when they set fees for optional services, to 

ensure that their own product is priced competitively. One airline 

official said that because commercial aviation is a highly competitive 

industry, the official’s company closely monitors the market and 

makes adjustments to the price of services, as needed. Industry 

stakeholders with whom we spoke, as well as consumer advocates, 

Airlines Cited Many 

Factors That Affect How 

They Price Optional 

Services
Page 23 GAO-17-756 Airline Optional Service Fees

believed that competition is a key factor in how airlines set fees for 

optional services.

• Customer service and satisfaction: Officials from 5 of the 10 

airlines we interviewed said that customer service and satisfaction are 

factors in how they set prices. Officials from one airline stated that 

they try to keep optional service fees relatively low to prevent 

passengers from feeling overcharged. In at least one case, an airline 

official told us that this airline sets the price of one type of fee to 

prevent too many people from purchasing the service. For example, 

this airline official told us they set the price for wireless internet access 

high enough so that relatively few passengers will pay for it because 

too many users can affect the speed and quality of the service. 

Officials from 6 airlines said that they conduct customer surveys and 

adjust the price of optional services based on survey feedback.

• Cost: Officials from 3 of the 10 airlines that we interviewed said that 

the airlines’ cost to deliver a service is a major factor in how they 

charge for that service. One of these officials said that this airline 

conducts a business case analysis when developing a new product to 

ensure that the revenues from the new optional service exceed its 

cost. Officials from 3 additional airlines cited cost as a minor factor. 

Officials from 2 of these airlines said they incorporate cost into 

optional service pricing only for products for which cost is relatively 

easy to measure, such as food and beverages. Conversely, officials 

from 4 airlines did not cite cost as a factor in pricing optional services.

Even airline officials who said that cost factors into their pricing 

decisions highlighted the complexity of calculating the precise cost of 

delivering many services. For example, one airline official explained 

that calculating the cost of cancelling a reservation requires 

consideration of the cost of the reservation system, corporate 

overhead, and possibly opportunity costs if the seat could not be resold. Another official from the same airline said that they closely track 

costs but do not necessarily have the ability to assign a specific cost 

to the provision of an optional service. This comment was echoed by 

several airline officials who said that calculating the cost of checking 

baggage, for example, requires consideration of a multitude of factors, 

including labor, ground infrastructure, and fuel costs.

In addition, one airline official said that the airline does not always 

incur costs when offering some optional services, for example 

allowing a passenger to select a seat in a preferred location, such as 

a window seat or toward the front of a cabin, but the airline will sell the 

service because customers value it enough to pay for it. Industry 

stakeholders echoed the view that the cost of delivering optional 
Page 24 GAO-17-756 Airline Optional Service Fees

services plays a minimal role in airlines’ pricing decision of optional 

services. One industry stakeholder we spoke with agreed and stated 

that the competitors’ prices and what customers are willing to pay are 

more important factors in how airlines set prices for optional services 

than the cost of delivering a product; this stakeholder said that the 

pricing of optional services is ultimately based on what will deliver the 

most revenue to the airline.

DOT has taken a range of actions to improve transparency of U.S. airline 

fees for optional services since 2010, as described below.

DOT conducts different compliance inspections of U.S. airlines to monitor 

compliance with its regulations on a variety of consumer traveler issues, 

including issues related to transparency of optional service fees.

• Since 2012, DOT has completed 19 compliance inspections of U.S. 

and foreign airlines according to documentation the department 

provided to us. DOT inspections are conducted on an ongoing basis, 

and according to DOT officials, have included repeated inspections of 

certain U.S. airlines that account for a significant percentage of U.S. 

enplanements. As part of these inspections, DOT inspectors review 

DOT Has Made 

Progress in 

Increasing 

Transparency of 

Optional Service 

Fees, but Consumer 

and Industry Groups 

Raised Some 

Challenges

DOT Has Monitored and 

Enforced Compliance with 

Transparency Regulations, 

Collected Consumer 

Complaints, and Provided 

Guidance and Information 

to Airlines and Consumers

Monitoring and Enforcing 

Compliance with Transparency 

Regulations
Page 25 GAO-17-756 Airline Optional Service Fees

records onsite at airlines’ headquarters as well as information on 

airlines’ websites. As part of the website review, DOT verifies, among 

other things, that the website provides adequate information about 

optional service fees, that consumers are provided an opportunity to 

knowingly and voluntarily “opt-in” to purchase optional services, and 

that the airline posts its current contract of carriage on its website in 

an easily accessible form per DOT regulations.38

• DOT also conducts additional targeted inspections to specifically 

assess airlines’ compliance with DOT’s consumer transparency 

regulations. For example, according to DOT documentation and 

officials, in 2012 DOT inspected 113 websites of U.S airlines, foreign 

airlines, and ticket agents (websites that were marketed to U.S. 

consumers) to monitor compliance with specific provisions of the 2011 

Consumer Rule 2. DOT found that most of the websites generally 

complied with Consumer Rule 2 provisions; however, 10 airlines and 

1 ticket agent faced enforcement actions for violations.

According to DOT officials, the department documents any violations 

identified during inspections and contacts the airline to correct the 

violation. If the violation is long-standing and severe, DOT may take 

enforcement action, including imposing civil penalties. 

In other instances, airlines may receive a warning that enforcement action 

may be taken in the future if the violations are not corrected. According to 

DOT officials, in 2016, DOT issued 22 consent orders against airlines 

related to aviation consumer rule violations39 and assessed $5,955,000 in 

civil penalties.40

 38With opt-in services, the customer is offered and can take action to purchase a service. 

This process differs from an opt-out scenario, where the service would be automatically 

included unless the customer takes action to decline the service. 

39A “consent order” is a type of settlement in which DOT may require air carriers to pay 

civil penalties or complete specified corrective actions in order to avoid future litigation. 

According to DOT, this number does not include orders resulting from reporting or 

licensing violations because such infractions do not result in a direct harm to individual 

consumers. A reporting failure is a failure to accurately or timely report data that the airline 

is required to report. Licensing violations occur when airlines operate outside of their 

economic authority or fail to provide advance notice prior to ceasing a particular operation.

40According to DOT, of this amount, $2,700,000 was paid as a condition of settlement. 

Offsets that reflect money and vouchers already paid directly to consumers amounted to 

$1,307,000. An additional $137,500 of fines that were suspended pending further 

violations were subsequently paid due to carriers violating provisions of their consent 

orders.
Page 26 GAO-17-756 Airline Optional Service Fees

DOT also analyzes and investigates passenger complaints about optional 

service fees that it receives via its website, mail, and telephone hotline.41

In 2014, DOT established a separate complaint category for optional 

service fees and began tracking the number of these complaints. DOT 

receives fewer complaints related to optional service fees than other 

topics, according to DOT officials. For example, DOT officials told us that 

they received in 2016, a total of 17,904 complaints of which 862—about 5 

percent—were regarding airline fees for optional services. According to 

DOT officials, the two largest complaint categories that DOT receives are 

regarding flight problems (e.g., delayed flights) and baggage problems 

(e.g., lost or damaged bags). We requested and reviewed a selection of 

2016 complaints related to optional service fees and found that 

complaints included concerns that fees for changing or cancelling 

reservations, transporting bags, and selecting seats were too high or that 

information about these fees was not transparent or fully disclosed to the 

customer.

DOT analyzes passenger complaint data to identify trends and investigate 

possible violations of DOT regulations. According to DOT officials, under 

DOT’s process for handling complaints, when a complaint is received, a 

DOT official will review and categorize the information by type of 

complaint. DOT reviews the complaint to see whether a regulation applies 

and, regardless whether it does, forwards all complaints to the applicable 

airline for the airline to respond to the consumer. Airlines are required to 

acknowledge each complaint within 30 days of receipt and provide a 

substantive written response to each complainant within 60 days of 

receipt.42 After receiving and reviewing the complaint, if DOT determines 

the airline is in fact violating a regulation, DOT will ask for a copy of the 

airline’s correspondence with the complainant. According to DOT officials, 

airlines generally respond to these requests in a timely fashion. A 

consumer complaint regarding compliance issues with an existing 

regulation can trigger an investigation in which DOT looks for egregious 

or repeated violations; a pattern of violations can lead to enforcement 

action. For example, in 2016, DOT issued a consent order against 

VivaAerobus, a foreign airline, after DOT found that the airline was not 

 41Passengers can also file complaints about optional service fees with airlines. The 

Federal Aviation Administration reviews complaints related to safety or security issues. 

4214 C.F.R. § 259.7(c).

Collecting, Reviewing, and 

Responding to Consumer 

Complaints
Page 27 GAO-17-756 Airline Optional Service Fees

disclosing baggage and other optional service fees in accordance with 

regulations.43 The airline was fined $150,000 in civil penalties.

DOT requires that U.S. airlines report revenues from optional service fees 

to BTS, which helps increase transparency regarding the amount of 

revenues generated from these fees. Currently, U.S. airlines are required 

to report this revenue in one of four separate accounts: baggage fees, 

reservation change and cancellation fees, other transport-related fees, 

and miscellaneous fees. Because revenues from baggage fees and 

reservation change and cancellation fees have their own accounts, the 

revenues from these particular fees can be tracked. However, according 

to DOT documentation, revenues from other optional service fees are 

reported either in the transport-related or miscellaneous fees accounts, 

which include revenue from optional services as well as from other 

sources. For example, according to DOT guidance, the transport-related 

revenue category includes not only revenue from all onboard sales (such 

as, food, drink, entertainment, and wireless internet access) but also 

revenue from fuel or airplane parts sold to other airlines.44 Similarly, 

according to DOT’s guidance, the miscellaneous category includes, for 

example, revenue for transporting unaccompanied minors and pets, as 

well as revenue from sales of miles to airlines, credit card companies, 

hotels, rental cars, or other business partners that are frequent flyer 

partners. From 2010 to 2016, revenue for the transport-related account 

increased by 10 percent, from $36.5 billion to $40.1 billion in constant 

2016 dollars. At the same time, revenue from the miscellaneous account 

increased by 87 percent, from $3.3 billion to $6.2 billion in constant 2016 

dollars; this 87 percent increase was the largest increase of all four 

accounts. Over the same years, U.S. airlines’ total operating revenues 

increased from $192.3 billion to $200.4 billion in constant 2016 dollars. 

Because the DOT data do not separate the revenue reported from 

optional service fees from the other types of revenues that are reported in 

the transport-related and miscellaneous fees accounts, we could not 

determine how much of the total revenue reported in these accounts 

should be attributed to optional service fees.

 43Aeroenlaces Nacionales, S.A. de C.V., t/a VivaAerobus (May 5, 2016). DOT found 

VivaAerobus violated 49 U.S.C. § 41712,14 C.F.R. §§ 399.84(a), 399.84(c), 399.85(d).

44Department of Transportation, Research and Innovative Technology Administration 

Bureau of Transportation Statistics Accounting and Reporting Directive, No. 289, 

Reporting Ancillary Revenue on Form 41, February 20, 2009.

Collecting Data on Revenue 

Generated from Fees
Page 28 GAO-17-756 Airline Optional Service Fees

In 2010, we reported on this issue and stated that without complete data it 

is difficult for policy makers and regulators to determine total revenues 

from optional service fees and the fees’ effect on the industry.45 We 

concluded that without collecting revenue from optional service fees in a 

separate account, it was difficult to determine the amount of total optional 

service fee revenues that airlines collect. We recommended that DOT 

require airlines to report all optional service fees paid by passengers 

related to their trip into a separate category, exclusive of baggage fees 

and reservation change and cancellation fees (for which separate 

categories already exist). Citing our recommendation, DOT initiated a 

rulemaking in 2011 that proposed requiring airlines to report optional 

service fee revenues in 23 separate categories.46 However, the final rule 

has not yet been published and DOT has not taken any recent action on 

this rulemaking. According to DOT officials, DOT rulemakings are 

currently being evaluated in accordance with Executive Orders 1377147

and 13777;48 thus, the schedules for many ongoing rulemakings are still 

to be determined.

In our 2010 review we also found differences in how airlines report some 

optional services fee revenues.49 More specifically, in 2010, we found that 

airlines were reporting revenues from the same optional service fees into 

different accounts. Based on responses from our selected airlines, this 

issue persists. For example, we found that some airlines accounted for 

revenues from unaccompanied minor fees as transport-related revenue 

while others reported them as miscellaneous operating revenue, and two 

airlines reported fees for unaccompanied minors as revenue from 

reservation cancellation fees. We also found differences in how airlines 

reported revenue from preferred seating, upgraded seats, seat selection, 

and priority security screening. In some cases, we found airlines reported 

fees inaccurately despite guidance, and in others, it was not clear from 

DOT’s guidance how certain fees should be categorized. DOT’s guidance 

has not been updated since 2009, and according to officials, there are no 

 45GAO-10-785.

4676 Fed. Reg. 41726, 41730 (July 15, 2011).

47Exec. Order No. 13771, “Reducing Regulation and Controlling Regulatory Costs” (Jan. 

30, 2017), 82 Fed. Reg. 9339 (Feb. 3, 2017).

48Exec. Order No. 13777, “Enforcing the Regulatory Reform Agenda” (Feb. 24, 2017), 82 

Fed. Reg. 12285 (Mar. 1, 2017).

49GAO-10-785.
Page 29 GAO-17-756 Airline Optional Service Fees

current plans to do so. As previously discussed, since 2010 airlines have 

introduced a number of new fees and products for optional services, and 

determining how to report revenue from these fees into the existing four 

accounts may not be clear. However, even if DOT were to revise its 

guidance and provide more detailed information on how to categorize 

different fees, it would still not be possible to understand how much 

revenue is generated just from optional service fees because airlines 

would still be required to report this information in accounts that include 

revenue from other non-fee sources. Implementation of our 2010 

recommendation that DOT require airlines to report all optional service 

fees, exclusive of baggage fees and reservation-change and cancellation 

fees, into a separate category would provide airlines with a clearer 

understanding of how to report revenue from specific optional service 

fees and provide the missing data on how much revenue is generated 

from optional service fees.

DOT has taken several actions to educate airlines and consumers about 

existing regulations and consumer rights related to optional service fees, 

for example:

• In 2011, after the issuance of Consumer Rule 2, DOT conducted 

informational sessions with the airlines about the requirements of the 

new regulations. Additionally, DOT developed and issued guidance 

that provided answers to frequently asked questions regarding the 

new regulations.50

• DOT provides consumers with information about their rights related to 

optional services through various publications available on its website. 

For example, DOT publishes “Fly Rights: A Consumer Guide to Air 

Travel” which provides information on a range of topics including 

airline fees, general refund policies, and information about DOT 

regulations.51

• DOT has a webpage, “Air Travel Tips,” where it publishes a collection 

of tips and information to help airline passengers. These airline tips 

 50Department of Transportation, Answers to Frequently Asked Questions Concerning the 

Enforcement of the Second Final Rule on Enhancing Airline Passenger Protections, 

August 19, 2011, accessed December 20, 2016.

https://www.transportation.gov/airconsumer/faq-rule2-enhancing-airline-passengerprotections.

51Department of Transportation, Fly Rights: A Consumer Guide to Air Travel, last updated 

December 7, 2015, accessed July 12, 2017, 

https://www.transportation.gov/airconsumer/fly-rights.

Educating Airlines and 

Consumers
Page 30 GAO-17-756 Airline Optional Service Fees

cover a wide range of topics, including information on how to file a 

complaint, DOT’s 24-hour refund policy,52 and airline fees.53

• DOT also publishes a monthly “Air Travel Consumer Report.” This 

report provides consumers with information on a range of topics, such 

as information about aviation consumer complaints filed with DOT. 

According to DOT officials, these monthly consumer reports present 

information in which customers are most interested.

 52DOT requires airlines to either hold a reservation at the quoted fare for 24 hours without 

payment or refund a paid ticket if the customer cancels the ticket within 24 hours of 

purchase if the ticket was purchased 7 days or more before the flight. 14 C.F.R. § 

259.5(b)(4).

53Department of Transportation, Air Travel Tips, last updated August 8, 2017, accessed 

August 22, 2017, https://www.transportation.gov/airconsumer/air-travel-tips.
Page 31 GAO-17-756 Airline Optional Service Fees

Representatives from consumer advocacy organizations and industry 

groups representing global distribution system (GDS) companies, the 

online travel agent industry, and metasearch companies told us that 

DOT’s 2011 regulations have had a positive impact such as increased 

transparency regarding optional service fees. In particular, three 

consumer groups told us that the Full Fare Price Advertising regulation 

has resulted in more transparent pricing of airfares across the industry 

and has reduced instances of misleading airfare advertising.54 Three 

consumer and two industry groups also told us that DOT’s regulation 

requiring airlines to disclose all optional service fee information on their 

websites has been a positive step for the industry and has increased 

consumers’ understanding of how they may be charged for different 

services. While consumer groups recognized DOT’s progress in this area, 

they also reported a range of issues, discussed below, that persist related 

to the transparency of fees for optional services. Industry officials shared 

similar views. DOT has initiated several rulemakings in this area that 

might address these issues, but these rulemakings are still ongoing.

While consumers are often able to obtain information about optional 

services and then purchase them directly from an airline’s website, 

information about these services and the ability to purchase these 

services is not always available from indirect sources, such as online 

travel agents. According to various estimates, about 50 percent of airline 

ticket sales occur through indirect sources. All four consumer advocacy

groups that we spoke with told us that not being able to obtain information 

about optional services and purchase optional services from indirect 

sources at the time of booking decreases consumers’ ability to determine 

the full cost of their travel. A representative from one consumer advocacy

group stated that having optional service fee information displayed 

alongside the airfare on online travel sites is important because it allows 

consumers to better compare different fares at the onset of their 

purchasing process. Two industry officials we spoke with agreed that not 

being able to purchase optional services through third parties decreases 

consumer transparency. One of these officials said that some basic 

optional services—seat selection in particular—are important to 

 54The Full Fare Price Advertising regulation requires that advertisements in the United 

States by an air carrier or ticket agent for air transportation within, to, or from the United 

States must include the entire price for air transportation, including government taxes and 

mandatory fees. 14 C.F.R. § 399.84(a).

Consumer and Industry 

Groups Recognized DOT’s 

Progress Related to 

Increasing Transparency 

of Optional Service Fees 

but Identified Other 

Transparency Challenges

Indirect Distribution Channels 

Do Not Always Have Optional 

Service Fee Information or 

Purchase Options
Page 32 GAO-17-756 Airline Optional Service Fees

consumers, who prefer to be able to purchase these services when they 

purchase their tickets.

In our interviews with airlines, officials from 8 of the 10 airlines we spoke 

with said that they make information about optional services, such as 

baggage fees, available to third parties, but that the level of information 

available about these fees varies across online travel agents. In addition, 

officials from 3 of the 10 airlines that we interviewed told us that they 

make optional services available for purchase through indirect channels. 

According to these officials, the type of optional services available for 

purchase differs by airline and by distribution channel. Officials from the 

remaining 6 airlines told us that they sell products primarily through direct 

channels (i.e., their own websites or customer service) because (1) they 

have more control over how those products are marketed to consumers 

and (2) the third-party websites have technical limitations in how they can 

display and sell optional service products. For example, one airline official 

stated that his airline can better differentiate its products from other 

airline’s products on its own website than on an online travel agency or 

metasearch company site. In addition, officials from the International Air 

Transport Association (IATA) told us that the industry as a whole is taking 

steps to develop standards and capabilities for optional services to be 

more widely available for purchase through GDSs and online travel 

agencies.55

In 2010, we recommended that DOT require airlines to disclose baggage 

fees and policies along with fare information across all sales channels 

used by the airline.56 In 2017, DOT issued a Supplemental Notice of 

Proposed Rulemaking57 and a Request for Information58 related to how 

 55IATA is a trade association representing approximately 275 airlines or 83 percent of total 

air traffic. According to IATA officials, more and more airlines are incorporating IATA’s 

New Distribution Capability—a travel industry-supported program launched by IATA for 

the development and adoption of a common XML-based data transmission standard. This 

standard would enable airlines to more easily sell optional services through travel agents 

and would make it easier for consumers to compare competing airlines’ fares and optional 

service products across multiple distribution channels.

56GAO-10-785.

57In January 2017, DOT issued a Supplemental Notice of Proposed Rulemaking 

proposing to require covered carriers to provide useable, current, and accurate (but not 

transactable) baggage fee information to all ticket agents that receive and distribute the 

carrier’s fare and schedule information, including GDSs and metasearch companies. See 

Transparency of Airline Ancillary Service Fees, 82 Fed. Reg. 7536 (Jan. 19, 2017).
Page 33 GAO-17-756 Airline Optional Service Fees

information about optional service fees would be distributed to ticket 

agents, including GDSs, online travel agents, and metasearch 

companies, that may address our recommendation. However, in March 

2017, DOT indefinitely suspended the public comment period for the 

proposed rule and information request to allow the President’s appointees 

the opportunity to review and consider the actions.59 In addition, this rule 

and information request may address some of the issues raised by 

consumer and industry groups that we interviewed, but not all. For 

example, while the Supplemental Notice of Proposed Rulemaking 

proposes requiring covered carriers to provide baggage fee information to 

all ticket agents that distribute fare and schedule information, it does not 

require that the information be made transactable (i.e., to require that 

airlines permit online travel agencies to sell these optional services). In 

addition, the proposed rulemaking would only require that information 

about baggage fees be made available, not other types of optional 

service fees. The Request for Information asks for comments from 

interested parties on whether airline restrictions on the distribution or 

display of airline flight information harm consumers and constitute an 

unfair and deceptive business practice or an unfair method of 

competition, among other questions. As previously mentioned, according 

to DOT officials, this rulemaking and request for information are currently 

being evaluated in accordance with Executive Orders 13771 and 13777, 

and the schedules for many ongoing rulemakings are still to be 

determined.

Representatives from the four consumer groups and three industry 

groups we spoke with also noted that as a result of the variety of new 

optional service fees, bundled products, and fares that airlines now offer, 

it has become increasingly difficult for consumers to compare airfare 

ticket prices, fees, and associated rules, and understand what is included 

in their purchases. As previously discussed, airlines have increased the 

number of fees for optional services and have begun introducing different 

optional service bundles and fares. Representatives from two consumer 

groups whom we interviewed said that even though airlines are required 

to have a “static page” on their website listing all optional service fees, 

 58Exploring Industry Practices on Distribution and Display of Airline Fare, Schedule, and 

Availability Information, 81 Fed. Reg. 75481 (Oct. 31, 2016). In December 2016, DOT 

published a notice in the Federal Register extending the response deadline and clarifying 

certain statements in the Request for Information. See 81 Fed. Reg. 94021 (Dec. 22, 

2016). 

59See 82 Fed. Reg. 13572 (Mar. 14, 2017) and . 82 Fed. Reg. 13375 (Mar. 10, 2017).

The Variety of New Optional 

Services and Products Has 

Made it Difficult for Consumers 

to Compare Prices
Page 34 GAO-17-756 Airline Optional Service Fees

these lists can be lengthy and can include several different fees with 

different associated rules that the consumer would need to interpret and 

understand. One consumer group representative stated that for 

consumers, comparing fares and optional service fees across multiple 

airlines can be challenging and time-intensive. Representatives from four 

consumer groups also noted that with the emergence of different fare 

products, there is greater potential that consumers might not fully 

understand what they are purchasing and what is included in the fare. 

According to one consumer advocate, when a single airline is offering 

three different economy products, consumers may not understand how 

these products differ, and this lack of clarity is even more acute on thirdparty websites.

According to DOT officials, they contact airline officials for additional 

information when airlines introduce new products that DOT believes will 

significantly affect consumers. DOT’s goal is to ensure that relevant 

information about conditions and restrictions of new products is 

accurately disclosed to consumers in a timely manner. For example, as 

discussed earlier in this report, since 2015, American, Delta, and United 

have introduced new Basic Economy fares. The key features of these 

fares are restrictions related to among other things, advanced seat 

selection, and, in the case of American and United, personal carry-on 

bags. According to DOT officials, they have monitored Delta’s introduction 

of Basic Economy and contacted American and United to get information 

about the airline’s plans to inform consumers about these fares and 

restrictions. DOT officials told us that going forward, they intend to

monitor complaints related to Basic Economy fares to determine if 

consumers are experiencing any issues associated with these tickets.

While airlines are required to provide customers with a contract-ofcarriage document, which generally includes information about an 

airline’s optional service fees and policies, consumer advocates have 

raised concerns that these documents are often lengthy and difficult to 

understand. Each airline has its own contract of carriage, which is the 

legally binding contract between the airline and its passengers. These 

documents are important because they provide useful information to 

consumers about the individual airline’s contract terms, policies, and rules 

related to different services such as check-in deadlines, responsibility for 

delayed flights, and optional service refund policies—all of which can vary 

Contract-of-Carriage 

Documents Are Generally 

Lengthy and Difficult to 

Understand
Page 35 GAO-17-756 Airline Optional Service Fees

across airlines.60 Any term or condition of this contract is legally binding 

on the airline and the passenger and may be enforced in court. However, 

according to three consumer advocates we spoke with these documents 

are often lengthy and can be filled with legal jargon, making the 

documents difficult to understand. We reviewed contracts of carriage for 

the 11 selected airlines and found that they ranged from approximately 17 

to 74 pages, with an approximate average length of 40 pages.61 In 

addition, we tested the 11 contract-of-carriage documents with an 

automated grade-level readability test and found they require a reading 

level of someone with a college graduate degree.62 According to DOT 

officials, the DOT Advisory Committee for Aviation Consumer Protection 

had recommended that DOT take steps to require airlines to simplify 

language in their contract-of-carriage documents. DOT officials stated 

that the department opted to not take specific action in this area because 

it did not want to get involved in contracts between airlines and 

passengers. However, the DOT Advisory Committee for Aviation 

Consumer Protection subsequently recommended in 2012 that DOT work 

with the airlines to survey how they define certain terms frequently used 

in their contracts of carriage and customer service plans. The department 

worked with A4A to develop such a document, which DOT then placed on 

its web site to assist consumers with understanding the terms and 

conditions of their travel.63 We reviewed this document and found that it 

provides an explanation of frequently used terminology in the airline 

industry and provides links to information about DOT’s consumer 

protection regulations, such as regulations related to baggage fee and 

code-share disclosures, and denied-boarding compensation 

requirements. According to a representative from A4A, airlines have 

 60In addition to the contract of carriage, information about optional service fee rules may 

be described in an airline’s ticket terms and restrictions. 

61The word count for these documents ranged from approximately 8,252 to 37,141 words 

per document with an approximate average word count of 19,790. To estimate the 

approximate page length, we assumed a word count of 500 per page.

62To assess the readability of the contract-of-carriage documents, we selected and used 

an automated readability tool—the Flesch-Kincaid Grade-Level (FKGL) test. The FKGL 

tool was developed by the U.S. Navy based on the Flesch Reading Ease test. The FKGL 

tool was developed primarily for adults and has been tested extensively on adult 

materials. It uses core measures of word length and sentence length to estimate the grade 

level at which the content is written. The version we used was included in the word 

processing software Microsoft Word.

63Department of Transportation, Common Terms in Air Travel, accessed July 27, 2017, 

https://www.transportation.gov/airconsumer/common-terms-air-travel. 
Page 36 GAO-17-756 Airline Optional Service Fees

committed to reviewing their contracts of carriage to see if they can be 

simplified to improve transparency.

We provided a draft of this report to DOT for review and comment. DOT 

officials provided technical comments that we incorporated as 

appropriate.

We are sending copies of this report to the appropriate congressional 

committees, the Secretary of the Department of Transportation, and other 

interested parties. In addition, the report is available at no charge on the 

GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-2834 or dillinghamg@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix III.

Gerald L. Dillingham, Ph.D.

Director, Physical Infrastructure Issues

Agency Comments
Appendix I: Information from Selected 

Countries on Increasing the Transparency of 

Airline Optional Service Fees

Page 37 GAO-17-756 Airline Optional Service Fees

Other countries have taken similar actions to the United States to 

increase consumer transparency of airline optional service fees. 

Specifically, the European Union (EU), Canada, Malaysia, and the United 

Kingdom (UK) have all enacted laws that include provisions related to 

increasing the transparency of airline optional service fees. For example, 

in 2008, the EU enacted Regulation (EC) No 1008/2008 on Common 

Rules for the Operation of Air Services in the Community, which 

established, among other things, specific requirements related to 

disclosing information about airline optional service fees.1 The law 

requires that airlines display the final price of a ticket, inclusive of all 

applicable taxes, charges, surcharges and fees unavoidable and 

foreseeable at the time of publication. The law also requires that the final 

price is disclosed at all times during the booking process and that the 

applicable conditions are published. In addition, airlines must disclose 

optional service fees in a clear, transparent, and unambiguous way at the 

start of the booking process, such as through a separate link on the 

airline’s website, and airlines must ensure that optional services are only 

offered on an “opt-in” basis. As shown in table 4, other countries have 

implemented similar laws. In addition, in 2017, Canada introduced 

consumer protection legislation related to air transportation that would 

require, among other things, that the Canadian Transportation Agency 

promulgate regulations establishing air passenger rights.2

 1

Commission Regulation 1008/2008, 2008 J.O. (293) 3.

2

Transportation Modernization Act, Bill C-49, 1st Sess, 42nd Parl, 2017, (First reading, 

May 16, 2017).

Appendix I: Information from Selected 

Countries on Increasing the Transparency of 

Airline Optional Service Fees
Appendix I: Information from Selected 

Countries on Increasing the Transparency of 

Airline Optional Service Fees

Page 38 GAO-17-756 Airline Optional Service Fees

Table 4: Laws with Provisions Related to Optional Service Fees as Reported by Selected Countries

Region or Country Law Provisions related to optional service fees 

European Union (EU) and 

United Kingdom(UK)a Regulation (EC) No 1008/2008 on common rules for the 

operation of air services in the 

community

• Requires the final price to be indicated at all times during the 

booking process and the applicable conditions to be published.

• Requires that displayed flight prices include all unavoidable and 

foreseeable taxes, charges, surcharges, and fees.

• Requires that optional service fees are communicated in a clear, 

transparent, and unambiguous way at the start of the booking 

process.

• Prohibits airlines from automatically adding optional services to a 

customers’ ticket and requires that optional services be offered 

to consumers on an “opt-in” basis.

• Requires EU member countries to ensure compliance with the 

regulation and lay down penalties for infringements that are 

effective, proportionate, and dissuasive.

Canada Canada’s Air Transportation 

Regulations

Canadian Transportation 

Agency Decision No. 144-A2014 (April 15, 2014)

• Requires that all airlines that travel to from and within Canada 

have a tariff—a contract-of-carriage agreement—that sets out, 

among other things, fares, rates, charges and information on 

optional service fees.

• Requires the advertised price of an airline ticket to include the 

total price of the fare, inclusive of all taxes, fees, and charges 

that a consumer must pay to obtain the air service. 

Advertisements must also include all optional services offered, 

as well as their price or range of prices, including applicable 

taxes and fees.

• Requires that when passengers are participating in an interline 

itinerary issued on a ticket whose origin or ultimate destination 

point is Canada, a single set of baggage rules must be applied to 

the entire itinerary, and the baggage rules must be disclosed to 

the passenger.
Appendix I: Information from Selected 

Countries on Increasing the Transparency of 

Airline Optional Service Fees

Page 39 GAO-17-756 Airline Optional Service Fees

Region or Country Law Provisions related to optional service fees 

Malaysia Malaysian Aviation Consumer 

Protection Code 2016

• Requires airlines to disclose the full airfare, which must include 

any government imposed taxes and fees, and other charges that 

are unavoidable and foreseeable.

• Requires airlines to communicate to the customer the cost of any 

optional service at the time of booking.

• Prohibits airlines from automatically adding optional services to a 

customer’s ticket and requires that optional services be offered 

to consumers on an “opt-in” basis.

• Requires an airline to disclose all terms and conditions of the 

contract of carriage to the consumer before the purchase of a 

ticket.

• The contract of carriage must be incorporated in the ticket or 

boarding pass and must include, among other things, information 

on baggage allowance policies. Incorporation could include 

stating that the complete terms and conditions are available on 

the website.

Source: GAO summary of laws and information obtained from selected foreign governments as described in our scope and methodology | GAO-17-756

a As a current member of the EU, airlines in the UK are required to also follow Regulation (EC) No 

1008/2008 on common rules for the operation of air services in the community. The UK also has two 

separate laws, the Operation of Air Services in the Community (Pricing) Regulation 2013 and the 

2002 Enterprise Act, which together provide the UK Civil Aviation Authority with authority to enforce 

Article 23 of Regulation (EC) No 1008/2008.

There are some differences between the U.S. and foreign laws. For 

example, Part V, Division III of Canada’s Air Transportation Regulations 

requires advertisements of air services to specify all optional services 

offered, as well as their price or range of prices, including applicable 

taxes and fees charged by government or public authority. In addition, the 

regulations prohibit information being provided in an advertisement in a 

manner that would interfere with the ability of anyone to readily determine 

the price for the air service, including for any optional incidental service. 

The Canadian law does not otherwise impose specific requirements as to 

how this information is to be made available to consumers. According to 

officials from Canadian Transportation Agency, airlines can decide how 

they want to communicate this information to the consumer. Also, 

according to officials from the European Commission, a 2014 European 

Court of Justice decision determined that airlines cannot charge for 

bringing hand bags or carry-on luggage into the plane’s cabin.3 According 

to officials, the court’s rationale for the decision was that airlines do not 

provide the passenger any services regarding carry-ons, as passengers 

carry their own bags.

 3

Case C-487/12, Vueling Airlines SA v. Instituto Galego de Consumo de la Xunta de 

Galicia (2014).
Appendix I: Information from Selected 

Countries on Increasing the Transparency of 

Airline Optional Service Fees

Page 40 GAO-17-756 Airline Optional Service Fees

Officials from the regulatory bodies that we interviewed said that they 

monitor airline compliance with consumer transparency laws through 

various methods. For example, according to a European Commission 

official, the European Commission and the authorities of EU member 

states (countries) monitor airline compliance with consumer transparency 

laws and have carried out several reviews to determine the level of 

compliance with Regulation (EC) No 1008/2008 in different EU countries.4

According to documentation provided by the European Commission, in 

2013, the European Commission, in conjunction with national authorities, 

initiated reviews of 552 websites and found that 382 websites were not 

compliant with the EU consumer transparency law. One problem they 

found was that optional services, including fees for baggage, insurance, 

and priority boarding, were not being offered on an “opt-in” basis. In 

addition, the European Commission conducted a “fitness check” of 

aviation regulations in 2013 to determine whether the airline consumer 

transparency laws and other consumer protection laws, were meeting 

their objective and whether any changes to these laws were needed. 

According to documentation provided by the European Commission, the 

review found that the laws were meeting their objectives, but that EU 

member states faced some challenges with enforcing these laws and 

could benefit from further coordination and sharing of best practices in 

this area. According to an official from the European Commission, it has 

also recently begun an evaluation of Regulation (EC) No 1008/2008 to 

determine whether there are any areas of the law that could be improved.

Similarly, officials from the UK and Canada have taken actions to assess 

compliance with existing consumer transparency laws. Officials from the 

United Kingdom’s Civil Aviation Authority (UK CAA) told us that in 2010 

and 2011 they reviewed the websites of the top 20 airlines flying from the 

UK and two smaller UK airlines to assess compliance with Regulation 

(EC) No 1008/2008. According to UK CAA officials, at that time, they 

discovered that most airlines were not in compliance and all the airlines 

had to make some changes to their websites. Issues included failing to 

include unavoidable taxes, fees and charges in the headline price, preselecting optional extras and not separately disclosing information about 

optional service fees. UK CAA officials notified airlines that were not in 

compliance and provided them with information on the steps that the 

airlines needed to take to ensure that their advertisements met the 

 4

However, the EU member states are ultimately responsible for enforcement of the pricing 

provisions of Regulation (EC) No 1008/2008.
Appendix I: Information from Selected 

Countries on Increasing the Transparency of 

Airline Optional Service Fees

Page 41 GAO-17-756 Airline Optional Service Fees

requirements of the law. According to UK CAA officials, most of the 

airlines agreed to amend their websites; however, there were three 

airlines where the UK CAA had to take enforcement action to achieve 

compliance. According to UK CAA officials, compliance with the EU law 

has improved since 2010, and most airlines now have a link posted early 

in the booking process to baggage fees and other optional service fees. 

The UK CAA has also completed reviews of travel agents’ websites to 

assess compliance with Regulation (EC) No 1008/2008, according to UK 

CAA officials. Canadian officials told us that the Canadian Transportation 

Agency monitors and enforces airline compliance with consumer 

transparency laws. To do so, they conduct periodic carrier inspections to 

assess compliance with Canada’s Air Transportation Regulations and 

conduct targeted investigations when needed. The Canadian 

Transportation Agency also reviews international tariffs to determine 

whether they set out all the information required by regulation and to 

assess whether airline policies with regard to optional service fees are 

clear, reasonable and not unduly discriminatory, according to Canadian 

officials. Malaysian officials that we spoke with stated that they are in the 

process of developing processes for monitoring and enforcing compliance 

with Malaysia’s consumer protection code.

Officials from some of the regulatory bodies whom we interviewed said 

that they have taken other actions to educate airline consumers about 

consumer transparency laws related to optional service fees. For 

example, the UK CAA posts information on its website about existing 

optional service fees for the 20 largest airlines that travel to and from the 

UK, and the document is updated twice a year. According to UK CAA 

officials, they make this information available on their website to inform 

UK consumers about these fees and help consumers compare different 

optional service fees across different airlines. Similarly, the Malaysian 

Aviation Commission has a “Know Your Rights, Before You Fly”

webpage, where, according to Malaysian officials, they post information 

for consumers, including their rights related to airline optional service 

fees.
Appendix II: Objectives, Scope, and 

Methodology

Page 42 GAO-17-756 Airline Optional Service Fees

Our objectives for this report were to describe: (1) how selected U.S. 

airlines have modified their offering and pricing of optional services since 

2010, (2) the factors that selected U.S. airlines consider when 

determining whether and how much to charge for optional services, and 

(3) the actions the Department of Transportation (DOT) has taken since 

2010 to improve the transparency of optional service fees and views of 

selected aviation stakeholders about these actions. We also described 

the actions taken by selected regions or countries to improve consumer 

transparency related to airline optional service fees and presented this 

information in appendix I.

To identify the ways in which selected U.S. airlines modified their offering 

and pricing of optional services since 2010, we first selected U.S. 

passenger airlines to examine. We used data from DOT’s Bureau of 

Transportation Statistics (BTS) on passenger enplanements and airline 

operating revenues. For the passenger data, we used the T-100 

database, which includes traffic data for U.S. airlines traveling to and from 

the United States. These data represent a 100 percent census of all 

traffic. For the financial data, we used Form 41 quarterly financial filings to 

BTS, specifically Schedule P-1.2. We relied on the most recent available 

BTS data at the time we developed our airline selection. To assess the 

reliability of the BTS enplanements and operating revenue data, we 

reviewed documentation about the quality control procedures applied by 

BTS; analyzed the summary data for obvious errors; and interviewed BTS 

officials about how the data are collected, validated, stored, and 

protected. We determined that the data were sufficiently reliable for the 

purposes of identifying airlines to include in our selection for this audit 

work. We selected U.S. passenger airlines that: (1) reported annual 

operating revenues of at least $20 million in calendar year 2015, (2) had 1 

million or more domestic passengers in calendar year 2015, (3) had at 

least 1,000 scheduled passengers in the third quarter of 2016, and (4) 

operate under their own brand. This selection process resulted in a list of 

12 U.S. passenger airlines: Alaska Airlines, Allegiant Air, American 

Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue 

Airways, Sun Country Airlines, Southwest Airlines, Spirit Airlines, United 

Airlines, and Virgin America. Collectively, the selected airlines transported 

81.15 percent of U.S. domestic passengers in 2016 and accounted for 

99.88 percent of baggage fees and 99.98 percent of rebooking and 

cancellation fees charged by all U.S. airlines in 2016. During the course 

of our review, Alaska Air Group, which owns Alaska Airlines, purchased 

Virgin America. As a result, we eliminated Virgin America from our 

Appendix II: Objectives, Scope, and 

Methodology
Appendix II: Objectives, Scope, and 

Methodology

Page 43 GAO-17-756 Airline Optional Service Fees

selection of airlines mid-way through our review and report on 11 selected 

airlines.1

We identified the types of optional services offered by the 11 selected 

airlines by reviewing webpages on airlines’ websites, which are required 

to prominently display optional services and fees. We accessed the 

airlines websites and took screen captures of the webpages with optional 

service fee information on March 31 and April 1, 2017, so that our 

analyses of the website content would be as comparable as possible. We 

also returned to airlines’ websites at later points to collect additional 

information. We compared the optional service fee information that we 

gathered from our review of airlines’ websites to optional service fee 

information that we collected as part of our 2010 review of airline fees to 

assess how these fees had changed since 2010.2

We corroborated information obtained from our review of airline’s 

websites through interviews with officials from 10 of the 11 selected 

airlines. We requested interviews with representatives from all 11 

selected airlines but one airline declined to be interviewed.3 As a result 

we interviewed officials from 10 of the 11 selected airlines.4 In 

interviewing the airline officials, we used a semi-structured interview 

instrument, which contained questions pertaining to the types of optional 

service fees and bundled fare products that airlines have introduced since 

2010, the factors that airlines consider when setting fees, and airlines’

views on advantages and disadvantages to consumers of unbundling 

optional services. During our interviews, we also asked airlines if they 

would be willing to share cost information on optional services with us, 

and all 10 airlines declined to provide us with such proprietary 

information; or said that they do not collect specific cost information on 

 1

Excluding Virgin America, the remaining 11 airlines transported 80.18 percent of U.S. 

domestic passengers on U.S. airlines in 2016 and accounted for 98.34 percent of 

baggage fees and 98.79 percent of rebooking and cancellation fees charged by all U.S. 

airlines in 2016.

2

GAO, Commercial Aviation: Consumers Could Benefit from Better Information about 

Airline-Imposed Fees and Refundability of Government-Imposed Taxes and Fees, 

GAO-10-785 (Washington, D.C.: July 14, 2010). The 11 airlines that we selected for this 

review were also part of our 2010 review. 

3

While Sun Country Airlines declined to participate in our review, we included relevant 

information about Sun Country in the aspects of our report that relied on publicly available 

information, which we obtained from the airline’s website.

4

One of the 10, Delta provided written responses to our interview questions.
Appendix II: Objectives, Scope, and 

Methodology

Page 44 GAO-17-756 Airline Optional Service Fees

optional services; or said that they collect cost information only in limited 

circumstances, such as food and beverage costs, which would not have 

been useful for this report. In addition to answering our interview 

questions, we asked the 10 airlines to provide information on when they 

first began charging for specific optional services, how much those fees 

were at the time that they were first introduced, and how revenue from 

those fees are categorized and reported to BTS. Nine of the 10 airlines 

that we interviewed provided this information.5 One of the responsive 

airlines did not provide a complete response, but the overall responses 

were sufficiently detailed to address our objective.

In addition to obtaining fee information, we analyzed airline financial 

information reported to BTS by airlines from calendar year 2010 through 

calendar year 2016—the most recent available—to analyze how revenue 

generated from optional service fees had changed from 2010 to 2016. We 

analyzed revenue data from baggage fees and reservation-change and 

cancellation fees, which are the two types of optional service-fee 

revenues that airlines are required to report to BTS in separate accounts. 

All other optional service-fee revenue is reported in accounts that include 

other airline revenue sources. We assessed the reliability of the BTS’s 

operating revenue data as discussed above and determined that they 

were reliable for the purpose of reporting overall trends in revenue from 

baggage and reservation-change and cancellation fees for 2010 through 

2016.

To identify the factors that airlines consider when setting optional service 

fees, we interviewed officials from the 10 selected U.S. airlines that 

agreed to speak with us about the factors airlines consider when deciding 

whether to separate optional service fees from the base fare price and 

determining how much to charge for a given optional service. We also 

interviewed selected aviation stakeholders that included three airline 

trade associations; four consumer groups; three global distribution 

systems (GDS) companies; a travel trade association representing GDSs, 

online travel agents, and metasearch companies; and two other industry 

stakeholders to obtain their views on factors that airlines consider when 

setting fees (see table 5). We selected the three airline trade associations 

that represent different airlines (i.e., domestic airlines, international 

airlines, and regional airlines). We selected four consumer group 

associations that represent a range of types of airline consumers (i.e., 

 5

Spirit Airlines declined to provide this information but otherwise participated in the review.
Appendix II: Objectives, Scope, and 

Methodology

Page 45 GAO-17-756 Airline Optional Service Fees

business travelers and leisure travelers) and that recently published 

articles on consumer transparency issues related to optional service fees. 

With regard to the GDSs, we selected the three largest GDS companies 

in the United States. To obtain the perspective of companies that provide 

information or sell airline tickets through indirect distribution methods, we 

also selected the travel trade association which represents GDSs, online 

travel agents, and metasearch companies. Finally, we selected two 

industry stakeholders because they have observed how the airline 

industry has changed since 2010 and cover the breadth of the airline 

industry.

Table 5: List of Aviation Stakeholders GAO Interviewed 

Category Organization 

Airline associations Airlines for America (A4A)

International Air Transport Association (IATA)

Regional Airline Association 

Consumer advocate organizations Business Travel Coalition

Consumers Union 

FlyersRights.org

Travelers United

Global Distribution System (GDS) companies Amadeus 

Sabre 

Travelport

Travel trade association representing GDSs, online travel 

agents and metasearch companies

Travel Technology Association

Other aviation industry stakeholders Airline Tariff Publishing Company 

IdeaWorksCompany

Source: GAO. | GAO-17-756

We also conducted an economic literature search for studies that have 

examined the effect of baggage fees on base ticket prices. The literature 

search was performed in March 2017, using keyword and controlledvocabulary searches in bibliographic databases including Transportation 

Research International Documentation, Academic OneFile, Scopus, and 

WorldCat. The terms included, but were not limited to, keywords such as 

“airline” or “air carrier,” “baggage fees” or “ancillary fees,” “unbundling” or 

“de-bundling,” combined with “impact” or “affect” or “effect” and “ticket 

price” or “base fare” or “airline pricing.” We limited our search to studies 

published after 2010 because baggage fees were first introduced in 2008. 

The literature search generated 11 initial results. We vetted this initial list 

by examining the abstracts for those that addressed our objectives and by 
Appendix II: Objectives, Scope, and 

Methodology

Page 46 GAO-17-756 Airline Optional Service Fees

determining which studies had appeared in peer-reviewed journals. We 

identified 5 studies that met these criteria. After performing a secondary 

review of these studies to assess the soundness of the studies’

methodologies and to confirm the relevance to our objectives, we 

excluded 2 of these studies. This resulted in the following 3 studies being 

included in our report.

• Henrickson, Kevin E. and John Scott, 2012, “Baggage Fees and 

Changes in Airline Ticket Prices,” in James Peoples (ed.), Pricing 

Behavior and Non-Price Characteristics in the Airline Industry

(Advances in Airline Economics, Volume 3) Emerald Group Publishing 

Limited, 177–192.

• Brueckner, Jan K., Darin N. Lee, Pierre M. Picard, and Ethan Singer, 

2015, “Product Unbundling in the Travel Industry: The Economics of 

Airline Bag Fees,” Journal of Economics & Management Strategy 24 

(3): 457.

• Scotti, D. and M. Dresner, 2015, “The Impact of Baggage Fees on 

Passenger Demand on US Air Routes,” Transport Policy 43: 4–10.

We also conducted several literature searches using online resources to 

identify reports, studies, articles, or other publications that discussed the 

use of optional service fees in the airline industry.

To determine what actions DOT has taken since 2010 to improve the 

transparency of optional service fees, we reviewed DOT regulations 

promulgated since 2010, such as regulations that establish requirements 

on the disclosure of optional service fees,6 the refunding policies of 

optional service fees,7 and post-purchase price increase limitations on 

baggage fees.8 In addition, we identified four DOT proposed rules9 and 

one request for information10 related to transparency of optional service 

fees and followed up with DOT regarding the status of these ongoing 

rulemakings and request for information. We also reviewed DOT 

guidance, directives, policies, and other documentation clarifying the 

 6

14 C.F.R. § 399.85.

7

14 C.F.R. §§ 250.5(f), 259.5(b)(3), (b)(5).

8

14 C.F.R. §§ 399.88, 399.89.

9

82 Fed. Reg. 7536 (Jan.19, 2017); 81 Fed. Reg. 75347 (Oct. 31, 2016); 79 Fed. Reg. 

29970 (May 23, 2014); 76 Fed. Reg. 41726 (July 15, 2011). 

1081 Fed. Reg. 75481 (Oct. 31, 2016). 
Appendix II: Objectives, Scope, and 

Methodology

Page 47 GAO-17-756 Airline Optional Service Fees

requirements of various regulations and describing the roles and 

responsibilities of DOT’s Office of Aviation Enforcement and Proceedings 

(OAEP) and Aviation Consumer Protection Division (ACPD) related to 

monitoring, investigating, and enforcing airline compliance with 

regulations related to airline optional service fees. To understand how 

OAEP and ACPD monitor compliance with existing optional service fee 

regulations and respond to consumer complaints about optional service 

fees, we interviewed officials from OAEP and ACPD about existing 

regulations; the policies, compliance, and enforcement activities 

undertaken by these offices; and the process for responding to 

complaints. In addition, we also interviewed officials from BTS about their 

guidance and process for collecting optional service fee revenue data 

from airlines. As described above, we asked officials from the 10 airlines 

that agreed to be interviewed about how they report revenue from certain 

optional service fees to DOT’s BTS. We summarized this information and 

identified fees that airlines commonly reported in different categories. To 

understand how different stakeholders view actions DOT has taken to 

improve transparency of optional service fees, we interviewed 

stakeholders described in table 5. In addition, during our interviews with 

officials from the 10 selected U.S. airlines that agreed to speak with us, 

we obtained their views on DOT’s actions and obtained information about 

how their airlines comply with DOT regulations related to optional service 

fees. We also conducted an analysis of the contracts of carriage for all 

the 11 airlines in our selection. This helped us to corroborate information 

we obtained from our interviews with airline officials about their optional 

service refund policies. These contracts of carriage were all accessed 

and downloaded on March 14, 2017, so that our analyses of the contractof-carriage content would be as comparable as possible. To assess the 

readability of the contracts of carriage, we converted the files to Microsoft 

Word documents and ran the Flesch-Kincaid Grade-Level test, which is 

included in the Microsoft Word software.11

Finally, we reviewed documents and interviewed officials from four 

selected foreign governments—the European Union, Canada, the United 

Kingdom, and Malaysia—that have taken actions to improve consumer 

 11To assess the readability of the contract-of-carriage documents, we selected and used 

an automated readability tool—the Flesch-Kincaid Grade-Level (FKGL) test. The FKGL 

tool was developed by the U.S. Navy based on the Flesch Reading Ease test. The FKGL 

tool was developed primarily for adults and has been tested extensively on adult 

materials. It uses core measures of word length and sentence length to estimate the grade 

level at which the content is written. The version we used was included in the word 

processing software Microsoft Word
Appendix II: Objectives, Scope, and 

Methodology

Page 48 GAO-17-756 Airline Optional Service Fees

transparency related to airline optional service fees. Specifically, we 

interviewed officials from the European Commission, Canadian 

Transportation Agency, United Kingdom Civil Aviation Authority, and the 

Malaysian Aviation Commission. We based our selection of foreign 

governments on various factors including whether the region or country 

has implemented or is considering implementing laws related to 

increasing consumer transparency of airline’s optional service fees, and 

recommendations from our interviews with DOT and industry officials and 

stakeholders. We interviewed officials about existing laws related to 

consumer transparency of optional service fees, how these laws are 

monitored and enforced, and the effects of these laws on the airline 

industry and airline consumers. In addition, we used these interviews to 

corroborate information obtained from our document reviews.

We conducted this performance audit from November 2016 to September 

2017 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 49 GAO-17-756 Airline Optional Service Fees

Gerald L. Dillingham, Ph.D., (202) 512-2834, or dillinghamg@gao.gov

In addition to the contact named above, Faye Morrison (Assistant 

Director), Maria Mercado (Analyst in Charge), Namita Bhatia-Sabharwal, 

Lacey Coppage, Leia Dickerson, Michele Fejfar, Hannah Laufe, Malika 

Rice, Amy Rosewarne, and Eric Warren made key contributions to this 

report.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(101233)
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