$tuff Happens: An Overview of NCL’s Findings on 

Airline Fees and Travel Insurance

Presenter: John Breyault, Vice President of Public Policy, 

Telecommunications and Fraud

National Consumers League

December 16, 2013

1
Who Are We?

• The National Consumers 

League is the nation’s 

pioneering consumer 

organization. Founded in 

1899, our non-profit mission is 

to advocate for social and 

economic justice for 

consumers and workers in the 

United States and abroad.

2
Why a Report?

• Rising Cancellation Fees Outrage Consumers

• Numerous Media Accounts of Consumers 

Failing to Get a Refund When Life Intervenes

• Anecdotal Accounts of Travel Insurance Policies 

Failing to Live Up to Consumer Expectations

3
Cancellation/Change Fees 

Cost Control Mechanisms or Profit Centers?

0

500000

1000000

1500000

2000000

2500000

3000000

2007 2008 2009 2010 2011 2012

Year

U.S. Airline Cancellation/Change Fee Revenue - Reaches $2.5 Billion in 2012

Revenue (in 

millions of dollars)

4
Cancellation/Change Fees Are A Significant Profit 

Center for Airline Industry

• “The airlines took in $159.5 billion in revenue last 

year and had expenses of $153.6 billion, according 

to the government. That 3.7% profit margin comes 

entirely from the baggage and change fees.”

• Source: USA Today, May 2013

5
Refundable Ticket Sales Have Never Been A Popular 

Alternative for Most Consumers...

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Restricted-Fare Tickets Dominate Airline Ticket Sales

Restricted Tickets (% of total passengers) Unrestricted Tickets (% of total passengers)

Source: Bureau of Transportation Statistics

6
... And It’s Not Hard to See Why

56

20

10

8

6

0

10

20

30

40

50

60

0-249% 250-499% 500-749% 750-1000% >1000%

No. of Routes

Non-restricted/Restricted Fare Difference %

% Differences Between Non-Restricted & Restricted Fares on Major U.S. Air Routes

Source: National Consumers League Analysis

7
Consumer Desire

Rising Cancellation Fees 

+ 

Unaffordable Refundable Tickets

=

Rising Consumer Desire to 

Affordably Manage Travel Risk

8
Solution? Travel Insurance

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

$ 0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

2004 2006 2008 2010 2012 U.S. Travel Insurance Sales (in Millions $)

Trip Cancellation/Interruption Policies Becoming a Larger Part of Growing U.S. Travel Insurance 

Market

Travel Insurance & Assistance Products Annual Sales Tip Cancellation/Insurance Packages (% of total sales)

Source: U.S. Travel Insurance Association

9
Aggressive Marketing Language of Travel Insurance 

Gives Consumers False Sense of Security

• “Worry-free travel insurance”

• “Peace of Mind is Only a Click Away”

• “StressFree Flight Protection”

• “Travel is ‘peace of mind’ and doesn’t have to cost a lot.”

Sources: Spirit.com, Delta.com, Expedia.com, AlaskaAir.com 

10
Travel Insurance Policies Have Significant 

Exemptions 

• Losses Not Covered Include:

• Existing medical conditions affecting the traveller, a travelling 

companion or a family member;

• Pregnancy and childbirth;

• Scuba diving without a dive master;

• Participating in or training for any amateur sporting competition;

• Being fired if the termination is the traveller’s or the traveller’s

companion’s fault.

Sources: Travel Guard, Allianz, Expedia.com 

11
NCL Reform Proposals

1. Congressional oversight hearings 

2. Travel insurance should be marketed in clear, nonmisleading language

3. Travel insurance loss ratios should be publicly reported

4. Cancellation/change fees should be tiered based on 

proximity of the travel date

5. Ticket transfers should be fee-free

6. Eliminate standby fees

12
Questions?

13
Contact

John Breyault

E-mail: johnb@nclnet.org

Phone: 202.207.2819

Twitter: @jammingecono, @ncl_tweets

Blog: savvyconsumer.wordpress.com

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