Frustration with U.S. airlines is soaring

Mar 26, 2015 11:22 AM by CBS News

It's not just you: Everyone appears to be frustrated with the U.S. airline industry. Despite the historic drop in oil prices, an important financial factor for commercial aviation, airfares haven't gone down accordingly.

Earlier this week, New York Times columnist Andrew Ross Sorkin went so far as to say the industry "is increasingly looking like an uncompetitive oligopoly," which in some cases deliberately avoids competition when it comes to airfares.

And now a new survey by the U.S. Travel Association reports most travelers would even be willing to pay several dollars more per ticket, if that payment went toward improving airline efficiency and offering more choices.

Roger Dow, USTA president and CEO, said the survey's overriding theme is concern that competition is lacking among the airlines.

Dow pointed to the fact that four U.S. airlines now control 85 percent of the nation's passenger traffic, thanks to recent industry consolidation. And he noted the results of earlier surveys, where the majority of air travelers feel underserved by carriers in their local markets.

"Air passengers aren't thrilled about ancillary fees, which disappear into the airlines' pockets, or federal taxes, which disappear into Washington's pockets," Dow said in a statement. "But if you show them a local user fee that is tightly structured to invest in our outdated and overburdened infrastructure, they understand the difference and strongly support it."

According to the survey, among the top frustrations for air travelers are the growing number of fees, particularly:

For flight changes or cancellations, which can run into the hundreds of dollars.
For seat assignments, which can cost around $50 per seat.
For checked bag, usually around $25 per bag.
For priority boarding, about $50.

The U.S. Department of Transportation says U.S. passenger airlines collected nearly $800 million in baggage fees during the fourth quarter of 2013, or 1.6 percent of total operating revenue. Reservation change fees for that time period were worth $675 million, or 1.4 percent of total operating revenue.

"They're not about to give up a revenue stream," Douglas Kidd, executive director of the National Association of Airline Passengers recently told New Jersey radio station WKXW-FM, especially now as the airlines are trying to pack as many passengers as possible on each flight. "They've been running at, recently, load factors above 85 percent," Kidd added. "Whereas maybe 10 to 15 years ago, if a plane was half-full, the airlines would consider themselves lucky."

Over 69 percent of travelers surveyed believe the federal government should let non-U.S. airlines offer more flights in America, in an effort to restore some competitiveness and to lower fares and improve service in U.S. airspace.

The U.S. has signed over 100 Open Skies agreements over the past 20 years. According to the U.S. State Department, these agreements remove government involvement in commercial airline decisions "about routes, capacity, and pricing, freeing carriers to provide more affordable, convenient, and efficient air service for consumers."

But three of the biggest U.S. airlines -- Delta, United and American -- are balking over recent attempts by several major Middle Eastern carriers -- Qatar Airways, Etihad Airways and Emirates -- to expand their service into the U.S. market.

The massive government subsidies these state-owned companies get, the U.S. carriers said in an online petition, directly threaten the U.S. airline industry and thousands of American jobs by "unfairly capturing U.S. airline market share and shifting U.S. aviation jobs overseas."

But advocates for business travelers believe the Big Three U.S. airlines are more worried about outside competition. "What they are concerned about is that these Gulf carriers have a lot of aircraft on order, and they really want to expand in the U.S.," Kevin Mitchell, chairman of the Business Travel Coalition, told the St. Louis Post-Dispatch.

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