Seat fees are now worth billions for U.S. airlines

If you’ve been annoyed over the last few years that you had to pay to get an assigned seat on a flight, so is the government. The Senate Permanent Subcommittee on Investigations, in one of its last acts before a more business-friendly Republican majority takes over next year, has issued a report criticizing the airline industry’s growing reliance on ancillary fees like seat fees and baggage fees.

The report, titled “The Sky’s the Limit,” criticizes carriers for loading down flyers with new charges for flying besides their ticket:

This strategy, known as “unbundling,” has spread to almost every airline in the industry. So-called “ancillary fees” have become a vital revenue stream for the airlines. Unbundling has not lowered the cost of flying for consumers, who now face additional charges to fly with carry-on or checked bags or to sit next to their minor children. Airlines have generated billions of dollars in revenue from ancillary fees while travelers confront more and increasingly complex fees and fewer options for avoiding them, obscuring the total cost of travel and obstructing comparison shopping.

Some airlines, like the low-cost Spirit Airlines, actually make the majority of their revenue from such fees. Though airlines with higher-end reputations like Delta Air Lines (DAL-0.60%) might seem immune from such behavior, they’re not. Those companies have also introduced no-frills classes where everything beyond the guarantee of a seat itself costs money.

In one of the report’s major findings, the committee’s investigation found that “American, Delta, United, Frontier, and Spirit generated $12.4 billion in seat fee revenue between 2018 and 2023,” or money customers pay to reserve a specific seat on an airplane above and beyond their ticket. “In 2023, for the first time since at least 2018, United collected more revenue from seat fees ($1.3 billion) than it did from checked bag fees ($1.2 billion),” the report says.

The focus on fees is part and parcel with the Biden administration’s war on junk fees that seems likely to reach a truce once Donald Trump returns to office. But Airlines for America, the industry trade group that sued to block mandatory fee disclosures, dismissed the report out of hand as propaganda for a busy Thanksgiving week when record numbers of travelers will likely have airline fees on mind.

“The report demonstrates a clear failure by the subcommittee to understand the value the highly competitive U.S. airline industry brings to customers and employees,” the group said in a statement reported by CNBC. “Rather, the report serves as just another holiday travel talking point.”