O’Connor: Late bag-fee refund law lands right on time

Brian J. O'Connor
Detroit News Finance Editor

Hey, remember back in May when the Overwhelming National Crisis of the Week was standing in long airport security lines to get to our summer vacations? You know, before we were outraged about mosquitos that cause brain defects, wondered whether major party presidential nominees can be trusted with the nuke codes, or griped about the total absence at the Rio Olympics of roller derby?

Yeah, good times.

The kerfuffle over Americans waiting for hours before their carry-on bags could be incompetently searched by Transportation Security Administration officers became completely hilarious thanks to a suggestion by U.S. Sens. Richard Blumenthal (D-Comedy Corner) and Edward J. Markey (D-Laugh Factory). Their idea: Simply ask major airlines to waive their fees for checked luggage so that travelers would carry on fewer bags and thus create shorter security lines.

Get this: Airlines collected $3.5 billion (with a “B!”) in baggage fees during 2014, even as their percentage of profits from the purported airline business model of collecting money from airfares fell to its lowest percentage ever. During 2015, that figure climbed to $3.8 billion. So of course the airlines instantly sacrificed all that dough to achieve something that is not actually part of the purported airline business model — the convenience of air travelers.

Aaaaaand ... that did not happen. What did happen is that I was able to pull out my bucket list and scratch off, “Laugh So Hard That I Cry.”

You guys are killin’ me here!

While utter naiveté is a quality I don’t particularly treasure in U.S. Senators, it turns out that some real good has come out of Blumenthal’s and Markey’s failed audition for “The Daily Show,” and that is the FAA Extension, Safety, and Security Act of 2016. Signed by President Barack Obama in July, the act requires airlines to automatically refund baggage fees if your suitcase arrives 12 hours or more late after a domestic flight, 18 hours for international.

Until now, the only required fee refund was for lost luggage, but permanently missing suitcases make-up just a small portion of baggage complaints. Airlines also can be liable for up to $3,500 for lost, damaged or stolen items and luggage, and for reasonable expenses caused by baggage delays, according to the Department of Transportation.

This can include handing you cash at the airport or reimbursing you later. But if you have to buy something like a new overcoat upon your luggage-less arrival in Anchorage, the airline can reimburse you for just a portion of the cost, since you’ll use the new coat for more than that trip, though that’s something to debate if you flew in from Miami.

And about these sled dogs ...

Other than flight problems, baggage problems are the second-biggest category of complaints about airlines, according to the Transportation Department, which doesn’t track payouts for lost and damaged bags, and doesn’t break out how many complaints relate to delayed rather than lost, damaged or stolen luggage. According to a spokeswoman, however, the vast amount of the 1,924,366 reported baggage complaints last year involved late bags.

Let’s guesstimate that half of those problems involved bags that were more than half a day late, which would come to 962,183 late-bag refunds to passengers. At $25 per checked bag, airlines would have been forced to automatically pay back $24 million last year. Even if only one-quarter of luggage troubles were bags late enough to trigger refunds, that still would be $12 million back to air travelers.

The approved legislation gives the Transportation Department a year to write the rules on baggage-fee refunds and gather public comments. The airlines think things are just fine now, so requiring fee refunds is completely unnecessary. This should make for some lively debate when the proposed rules are published, but the act makes it clear: refunds will be required.

So, in a year or so, airlines are either going to get much, much better at getting your bags to you on time, or they will ease their checked baggage fees, or they’ll jack up fares or find some way to offset all that refunded revenue, which amounts to millions in nearly pure profit.

My bet? Sometime in the second half of 2017, I‘ll be writing a column on the troubling new trend of airline pay toilets.


(313) 222-2145

Twitter: @BrianOCTweet

Brian O’Connor is author of “The $1,000 Challenge: How One Family Slashed Its Budget Without Moving Under a Bridge or Living on Government Cheese.”