Refunds proposed for delayed baggage

Bags in limbo at Philadelphia International Airport in 2007. A new rule would require "timely" delivery by airlines.
Bags in limbo at Philadelphia International Airport in 2007. A new rule would require "timely" delivery by airlines.
Posted: April 14, 2011

NEW YORK - You've paid $15, $20, even $35 to check your bag on a flight. Then the airline loses it, but you don't get your money back.

The government wants to change that, tackling two of the biggest complaints about air travel - poor service and the explosion of fees. Major airlines, which collect $3.3 billion in bag fees each year, are opposed.

Under current rules, if luggage is never found or is damaged, passengers can ask for a fee refund as part of their lost-property claim. But if a bag is simply delayed, the passenger is out of luck.

Now the U.S. Transportation Department wants to make airlines pay passengers more when they're bumped off their flights, allow passengers to cancel reservations within 24 hours of booking with no penalty, require better disclosure of fees and surcharges, and require airlines to refund the fee if a bag is lost or not delivered in a "timely" manner.

Exactly what "timely" means under the new rule is yet to be determined. When the DOT asked for public comment, one suggestion was that a bag be considered late if not delivered within two hours of the passenger's arrival.

The government is expected to release details of the rule this month but has yet to say when the change would go into effect.

Two carriers - Alaska Airlines and Delta Air Lines - provide a credit but not a cash refund.

Airlines prefer handing out vouchers instead of cash because the credits either bring additional business or go unredeemed, costing them nothing.

U.S. airlines lose bags at about half the rate they did in 2007, before checked-luggage fees. People are carrying on more bags, making the airlines' job easier. Still, last year, more than two million bags didn't arrive on their owners' flights.

"Passengers are paying $25 to have their bags carried, but they aren't getting any better service. The airlines are just using it as a way to increase revenue," said Nick Gates, who oversees baggage products for SITA, an aviation technology provider.

John Thomas, head of global aviation at LEK Consulting, disagreed. Now that airlines make money off baggage, he said, they can justify spending money to improve tracking technology and handle bags more efficiently.

Thomas said each bag cost the airlines $15 to $20 to cover fuel and handling costs. A delayed bag costs an average of $100 to return to its owner, Gates said.

The Air Transport Association of America, which represents most major airlines, told the Transportation Department baggage fees and their refunds were a competitive point best left to the marketplace. Automatic refunds, the group said, would increase costs and lead to higher prices for all passengers.

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