The problem, for airlines, is that the US Congress is starting to take a closer look at these and other fees. Not, alas, because this kind of surcharging misrepresents the price of air travel to consumers. Rather, Congress has noticed that taxes aren’t collected on surcharges the same way they’re assessed on base fares.

If the fees are fare increases in disguise (which fuel surcharges and peak travel surcharges certainly are) then the government has every reason to want its money. Yes, those fees would be passed straight to the the consumer, but it would be logically consistent and fair.

The Government Accountability Office is investigating the surcharges, and public hearings are coming. Airline executives won’t enjoy their time on the stand, but it’s an important debate to have.

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Upgraded: Baggage allowances on Gulf Air
This isn’t something you’ll see in North America anytime soon: Gulf Air is raising the weight limits for passengers with (complimentary!) checked baggage, effective October 1, 2009. And the increases aren’t small: +10 kg (22 lbs), in each class. That raises the total weight limits for First, Business and Economy to 50 kg, 40 kg, and 30 kg, respectively. Silver-level frequent fliers in Gulf Air’s frequent flyer program get another 15 kg; gold members get another 20 kg. Individual bags are still limited to a whopping 32kg (70 lbs) each.

Upgraded: Virgin Atlantic’s website
Sure, airline websites have been selling hotel reservations and rental cars. But now Virgin Atlantic is trying to go further by offering “add-ons” like passports and visas. Services are provided by CIBT, either via the Virgin website or call center. (Or, perhaps more accurately, centre.)

Upgraded: Paperless boarding passes at US airports
The number of airlines and airports that permit scanning boarding passes from your mobile device keeps increasing. The TSA blog compiles the who/where. Here’s the bottom line, airlines and airport codes:

Continental: IAH, DCA, EWR, BOS, AUS, SAT, CLE, LGA, LAS, SFO, ORD, LAX, SAN, FLL, TPA, PDX, PHX, CLT, MSY, RDU, MCO
Delta/Northwest: ATL, LAS, MEM, MSP, DET, SLC, CVG
Delta only: LGA
Northwest only: IND
Alaska: SEA
American: ORD, SNA, LAX

Upgraded: Punishments for abusive passengers in-flight
The FAA is increasing the size of the penalties it levies against unruly passengers, like the man who “dropped his pants and exposed himself to the female passenger sitting next to him, then punched her, according to an FBI affidavit.” Good.

The original story (that prompted him to do further digging) has strangely disappeared from his BoardingArea blog, but still appears on a (legacy?) blogspot site:

Here’s a new one, at least to me. As we taxied before takeoff on a flight tonight from Denver to Tucson, the flight attendant announced that no personal possessions could be placed in the seat-back pocket, because of “FAA regulations.”

Nothing, she said. Not a pair of eyeglasses or a newspaper or a paperback book. Only “company-printed materials” were allowed in seat-back pockets, she said, and of course I quote her precisely.

What were these strange new “FAA regulations”? My seat-mate — a hard-core business traveler and until then a stranger to me — and I looked at each other. Surely this could not be a new law. But before takeoff, here the flight attendant comes marching down the narrow aisle on inspection, and right away she spots the books each of us had tucked into the pockets, as we had done thousands of times before.

She was on us like a prison guard. “Gentlemen, I told you, nothing in the pockets,” she said. Sheepishly, we put our books in our laps, while the “company-printed materials” (the crappy in-flight magazine, the sales catalog, the barf bag and who knows what else) rode merrily alone in the seat-back pockets.

One does not argue with a flight attendant if one wants to get where one needs to go.

Like Joe, I would have assumed that the flight attendant who was telling passengers that use of the seatback pockets was prohibited was on a power trip. I would have thought the same. Apparently, I would have been wrong, as Joe wrote in yesterday’s NYT column.

The Federal Aviation Administration said Monday that airlines whose flight attendants had been telling passengers that no personal items of any kind could be placed in seatback pockets were “following our guidance, if they are enforcing this with travelers.”

The agency’s response came after numerous inquiries following a flight I made from Denver to Tucson operated by SkyWest Airlines, on which the flight attendant announced before takeoff that, as a safety measure, nothing could be placed in seatback storage pockets — no eyeglasses, no ticket stubs, no iPods or bottles of water or magazines.

What. The. Hell.

I understand the ban on sticking your laptop computer into the seatback pocket. That’s a big item that peeks out of the pocket and can hurt someone if it flies out.

But a book? A sheet of paper? A ticket stub? Have we lost all sense of logic?

If the contents of the pocket are truly dangerous then ban everything. Ban SkyMall catalogs. Ban the safety cards. Ban barf bags (with ads, or with art, or anything on them.) Ban “American Way,” “Hemispheres,” and the (oh-so-creatively titled) “US Airways Magazine.” They’re a threat to your safety! Hide the kids!

For the time being, it doesn’t appear that airlines are actively enforcing this. Most appeared to be unaware of the rule — which originated in a 2007 cabin safety directive put out by the FAA — so for now, it’s still going to be the exception, not the rule, to hear this rule announced. But once is too much. This is just plain stupid.

I’m reminded of Ryanair. The much-maligned Euro-WalMart of the skies, has never had seatback pockets, as a way to save money on cleaning expenses (and restocking those magazines).

Apparently, we are all Ryanair passengers now.

(Thanks to reader Nicole Rowan for drawing the column to my attention!)

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One of the great frustrations of booking travel — air, hotel, car, whatever — has been the difference between initially-quoted price and the final bill. For hotels, the problem has often been surcharges like resort fees, local occupancy taxes, and other mandatory fees that aren’t included in the base rate. That may be changing, if only for European customers.

In an effort to meet the terms of European Union regulations, Pegasus Solutions, which provides hotel rate information to travel agencies and most major booking sites, is requiring hotels to break out their fees in a way that hasn’t been required before.

But just because a hotel is required to report all the parts of a room rate, that doesn’t mean you, the customer, will see things broken out when you go to book:

Once Pegasus provides the pricing breakdown to distributors, it will be up to each website where there are no governmental mandates, such as in the U.S., to decide how — or if — they want to display the information.

All websites that sell hotels eventually give consumers the total price, including taxes and fees, but some distributors force consumers to take two or three steps. Sometimes, distributors require credit card information before revealing the bottom-line price.

That means that US customers might still end up with partial quotes, lumped-together taxes and fees, and worst of all, surprises like mandatory resort fees, payable upon check-in.

The resort fee has always been my greatest hotel peeve. If it’s a mandatory charge, it should be quoted up front, with the rate. Now, with the Pegasus initiative, these fees will hopefully be visible — somewhere. But will the US consumer benefit? Unless they’re doing searches on EU-based search engines, I doubt it.

The major online travel agencies have been escalating their competition over the price and transparency of surcharges, for hotel booking fees as well as airline booking fees. So here’s a challenge to the agencies in the US:

Start breaking out the price of a hotel stay, including your fees, their fees, and the taxes. Be thorough about it, and show them right up front. Include the resort fees. Don’t make us go all the way to the brink of purchase before showing us the numbers. Give us the facts, up front, the first time.

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Alliances of global airlines — oneworld, Skyteam, and Star Alliance — are under attack. Attached to proposed legislation to upgrade the air traffic control system, a new proposal could be the death knell for the alliances — or at least the end of their legal presence in the United States.

Rep. James Oberstar (D-Minn.), a longtime critic of the alliance system is harnessing unease in Washington D.C. about the competitive impact of international pacts to back a bill that could have a drastic impact on existing and planned airline cooperation.

The chairman of the U.S. congressional committee that oversees airlines is pushing an aviation bill that would automatically withdraw antitrust approval for alliances within three years, although they could be restarted under more stringent rules.

The bill is attached to a $70 billion proposal to modernize the creaking U.S. air traffic control system, which gives it a greater chance of becoming law.

Its provisions could lead to the rolling back of the antitrust immunity, or ATI, already in effect for members of the Star and SkyTeam alliances. It could also derail efforts to expand these groupings and extend immunity to members of Oneworld, the smallest of the three.

Remember that Oberstar is the same legislator trying to block liberalization of airline ownership rules. I would argue that alliances would never have become necessary if nations — like the US — had more reasonable cross-border ownership rules. The alliances are a way to give the companies backdoor merger benefits (e.g., “revenue sharing” on trans-Atlantic routes) alongside the efficiencies that come with aligned schedules.

So what happens if alliances are declared a monopoly in the US, or elsewhere? Frankly, it could be a good thing for passengers, as long as codesharing isn’t entirely eliminated in the process. Alliances may have benefited travelers where schedule alignment and frequent flyer partnerships are concerned, but they’re legal oligopolies. They admit as much: That’s why they require antitrust immunity in order to function.

If airline alliances were to disappear, international passengers would likely see some inconvenience at first. But how much inconvenience? Global lounge access? Priority tags on your luggage? Really, what would change? And for how long? Over time, airlines would negotiate bilateral partnerships in lieu of broad alliances.

And what about the upside? As it stands, alliances are essentially a legalized price-fixing scheme. They’ve always been for the convenience of the airlines, not the passenger. So eliminating price fixing sounds like an easy win for the consumer.

Oberstar may be wrongheaded with his advocacy of protectionism, but he may be onto something with regard to alliances.

But the treaty wasn’t supposed to end with a few new routes across the Atlantic. European airlines in particular are hoping to move into the North American market in a way they’ve never been allowed to before.

The Europeans are prepared to lobby vigorously for the part of Open Skies they see as far more crucial: relaxed ownership rules. In 2010, a year that will likely inflict further financial stress on a global airline industry struggling under recession, expect a new push to soften the 25% cap the U.S. imposes on foreign investment in airlines. It’s no secret to anyone that among the developed world’s airlines, U.S. carriers are the unfortunate, pitied cousins, their service and finances both in shocking disrepair. Most U.S. airline executives would welcome a strong financial partner, or the ability to sell out to one of them. And Europeans want greater access to fly domestic U.S. routes and to acquire airlines here.

But those who are salivating at the prospect of an Air France or Lufthansa flying into Toledo or Raleigh, wipe the spittle off your chin and stop dreaming. It’s not happening. Especially with this guy in a position of power:

In the U.S., Rep. James Oberstar (D-Minn.), chairman of the House Transportation Committee, reaffirmed his support for tightening foreign-ownership restrictions by inserting protectionist language in legislation to reauthorize FAA funding.
[...]
Labor has also cultivated a warm relationship with Oberstar and has voiced support for his tougher language on control.

Capt. John Prater, president of the Air Line Pilots Association, said, “ALPA strongly backs language in the bill affirming that U.S. citizens must control key operational aspects of U.S. airlines. This bill does that by identifying fleet composition, route selection, pricing and labor relations as among the operational elements that the Department of Transportation must ensure U.S. citizens control.”

Oberstar’s language would require U.S. citizens to “control all matters pertaining to the business and structure of the air carrier, including operational matters such as marketing, branding, fleet composition, route selection, pricing and labor relations.”

I understand that the airline industry is critical for the movement of goods and services in the country. And as such, the government takes a special interest in its ownership. But the 25% limit on ownership is overly restrictive, and actually hurts American airlines’ access to global capital.

Oberstar’s efforts to add conditions to expanded ownership will make US airlines less attractive to foreign investors. That’s intentional. And it’s dumb. Short-term it “protects” the companies from control by outsiders, but long-term it makes these American companies — already a laughing stock in the global marketplace — increasingly irrelevant.

Frankly, I don’t think most passengers care much, one way or the other, who owns the airline they’re flying. JetBlue is 19% owned by Lufthansa; does that make you more or less likely to fly them? How about Virgin America, whose nationality is perpetually being challenged, with its high-quality inflight product?

So, as much as I’d enjoy the prospect of a high-quality international carrier coming in and serving domestic cities, it’s not going to happen. And it looks increasingly unlikely that American carriers will get to partner with stronger international partners. And that, in particular, is a shame.

The e-mail blitz was on this afternoon. Several airlines sent out their bulk-mails, announcing their opposition to “speculators” in the oil market. In an orchestrated letter signed by 12 airline CEOs, the airlines blamed the oil market for their companies’ woes. It’s a maddening piece of propaganda.

The airlines’ efforts to blame the oil market’s participants for causing the price of oil to go up is a red herring. Speculators exist, sure, but unlike the housing market’s speculators, in which investors actually bought physical properties to affect market pricing, oil futures market participants aren’t actually taking delivery of oil. They’re effectively wagering on the direction of prices, but that doesn’t directly affect oil supply or real consumptive demand.

The letter is chock full of misinformation and dumb logic. For example:

A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab.

The price goes up every time? If so, why would anyone sell? No one has ever lost money on a trade? What market is this, and how can I participate?!!

Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices…

It’s a smidge more complicated than that, guys. War in Iraq and Afghanistan, mortgage meltdown and uptick in foreclosures, trade deficits, currency devaluation, bloated consumer debt, runaway derivatives markets… But anyway…

…speculators who trade oil on paper with no intention of ever taking delivery…

Umm, that’s an argument against futures markets in and of themselves, and not against speculators per se.

The Economist has a good breakdown of the “blame the speculators” logic this week. Forgive me for quoting them at length:

[Blaming the speculators] holds obvious appeal for those looking for a scapegoat. But there is little evidence to support it. For one thing, the surge in investment in oil futures is not that large relative to the global trade in oil. Barclays Capital, an investment bank, calculates that “index funds”, which have especially exercised the politicians because they always bet on rising prices, account for only 12% of the outstanding contracts on NYMEX and have a value equivalent to just 2% of the world’s yearly oil consumption.

More importantly, neither index funds nor other speculators ever buy any physical oil. Instead, they buy futures and options which they settle with a cash payment when they fall due. In essence, these are bets on which way the oil price will move. Since the real currency of such contracts is cash, rather than barrels of crude, there is no limit to the number of bets that can be made. And since no oil is ever held back from the market, these bets do not affect the price of oil any more than bets on a football match affect the result.

The market for nickel provides a good illustration of this. Speculative investment in the metal has been growing steadily over the past year, yet its price has fallen by half. By the same token, the prices of several commodities that are not traded on any exchanges, such as iron ore and rice, have been rising almost as fast as that of oil.

Bottom line: The airlines are whining. Suck it up. It’s your business. Manage it.

One surprise: Southwest signed the letter. By the logic of the letter, Southwest is one of the “speculators,” and in fact it’s a major reason Southwest has been eating everyone else’s lunch. Yet they signed the letter decrying their own business practices. Huh.

Less surprising: The signature of United. Despite having a CEO who previously worked at Texaco, these guys couldn’t figure out how to manage fuel prices. When they emerged from bankruptcy, they based their business plan on an unrealistic $50/barrel oil. It was trading around $65/bbl at the time, and it hasn’t gotten any cheaper. ($142/bbl today.)

The airlines who today whine about the oil market moving higher are complaining about their poor past decisions. They’re hatin’ the player and the game.

That said, if you want to check out the airlines’ “campaign” to stop investment, or “speculation,” they’ve got a website which I am loath to link to, but offer up for the sake of fairness and equal time. It’s StopOilSpeculationNow.com. Full text of the airline CEOs’ open letter is here.

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Upgraded: The Five-Finger Discount
Chris Elliott essentially accuses the TSA’s baggage screeners of systematically stealing things from travelers’ luggage. Watch your designer eyewear. (How’s the hate mail from angry TSA employees, Chris?TSA employees aren’t exactly quiet when they’re criticized on the internet…)

Downgraded: Pilots’ comfort zone
Several Continental 757s traveling over the Atlantic have been making fuel stops in Canada on the westbound route. As Jared Blank points out, this isn’t a case of running-on-fumes, but as a passenger, who the hell cares? I don’t want to add a stop in Newfoundland just for kicks. Granted, I’ve never been wild about 757s on trans-oceanic routes, but the low-fuel issue isn’t limited to those routes. Pilots have been complaining that airlines have been pressuring them to fly with less extra fuel than before. After all, fuel is heavy, so carrying more means burning more. But let’s not be penny-wise, pound-foolish.

Upgraded: Advice that no one is heeding
Bob Crandall, former CEO of American Airlines, and now working for an air taxi startup, argues in the New York Times op-ed pages that we “do not need to return to the over-regulation of the past, but some government intervention is required.” This includes blocking mergers and changing bankruptcy laws to prevent airlines from operating under chapter 11. Good luck, Bob.

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Up next: Continental-United. It’s going to happen, though nothing is official. Northwest’s linkup with Delta makes it possible, since Northwest held a “golden share” of Continental stock and could nix a merger if they wanted. Sigh. With several airlines folding in the past weeks, and with one or two mergers coming up, competition will (at least temporarily) be reduced significantly. Watch for prices to rise. But will rising prices kill demand?…

Who will be next to fall?
Chris Elliott may be making book on which airline will fold next, but it won’t be Virgin America. (I put an exacta box on Alitalia and SunCountry, with a side bet on Mesa and a long-shot on VA. The latter bet may be down the crapper. Thankfully, no money changed hands…) The Branson-powered airline will get another $100 million in capital from investors. Profitability is still 3 years away, they say. Three years for me to win that bet!

More FAA inspections… but no groundings
The FAA, fresh off its attempted legitimacy-building groundings of American’s MD-80s, is ordering the repair of wing de-icing systems, landing gear, and (!) oxygen masks on 1980s-era Boeing 737s. That means Continental, Delta, Southwest, United, and others will have some repairs to make. But it’s obviously not urgent, since the airlines have 36 months to fix things. So, three years from now, if airlines are grounded for these problems, you’ll know why. Bonus: United and the Air Transport Association asked for 48 months, instead of 36. Denied. This really, really, really must not be a big deal.

Peter Greenberg disagrees, after chatting up an FAA inspector responsible for Mesa’s fleet. But Peter, much like with a car, there are degrees of repair. Sure, I should get those wiper blades replaced on the old Honda, as they’re streaking a bit when I wipe the dew off in the morning, but they’re not a danger to me… yet. I agree that repairs should be made, and maintenance is important, but as long as the FAA says it’s minor work and the pilots are willing to put their lives on the line, I’m willing to take the chance and get onboard.

Urinals!
We’ve been promised martini bars, bedrooms, and even weight rooms, so I’ll believe it when I see it, but here’s another in the long line of upgrades to the inflight experience:

Airbus announces the option of urinals in onboard restrooms. That will make turbulence so much less … messy.

But not good enough, Airbus: I demand bidets!

Upgraded: Delta-Northwest merger odds
Delta’s pilots have agreed to a deal that could pave the way for the Delta-Northwest merger, previously on the skids. We’ll see. (Thanks to Dr. Vino!)

Upgraded: Them. Not you
Hundreds of thousands of people are stranded in airports, waiting to get out on the next flight. If you’re feeling bitter, you may not want to read about how airlines treat VIP passengers. Not elite frequent flyers. Celebrities. (Thanks to reader J!)

Upgraded: Explanations for the accidental discharge of a pilot’s pistol
Downgraded: The TSA
Still wondering how a US Airways pilot might have fired a weapon mid-flight? Here’s a plausible explanation, in video (or vlog) form. (Enjoy the guy’s amazing Chicago accent, as a bonus.) The post suggests that TSA’s policy — requiring an awkward padlock that can pull the trigger if conditions are right — is to blame. I’m still opposed to guns in the cockpit, but the argument against this particular lock system makes sense. Locks: good. This lock: maybe not. Better training of pilots would help, too, methinks. (Thanks to reader Dave!)

Downgraded: Checked baggage weight
In the U.S., airlines are waging a war against the second checked bag. Across the Pacific, Australian baggage handlers are threatening to refuse to move bags weighing more than 20kg (44 lbs.) Until now, 32kg (70 lbs.) were considered legal weight, and those numbers still appear in the Qantas contract. Most U.S. airlines have a 50 lb. cutoff before overweight charges kick in. But this is different: It’s not about fees, it’s about willingness to transport bags over a given weight, period. Bottom line: As always, pack light! (Thanks to reader Rob!)

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American Airlines grounded its entire fleet of MD-80 jets to check wiring on the planes. As I write this, 325 flights are canceled.

Delta, also with a sizable MD-80 and -90 fleet, canceled several hundred flights for the same reason.

Earlier in the week, United took a number of its 747s out of service, also to perform maintenance checks, “to ensure compliance with federal maintenance standards.” All of a sudden? “The Federal Aviation Administration ordered the temporary groundings after discovering that test equipment used at a South Korea maintenance station was faulty.”

What’s going on?

After Southwest’s brief grounding of more than 40 737-300 jets because of possible damage to the aircraft’s metallic “skin,” the FAA is cracking down on maintenance. The agency “recently launched spot checks of compliance with safety requirements for all U.S. airlines.”

Well, good. After apparently not doing enough spot checking, the agency is playing catch-up. It’s encouraging, I suppose, that the inspections are being done now. But what does that mean for recent flights, like those, say, a week before these recent groundings? Wasn’t maintenance taken seriously before? Were you taking a risk?

There probably wasn’t much risk to passengers, frankly. I always comfort myself with the notion that the pilots are as much at risk as passengers. If they’re willing to get on board, then so am I.

But, as a matter of principle, I prefer that my airlines don’t cut corners and don’t skimp on maintenance. I also prefer that my government’s regulatory bodies do their job and actually keep companies under scrutiny in a clear, defined, and above all consistent manner. That clearly didn’t happen. And that is what needs to be addressed. The sky isn’t falling, but things could sure be better.

The airlines affected are canceling flights wholesale today, though they promise to be back on schedule soon. That’s the immediate bad news for travelers today. The fact that regulation has been haphazard is frankly of greater concern.

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Passenger bill of rights (PBOR) advocates were dealt a blow today, when a federal appeals court overturned New York’s PBOR law. Why? The state law is superseded by the federal Airline Deregulation Act of 1978, so the state legislature is deemed unable to re-regulate the airlines.

The challenge to the New York law was brought by the Air Transport Association of America, the industry trade group that represents many U.S. airlines.

As Sam Glover notes:

While the Second Circuit’s interpretation of the preemption clause in the Airline Deregulation Act of 1978 seems at least reasonable, I have to wonder whether the air travel industry would have been better off losing this case. Now they just look like inhuman jerks who do not want to be bothered with giving trapped passengers some very basic creature comforts. Like air to breathe and a place to pee.

Fixing this at a state level may not work, after all. This will require leadership at the federal level. Write your House Representative. And your Senators, too.

(Thanks to Sam and Lar!)

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