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Senators grill airline officials about fees for seats and checked bags
Members of a U.S. Senate subcommittee took aim at airline executives Wednesday for using an expanding menu of fees to charge customers for early boarding, better seats and other comforts that used to be part of the ticket price.
Sen. Richard Blumenthal, D-Conn., said he thinks the federal government should review and perhaps fine the airlines for their use of what he called junk fees.
Blumenthal, the chairman of the Senate Permanent Subcommittee on Investigations, said seat fees were pure profit for the airlines because they don’t have to create new seats or incur other expenses by allowing customers to pick where to sit.
Some senators expressed frustration during Wednesday’s hearing when airline executives could not explain how they set the amount of various fees. They said the vagaries of airline pricing make it hard for consumers to budget for trips.
“We’re all captives on your airplanes at a certain point. You just say, ‘You want to pick seat? We’re just going to charge you some random amount more,’” Sen. Maggie Hassan, D-N.H., said. “It would be good if you guys could be transparent about what you do and why.”
The fees don’t seem to be discouraging anybody. Americans are flying more than ever.
The Transportation Security Administration reported screening nearly 3.1 million travelers at airports around the country on Sunday, a new single-day record. The 15 busiest days in TSA history have all occurred this year, with traffic at airport checkpoints up 5% over 2023.
Airline executives bristle at the term “junk fees,” and argue they are merely giving consumers what they want: choices.
“Our customers who prioritize affordability have the option to choose a lower-fare product and, in doing so, opt out of paying for additional services that they do not want,” Andrew Nocella, the chief commercial officer of United Airlines, said in testimony prepared for the panel’s hearing. “But we also have customers who seek more services, and they retain the ability to choose the services they value, for an incremental fee, like a seat with extra legroom or checked bags.”
Airlines have been adding fees on desirable seats to take advantage of increasing demand.
The airline executives took offense at the charge that they are gouging travelers.
“It has never been more affordable to fly,” said Steve Johnson, chief strategy officer for American Airlines.
Transportation Department figures indicate that airfares have fallen by about one-third since 2000 when taking inflation into account. However, those figures do not include fees.
Senators said fees should be described clearly during the ticket-buying process. The executives said their airlines do that.
Some subcommittee members also criticized airlines for the way they enforce fees.
Sen. Josh Hawley, R-Mo., sparred with executives of Frontier Airlines and Spirit Airlines, which paid employees $26 million in bonuses for spotting customers whose carry-on bags were too big to fit under a seat. The passengers were forced to pay a fee — up to $77 on Spirit and $99 on Frontier — to use an overhead bin.
“If people want to know why it’s such a terrible experience to fly, this is news for them today,” Hawley told the airlines executives Wednesday. “Your airlines are paying millions of dollars to your employees to harass people who have already paid!”
Frontier Chief Commercial Officer Robert Schroeter and his counterpart at Spirit, Matthew Klein, said ensuring that people follow the rules was a matter of fairness to all passengers.
When Hawley asked why bag fees may vary from one customer to another, Schroeter said Frontier must cover its costs.
“Overall, our job is to generate the most revenue we can so we can keep profitable as an airline,” he said.
U.S. airlines raised more than $7 billion from fees on checked bags last year, with American Airlines and United Airlines leading the pack. They scooped up another $1 billion in ticket-change and cancellation fees, although that was about one-third of what they raised before the coronavirus pandemic, when the biggest airlines dropped change fees.
Exact figures on other types of fees are hard to determine, but the Senate panel reported last week that United, American, Delta Air Lines, Frontier and Spirit collected a combined total of more than $12 billion in seat fees between 2018 and 2023. That included charges for things such as more legroom or an aisle seat near the front of the plane.
Airline fees have been a frequent target of criticism by the Biden administration, all the way up to President Joe Biden.
A Transportation Department rule that took effect in October requires airlines to make automatic cash refunds for tickets and fees when flights are canceled.
The airline industry is suing to block another regulation requiring more prominent disclosure of baggage and cancellation fees. An appeals court has blocked that rule, and its fate is uncertain under President-elect Donald Trump. Blumenthal asked the five executives to drop the lawsuit. None agreed to do so.
The airline industry and Transportation Secretary Pete Buttigieg have continued to fight over fees and other regulations, even after the November election.
Meta to build $10 billion AI data center in Louisiana
NEW ORLEANS | The largest artificial intelligence data center ever built by Facebook’s parent company Meta is coming to northeast Louisiana, the company said Wednesday, bringing hopes that the $10 billion facility will transform an economically neglected corner of the state.
Republican Gov. Jeff Landry called it “game-changing” for his state’s expanding tech sector, yet some environmental groups have raised concerns over the center’s reliance on fossil fuels — and whether the plans for new natural gas power to support it could lead to higher energy bills in the future for Louisiana residents.
Meanwhile, Elon Musk’s AI startup, xAI, is expanding its existing supercomputer project in Memphis, Tennessee, the city’s chamber of commerce said Wednesday. The chamber also said that Nvidia, Dell, and Supermicro Computer will be “establishing operations in Memphis,” without offering further details.
Louisiana is among a growing number of states offering tax credits and other incentives to lure big tech firms seeking sites for energy-intensive data centers.
The U.S. Commerce Department found that there aren’t enough data centers in the U.S. to meet the rising AI-fueled demand, which is projected to grow by 9% each year through 2030, citing industry reports.
Meta anticipates its Louisiana data center will create 500 operational jobs and 5,000 temporary construction jobs, said Kevin Janda, director of data center strategy. At 4 million square feet (370,000 square meters), it will be the company’s largest AI data center to date, he added.
“We want to make sure we are having a positive impact on the local level,” Janda said.
Congressional leaders and local representatives from across the political spectrum heralded the Meta facility as a boon for Richland parish, a rural part of Louisiana with a population of 20,000 historically reliant on agriculture. About one in four residents are considered to live in poverty and the parish has an employment rate below 50%, according to the U.S. census data.
Meta plans to invest $200 million into road and water infrastructure improvements for the parish to offset its water usage. The facility is expected to be completed in 2030.
Entergy, one of the nation’s largest utility providers, is fast-tracking plans to build three natural gas power plants in Louisiana capable of generating 2,262 megawatts for Meta’s data center over a 15-year period — nearly one-tenth of Entergy’s existing energy capacity across four states.
The Louisiana Public Service Commission is weighing Entergy’s proposal as some environmental groups have opposed locking the state into more fossil fuel-based energy infrastructure. Meta said it plans to help bring 1,500 megawatts of renewable energy onto the grid in the future.
Louisiana residents may ultimately end up with rate increases to pay off the cost of operating these natural gas power plants when Meta’s contract with Entergy expires, said Jessica Hendricks, state policy director for the Alliance for Affordable Energy, a Louisiana-based nonprofit advocating for energy consumers.
“There’s no reason why residential customers in Louisiana need to pay for a power plant for energy that they’re not going to use,” Hendricks said. “And we want to make sure that there’s safeguards in place.”
Public service commissioner Foster Campbell, representing northeast Louisiana, said he does not believe the data center will increase rates for Louisiana residents and views it as vital for his region.
“It’s going in one of the most needed places in Louisiana and maybe one of the most needed places in the United States of America,” Foster said. “I’m for it 100%.”
Environmental groups have also warned of the pollution generated by Musk’s AI data center in Memphis. The Southern Environmental Law Center, among others, says the supercomputer could strain the power grid, prompting attention from the Environmental Protection Agency. Eighteen gas turbines currently running at xAI’s south Memphis facility are significant sources of ground-level ozone, better known as smog, the group said.
Patrick Anderson, an attorney at the law center, said xAI has operated with “a stunning lack of transparency” in developing its South Memphis facility, which is located near predominantly Black neighborhoods that have long dealt with pollution and health risks from factories and other industrial sites.
“Memphians deserve to know how xAI will affect them,” he said, “and should have a seat at the table when these decisions are being made.”
GivingTuesday estimates $3.6B was donated
this year
NEW YORK | U.S. donors gave $3.6 billion on Tuesday, an increase from the past two years, according to estimates from the nonprofit GivingTuesday.
The Tuesday after Thanksgiving, now known as GivingTuesday, has become a major day for nonprofits to fundraise and otherwise engage their supporters each year, since the 92nd St Y in New York started it as a hashtag in 2012. GivingTuesday has since become an independent nonprofit that connects a worldwide network of leaders and organizations who promote giving in their communities.
“This just really shows the generosity, the willingness of American citizens to show up, particularly collectively,” said Asha Curran, CEO of the nonprofit GivingTuesday. “We are just seeing the power of collective action and particularly collective giving over and over and over again.”
This year, about 18.5 million people donated to nonprofits and another 9.2 million people volunteered, according to GivingTuesday’s estimates. Both the number of donors and the number of volunteers increased by 4% from the group’s 2023 estimates.
“For us, it’s not just about the number of dollars,” Curran said. “It’s about the number of people who feel like they have agency over the way their communities progress forward into the future.”
The nonprofit GivingTuesday estimates the amount of money and goods donated and the number of participants using data from donor management software companies, donation platforms, payment processors and donor-advised funds. Curran said they are purposely conservative in their calculations.
Nonprofits in the U.S. raised $3.1 billion in both 2022 and 2023 on GivingTuesday. That mirrored larger giving trends where the overall amount of donations dropped in 2022 and mostly held steady in 2023 after accounting for inflation.
It’s never easy to predict current giving trends, but Una Osili, associate dean at the Indiana University Lilly Family School of Philanthropy, said there were economic forces pushing in both directions.
“At the very same time, there’s a lot of uncertainty, especially around prices, the cost of living, the supermarket toll that people are expecting to continue even though inflation has moderated,” she said.
Donating or volunteering with nonprofits aren’t the only ways people participate in their communities. Many give to crowdfunding campaigns, political causes or support people directly in their networks. But tracking charitable donations is one way that researchers use to understand people’s civic engagement.
“This country is undeniably in a lot of pain and very divided right now,” Curran said. “And so to have a day that felt as hopeful and as optimistic as yesterday did, I’m sure was not only comforting to me, but to many, many millions of people.”
—From AP reports
