Video: Lost luggage to result in refund?

Matt Rourke  /  AP
The Department of Transportation is proposing a new rule this year requiring automatic refunds for delayed luggage. The major airlines, which collect more than $3.3 billion in bag fees a year, oppose the idea.
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updated 4/14/2011 1:48:16 AM ET 2011-04-14T05:48:16

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

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

The airlines charge $15 to $35 to check a bag, $20 to $45 to check a second and more for the third and beyond. Most airlines won't provide a refund, even if it takes days to return a passenger's suitcase. They say the rule would raise prices for everyone.

"I am going to pay you $25 to deliver my bag to X destination, it should be there waiting," says Joseph S. Rosenberg of Roanoke, Va., who had to buy a suit at the last minute this week after an airline lost his bag on a flight to a business meeting.

"They should return the fee for failure of service," says Rosenberg, whose luggage arrived after his meeting.

Transportation Secretary Ray LaHood has implemented a series of rules aimed at protecting passengers. Last year, the government limited how long passengers can sit on planes during ground delays to three hours.

Now the Transportation Department wants to make airlines pay passengers more when they're bumped off their flight, allow passengers to cancel reservations within 24 hours of booking with no penalty and require better disclosure of fees and surcharges.

Airlines prefer vouchers
Under existing 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, a passenger is out of luck.

Two airlines provide a credit — although not a cash refund. Alaska Airlines offers a $20 credit for future travel or 2,000 frequent flier miles if luggage is not at the claim area 20 minutes after the plane parks at the gate. Delta gives a $25 credit for each bag if it doesn't arrive within 12 hours. Both airlines require a claim form.

Airlines prefer handing out vouchers instead of cash. The credits mean that a passenger will either bring them additional business or just never redeem the voucher, costing the airline nothing. Airlines often offer vouchers when they look for volunteers to give up seats on overbooked flights.

U.S. airlines lose bags at about half the rate they did in 2007, before the implementation of checked luggage fees. People are carrying on their bags, making the airlines' job easier. Still, last year, more than 2 million bags didn't arrive on the same flight as their owner.

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"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," says Nick Gates, who oversees baggage products for SITA, an aviation technology provider.

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

What does 'timely' mean?
Thomas says it costs the airlines $15 to $20 per bag to cover fuel and handling costs. A delayed bag costs an average of $100 to return to its owner, Gates says.

The new DOT rule would require airlines to refund the fee if a bag is lost or not delivered in a "timely" manner. Exactly what "timely" means is yet to be determined. When the DOT asked for public comment, one suggestion was that a bag be considered late if it isn't delivered within two hours of the passenger's arrival.

The government will release details of the rule later this month but has yet to say when it would go into effect. The rule will address baggage as well as other proposed changes, including payments to bumped passengers, no-penalty cancellations and improved fee disclosure.

The Air Transport Association of America, which represents most of the major airlines, told the DOT that whether to charge baggage fees — and whether to refund them — is a competitive point best left to the marketplace. Automatic refunds, the group says, will increase costs and lead to higher prices for all passengers.

But the American Society of Travel Agents told the DOT that because airlines regularly charge for checked baggage, "it is only reasonable" that passengers are offered a refund for delayed bags.

"Absent such a requirement," the group says, "there is little incentive to assure timely delivery."

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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