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July 23, 2014 BE_Post, Blog No Comments

1. Read the passage about the recent changes in airline fees and find the most appropriate definitions for the words in bold:

1.   scrutiny: a. testing, b. criticism, c. close examination

2.   unbundled services: a. new services, b. unsupervised services, c. services charged separately

3.   frenzy: a. wild excitement, b. mental agitation, c. mania

4.   transparent: a. see-through, b. obvious, c. fair

5.   proliferation: a. rapid growth, b. development, c. implementation

 

Answers: 1c, 2c, 3a, 4b, 5a

U.S. carriers have been put through severe scrutiny lately, the reason for it being airline fees charged on unbundled services. The fees are obviously a goldmine, considering that carriers are reported to have made around USD 7.9 billion in baggage fees, reservation change fees and cancellation charges in 2008 and 2009. However, predicted to be “soon charging for oxygen”, U.S. airline fees are not only testing the travelers’ patience. This time the fee frenzy has grabbed the attention of the House Subcommittee on Aviation.

During the hearing held in July 2010 the subcommittee considered a U.S. Government Accountability Office report on the fees charged for optional services. It was stated that airlines fail to disclose fees to their customers in a way that is completely transparent and that the proliferation of such fees, as well as the manner in which they are presented, is a serious misleading factor.

Another irritating fact the government has not failed to mention is the tax loophole that makes airline fees non-taxable (http://boardingarea.com/blogs/flyingwithfish/2010/01/27/irs-states-that-excess-baggage-fees-are-not-taxable/ )

If the legislation comes through, the government expects an increase in transparency of hidden fees for airline ticket sales, taxable fees and comprehensive data collection tools regarding the handling of lost, stolen or mishandled baggage.

*Read more about the confusion airline fees are creating: http://www.nytimes.com/2010/08/10/business/10fares.html?src=busln

2. Watch the CNN report on the subcommittee hearing on airline fees (http://www.cnn.com/2010/TRAVEL/07/14/house.airline.fees/index.html?eref=rss_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fcnn_topstories+%28RSS%3A+Top+Stories%29&utm_content=Google+Feedfetcher )and answer the following questions:

1.   According to the U.S. Department of Transportation, why doesn’t the published airfare represent the actual cost of travel? (answer: Fees used to be included in the ticket price are now charged separately)

2.   How does this lack of transparency affect consumers? (answer: They are unable to compare fare offerings and make rational economic decisions based on the full cost of travel)

3.   What does the U.S. Department of Transportation want airlines to change about how they present fees to the public? (answer: They want consumers to be able to acquire complete information on the full cost of travel through clear and straightforward publishing of airline fees)

4.   Why does Rep. James Oberstar call airline fees “a back door price increase” and “back door financing”? (answer: He explains that once airlines call a service “a fee”, it is no longer taxable, so airlines are evading taxation from certain units of government)

5.   Why does Rep. James Oberstar insist on airlines “exercising self-restraint”? (answer: Because if fees continue to increase and proliferate, a public outcry will eventually lead to a legislation that airline executives will not like)

3. Look through the partial transcript of Rep James Oberstar's address and use your listening comprehension skills to fill in the gaps:

You can ……………………. (impose) these taxes with impunity by calling them a fee. That's just………………………….financing (answer: back door).If they don't…………………………….. (answer: exercise restraint), there is going to be a continuing …………………. (upcry) from the traveling public. And you're going to have some kids of ………………………. (answer: regulation) that you won't like. So if you don't exercise……………………. (answer: self-restraint), you're going to get a push-back from the traveling public, they will come to the Congress and the Congress will act. It's not a threat – it's history.

4. Listen to David Ridley speak about Southwest's fee policies and fill in the gaps with the appropriate words from the video, substituting their synonyms in italics:

Our (1. most important, priority) philosophy at Southwest Airlines is to not charge customers for things they have historically received for free. That is why at Southwest we are (2. feel obligated to follow through with) to low fares with no hidden fees. What you see is what you pay. Our policy of not nickel and diming is not a (3. an innovative strategy or trick to promote a business). It's good business and it makes our people feel better about who they are and what they do.

Answers: 1. overriding, 2. committed, 3. gimmick

5.Listen to Kevin Mitchell of Business Travel Coalition voice his opinion on the matter and determine whether these statements are true or false:

1)   Consumers lacking information are es economically trapped as they would be physically trapped in a 7-hour long tarmac delay (t/f? ) (answer: T)

2)   The need for consumer protection in this industry is acute, but doesn't need to be burdensome (t/f?) (answer: T)

3)   Airlines should be expected to make a first, potentially suicidal move towards decreasing their airline fees (t/f?) (answer: F)

4)   A reasonable measure of government regulation is needed to motivate airlines in decreasing their fees (t/f?) (answer: T)

6.   Use your active vocabulary in the following sentences:

1)   Passengers are never happy about airlines' …………………………………………….. , but the recent increase in airline fees has caused a major public…………………………… (answer: nickel and diming, upcry)

2)   The ………………………………………. of fees with some low-budget carriers can not be justified.  (answer: proliferation)

3)   In the course of the talks both sides agreed that fee presentation for………………………………. services should be more………………………………. (answer: unbundled, transparent)

4)   Many airline executives insist that Southwest's no-fee policy is only a………………………………. to attract more customers. (answer: gimmick)

5)   The company's …………………………………. policy has been subject of public…………………………….. (answer: scrutiny)

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