Ancillary Fees, Anti-Trust and Credit Card Hacking in Hotels

Locations in this article:  New York City, NY

Travel columnist Joe Sharkey of The New York Times sat down with Peter to discuss the latest in travel news.

Joe Sharkey: Peter, you were recently talking about Ireland. I highly recommend if you have the time getting on a horse, and just sort of trekking through Ireland. If you want to get Ireland truly in your soul, get on horseback, and get up to Connemara in West Ireland, and just lose yourself in the magnificent bogs, mountains, lakes, and the ocean. It’s just marvelous. Anyway, about those airline fees …

Peter Greenberg: You bet I want to talk about airline fees. Spirit Air has begun kicking butt with that up to $45 charge for carry-on bags. And, of course you have Ryanair in Europe still floating around the idea of selling standing-room only seats.

JS: I think that that’s baloney. They refer to [Ryanair CEO] Mr. O’Leary as, Mr. Oh, Really? I don’t buy that. I don’t think any regulator is going to go for standing-room-only seating, but who knows?

Spirit Airlines planePG: I would not want to be a gate agent at Spirit Air. I sure hope they have their health insurance paid up because they’re going to get beaten up.

JS: I’m so skeptical of Spirit. It offers ultra-low fares for ultra-low service, but it’s also way up at the top at per passenger in racking in fee revenue. They rack in an average of $28 per passenger in ancillary fees. Not just baggage fees, but whatever else. If they open the door for you, they charge you. The consulting firm IdeaWorks released figures that last year, global airlines—led mostly by US carriers—brought in $13.5 billion in ancillary fee. That’s 48 percent over the previous year. I don’t know how you really sort of grasp that concept, but they’re just hitting you with fees right and left.

PG: I’m not opposed to an airline making a profit, but the nickel-and-dime aspect of it is killing me.

Learn more about fees: Airline Fee Analysis: Southwest Vs. Spirit.

JS: You know they are making profits. This week all of the U.S. carriers are reporting their second-quarter earnings and all of a sudden it’s happy days are here again. We’re looking at Delta profiting more than $400 million in the second quarter. US Air $400 and some million. They’re all posting numbers like that compared with pretty significant losses last year. If you look at it just from the industry point of view, the airline industry is doing just super right now. But there is not enough focus on when it means for consumers. Anyone who travels knows all the airplanes are full to the point where they’re uncomfortable; bumping is up. I think that needs to be a story in the months and years to come.

Suitcase full of moneyPG: Well I’m waiting for the U.S. Justice Department to stun me by actually filing an anti-trust case. I’ve not seen one in a decade.

JS: No, and it’s going in the opposite direction as you know. British Airways and its partners, American and Iberia, have just gotten anti-trust immunity. I mean they’re good airlines, and they’re providing very good service. But I think these questions need to be raised about the arguably anti-competitive activities.

PG: Just in keeping with your good news theme, 38 percent of the credit-card hacking cases last year involved hotels.

JS: Did that surprise you?

Learn more about anti-trust: British Airways-Iberia Merger Raises Competition Concerns.

PG: Yeah, it did.

JS: Apparently starting in about 2008 the worldwide hacker networks, including the ones in Russia and elsewhere, found out that there were soft targets in hotels. Even though hotel companies have sophisticated technology, the individual hotels often are in a position where they’ve had to spend a tremendous amount of money. If you own a hotel you have to spend a lot of dough on improving Wi-Fi, on improving high-definition television, in-house technology, and point-of-sales system. In the past two years, hotel owners have been in a rough time. They haven’t really spent as much money upgrading those systems. The hackers realize that, and they’ve been banging the hotels at a rather shocking rate.

Hotel signPG: Well they haven’t been banging hotels. They’ve been banging consumers.

JS: Well banging credit-card companies actually. But I was a victim of this. You’ve got to check your credit-card accounts rather frequently, and look at all these little charges. We’re so used to using our credit card for Starbucks that I got into the habit where I wasn’t checking my account as regularly.

PG: You know what it is they get you with these little charges.  You see, every credit card company like Visa or MasterCard that has floor limits. The hackers know this, so as long as they make a charge under $25 it’s going to get approved.

JS: Little tiny charges, right.

Learn more in our Travel Safety & Security section.

PG: So they are going to start doing these tiny charges. If you don’t look at your statement, wow, do you get hosed.

Hotel signJS: I can’t stress enough, you’ve got to start checking those little charges. We’ve gotten so comfortable with using these credit cards. I was dumb enough that I got banged for items like iTunes. I don’t have an iTunes account. How did they run up $400 on iTunes?

PG: Here’s another scenario: in New York City cabs, you use your credit card to swipe. I started checking my statement, and on a couple of my cab rides, I got charged double.

JS: Do you think that was by the cabbie or by a hacker?

PG: I don’t know. I always ask for a paper receipt now. I want to be able to match the receipt against what it says on the screen or otherwise it is my word against theirs.

JS: That’s a good idea. Who knew that anyone would ever have sympathy for a credit-card company? But they’re really getting nailed on this stuff. They’re starting to lean on the retailers and hotel companies to keep a system in place.

Learn about Travel Insurance Limits & Why You Should Avoid Ryanair.

PG: Let me give you one warning. I tried for convenience sake to have so many of my charges automatically billed to my credit card. Whether it’s my cable TV, or my E-ZPass on the freeway. Well if you call your credit-card company and say, “I want to dispute one of these charges,” they might actually cancel your card, and cancel an account number, and the next thing you know you’re defaulting on all your pre-approved expenses. It’s a mess.

JS: That is exactly what happened to me. When I complained about unauthorized charges the first thing they do is they change your credit card number. I forget who I have on automatic pay, so items like the cable bill bounced.

PG: Your credit card starts playing racquetball. Joe Sharkey and I are going to be out there charging people just to talk to us now. It’s a new ancillary fee.

JS: There you go. I like that one.

By Peter Greenberg for PeterGreenberg.com.

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