Don't forget to read the fine print…
As airline change fees and travel insurance have grown to billions of dollars in recent years, consumer advocates are urging airlines to allow more flexibility in canceling tickets.
They are also warning travelers to read the fine print on their insurance policies.
Change fees, which are typically $200 per ticket for domestic flights, totaled nearly $2.6 billion last year, according to the Bureau of Transportation Statistics.
Travelers risk change fees because refundable tickets are usually much more expensive than restricted fares. Among the top 100 most popular pairs of cities for U.S. flights, a refundable ticket averages 3½ times the cost of a restricted ticket, according to a study by the National Consumers League.
"These are fees that have gone up and up and up in recent years," John Breyault, the league's vice president for public policy.
Sally Greenberg, the league's executive director, said after taking her son to Boston for a baseball game that got rained out and rescheduled for the next day, she bought new tickets to return to Washington because change fees were prohibitively expensive.
"We've lost hundreds and hundreds of dollars," said Greenberg, who called it "a pretty lousy" business model.
Change fees aren't universal. For example, Southwest Airlines doesn't charge them.
David Berg, general counsel for the industry group Airlines for America, said change fees penalize the people whose plans change, rather than all travelers. He noted that airlines made an average profit of 37 cents per passenger last year, but would have lost $8 per passenger without ancillary fees, such as changing tickets or checking luggage.
"The question is really, what is fair?" Berg said. "Is it fair to raise prices for everyone, or is it fair to charge fees for services of people that they need or want?"
The Transportation Department's Advisory Committee for Aviation Consumer Protection studied change fees at a recent meeting. Blane Workie, the department's deputy assistant general counsel for the Transportation Department, said regulators can't challenge prices under the legislation that deregulated airlines in 1978, but it can investigate unfair or deceptive practices.
"We don't have the authority to regulate the price," Workie said.
The league, for its part, recommends:
•Clear language for insurance policies sold through airline websites.
•Tiered change fees depending on when a ticket is canceled, with no charges 10 days or more before a flight.
•Allowing travelers to transfer tickets to other people without a fee.
Against this backdrop, sales of travel insurance totaled $1.9 billion last year, up from $1.3 billion in 2006, according to a survey for the industry group U.S. Travel Insurance Association. About one in four customers got insurance from airlines and online travel agents, according to the survey.
A Transportation Department rule in April 2011 required travelers to choose whether to take the insurance, rather than automatically be included.
But Breyault said travelers can feel pressured to buy the insurance because a clock is often ticking to buy the plane ticket. The rush can prevent travelers from reading the fine print that policies won't pay for cancellations based on pre-existing medical conditions, pregnancy, amateur sports training or being fired.
"These rising fees are leading consumers to access a product that they wouldn't otherwise want to buy," Breyault said. "Our conclusion, based on our research, is that it appears they are not being marketed to them in a fair way."
The consumers group said travelers don't know where to complain when insurance doesn't pay. The National Association of Insurance Commissioners, which represents state regulators, said 64 complaints about travel insurance have been resolved from 2010 through Nov. 25, 2013.
Linda Kundell, spokeswoman for the travel insurance association, said the policies typically allow customers to cancel within 10 to 14 days if they change their minds. She said insurers typically waive the medical exemptions so long as the customer was healthy enough to travel when buying the ticket.
"It is travel insurance," Kundell said. "It's regulated by every state, so it has to comply with each single state."
Travelers with complaints should first try an appeal with their insurer, and then contact their state insurance regulator, she said. Travelers are becoming more aware of the insurance and are generally satisfied with their policies, which they say give them peace of mind, she said. State regulators sided with insurers in 75% of the cases resolved in 2011, the most recent year available, she said.
"Every time there is some kind of natural disaster or snowstorm there tends to be increased interest in travel insurance," Kundell said.