PHOTO: New DOT rules will help passengers know more about airlines. (Photo courtesy of Thinkstock)
NOTE: This story was edited at 4:33 p.m. ET Oct. 19 to include comments from the American Society of Travel Agents
The U.S. Department of Transportation late Tuesday unveiled a series of new rules aimed at making airlines – and the way they go about their business – more transparent to consumers.
The government is calling the initiative the most important set of consumer protections from the airline industry in years.
"The actions we're announcing today will help consumers know how airlines are performing, will make sure that consumers don't have to pay for services they don't receive and will help consumers find the best flight options for them," Jason Furman, chairman of the White House Council of Economic Advisers told reporters on a conference call.
Said Transportation Secretary Anthony Foxx: “The goal is to have a more robust consumer marketplace.”
The new rules, to go into effect in January of 2018, require airlines to refund baggage fees if luggage is “substantially” delayed; prohibits online travel agents from “undisclosed biasing of flight offerings on behalf of certain airlines,” meaning agents cannot offer flights based on relationships, financial or otherwise, with certain carriers; and requiring carriers to report how often they lose or damage wheelchairs.
The DOT said it will also introduce separate rules going forward regarding “surprise airline fees” and rules that would prevent the airlines from keeping some fare information only for their proprietary websites and not sharing all fares and flight options with online travel agencies.
“We just want it to be more transparent,” Foxx said.
The new rules drew an immediate rebuke from Airlines For America President Nick Calio.
“It would be difficult to find an industry that is more transparent than the airline industry; customers always know exactly what they are paying for before they buy,” Calio said in a statement. “Dictating to the airline industry distribution and commercial practices would only benefit those third parties who distribute tickets, not the flying public.”
U.S. Travel Association President and CEO Roger Dow said in a statement that the travel community is grateful that the administration continues to shine a light on many of the more frustrating issues that ail the air travel experience in the U.S. – but hopes the DOT goes further.
“We hope that post-election, the discussion broadens to policy options that treat the root cause rather than just the symptoms—namely, the lack of choices and air service for far too many flyers. Executive rulemaking is one thing, but Congress must do its part to bring air travel in the U.S. back on par with the rest of the world, and we certainly look forward to continuing that dialogue with leaders across the political spectrum,” Dow said. “In the meantime, the administration has the ability to benefit consumers, increase connectivity and spur competition by protecting Open Skies agreements and approving the entry of new low-cost competitors like Norwegian Air International into the U.S. aviation market.”
The American Society of Travel Agents President Zane Kerby released his own statement, saying:
“On the whole, the latest round of DOT consumer protection rules will benefit the flying public and the travel agency community who serves them. In particular, we appreciate that proposals related to code-share disclosure and online biasing conform to existing Department guidance and do not add substantial new disclosure burdens to agencies. We also applaud the Department for setting aside unwarranted proposals on disclosure of carriers marketed and not marketed in ticket agents’ online displays and of travel agency incentive payments.
“At the same time, we are disappointed that DOT is further delaying regulation on the disclosure of fees for basic ancillary services at all points of sale, an issue it has been studying for over five years. We have long urged the Department to strike a decisive blow for consumers by requiring full transparency and ‘transactability’ for airline ancillary fees
“We strongly reject airline arguments that such regulation ‘would only benefit those third parties who distribute tickets, not the flying public.’ Travel agents advise the traveling public. Airlines and their surrogates argue that disclosing the full cost of travel is bad for the consumer. Following that logic, an airline should remove all ancillary fee information from its own website in order to better serve customers.
In the unregulated environment in which we now operate, airlines have reaped billions in ancillary fees – $18.6 billion in 2015 according to IdeaWorks. We believe in the free market, and in the airlines’ prerogative to price their services. However, withholding important information from consumers who engage the services of a professional travel agent harms the traveling public. Although airline websites have sold tickets since the 1990s, today over 50 percent of consumers purchase their air travel through a travel agent. These consumers should be as informed and empowered as those who buy directly from airlines, and while some progress has been made serious challenges remain in terms of agency access to ancillary fees.”