by Tim Wood
Last updated: 1:42 PM ET, Wed May 21, 2014
Photo courtesy of Thinkstock
The news has been scary as of late for airline passengers as it seems the airlines were winning their battle to advertise fares without full transparency.
The U.S. Department of Transportation (DOT) tried to level the playing field a bit today, proposing rules that have myriad implications for air travelers, airlines and travel agents.
After three years of internal study, U.S. Transportation Secretary Anthony Foxx today proposed new consumer protections for air travelers, building on the DOT's previous passenger protection rules issued in December 2009 and April 2011.
"The proposal would require the disclosure of fees for certain basic airline services such as checked baggage, require more carriers to report their performance data to DOT, and codify the Department's definition of a ticket agent to ensure that companies that offer flight search tools and receive a form of compensation are adhering to the Department's consumer protection requirements," the DOT said in a statement today.
"Knowledge is power, and our latest proposal helps ensure consumers have clear and accurate information when choosing among air transportation options," said U.S. Transportation Secretary Anthony Foxx. "The proposal we're offering today will strengthen the consumer protections we have previously enacted and raise the bar for airlines and ticket agents when it comes to treating travelers fairly."
According to the proposed rule, airlines and ticket agents would be "required to disclose fees for certain basic, additional services associated with airline tickets at all points of sale. The proposal defines these services as first checked bag, second checked bag, one carry-on item, and advance seat assignment."
[BLURB]"Knowledge is power, and our latest proposal helps ensure consumers have clear and accurate information when choosing among air transportation options." - U.S. Transportation Secretary Anthony Foxx.[/BLURB]
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The DOT stated that fees for additional services are often difficult to determine when searching for airfares and as a result, many consumers are unable to understand the true cost of travel before purchasing a ticket.
The proposed rules fly in the face of the proposed H.R. 4156, the Transparent Airfares Act of 2014, a proposed law pushed by the airlines lobby but opposed by travel industry experts. In that legislation, the base fare would be allowed to be advertised with government fees displayed separately.
Strong opponents of H.R. 4156 spoke out in support of the DOT's latest efforts.
"While we are still studying in detail the numerous and complex provisions in the DOT's proposed passenger-protections rulemaking, we thank the agency for its thoughtful, pro consumer deliberations," the Business Travel Coalition said in a statement today.
"DOT's actions reinforce the agency's unique role as the only forum - state or federal, judicial or regulatory - where consumer protections exist for airline consumers. What's more, the reckless, anti-consumer H.R. 4156, the Transparent Airfares Act of 2014, is placed in stark relief as it would undermine DOT's authority to police unfair and deceptive airline practices."
The BTC said while the proposed rule is a positive step forward, they want to see stricter rules that would allow travel agents to sell a complete ticket instead of passengers later being hit with ancillary fees, like checked bags and added leg room.
"Consumers will benefit from greater price transparency by the Department's proposal to require airlines to provide real-time pricing of core ancillary services (e.g., for checked bags) wherever they sell their tickets," the BTC said in its statement. "However, DOT must require that ancillary fee information is disseminated to travel agents in an efficient manner that is truly usable by agents and we urge the agency to ensure that consumers can purchase these services from travel agents at the same time as an airline ticket."
BTC president Kevin Mitchell also said that he hopes that the DOT's actions will further illustrate the level of mistruths and spin doctoring being done around H.R. 4156.
"It's a good step and I think the public is truly starting to see how ridiculous the airlines and the lawmakers supporting this are being," Mitchell said. "This lie the airlines are engaging in, it's like a hang glider jumping off a 50-story building. Once you do it, you have to commit to it. There's no going back."
The proposed rule would also expand the pool of carriers that would be required to report information to the Department about their on-time performance, oversales, and mishandled baggage rates. The new threshold would account for any carriers that account for at least 0.5 percent of domestic passenger revenue. That means growing bargain airlines like Spirit, Air Wisconsin, Horizon, Mesa, Pinnacle, Allegiant and Republic would now have to report such information.
[BLURB]"It's a good step and I think the public is truly starting to see how ridiculous the airlines and the lawmakers supporting this are being." - Business Travel Coalition President Kevin Mitchell[/BLURB][/CALLOUT]
Under the proposal, all reporting carriers would also be required to provide similar performance data for their domestic scheduled flights operated by code-share regional partners.
The DOT is also seeking to enhance protections for air travelers by publishing its interpretation of the term "ticket agent" which is used in many laws and regulations. They are specifically pointing toward online ticket agents, or OTAs, such as Expedia, Google and Kayak - making sure they must follow the same consumer protection regulations and information reporting, such as disclosing codeshare partners in the flight itinerary.
Other proposals in the Notice of Proposed Rulemaking would:
• Require large travel agents to adopt minimum customer service standards such as responding promptly to customer complaints and providing an option to hold a reservation at the quoted fare without payment, or to cancel without penalty, for 24 hours if the reservation is made one week or more prior to a flight's departure date. The standards would only apply to travel agencies with revenues more than $100 million, a specification that is good news to smaller agents.
• Require carriers and ticket agents to disclose any code-share arrangements on initial itinerary displays on their websites
• Prohibit unfair and deceptive practices such as preferentially ranking flights of certain carriers above others without disclosing the bias in any presentation of carrier schedules, fares, rules, or availability.
There are some who see part of the proposed rules as the DOT overstepping and overreaching.
""The basic idea is excellent and I like the rest of the proposals, especially making the smaller airlines more accountable to reporting, but the transparency with all the optional charges, I'm a little concerned about how it can be implemented efficiently," said travel consumer advocate Ed Perkins. "The airlines can do that, but I'm not sure how an Expedia or a Kayak can do that. I'm going to have to see how the folks who have to implement this react before I can really support it."
Travel industry analyst Henry Harteveldt, founder of Atmosphere Research Group, took an even stronger stance. Like Perkins, he applauds a lot of what is in the proposal but specifically takes issue with the idea of disclosing all optional fees upfront.
"I appreciate that the DOT is trying to look at this in a black and white manner. The advocacy is important, but the reality is it's a million shades of gray with all the optional services," Harteveldt said. "It's important to state that there may be fees associated. But the DOT is getting involved at a granular level. It's almost like they want to tell the airlines how to arrange the clothes in their drawer."
Harteveldt said that consumer frequent flyer status, whether they own an airline credit card and their specific itineraries will all come in to play in displaying those rates.
"It's extremely complex. No airline is approaching all this in the same way. This is optional stuff, so I don't think the DOT should get involved in oversight here," he said. "What happens when they start offering sales on advance seat assignments or waive checked bag fees if you book by a certain time? There's so many factors here that you end up trying to do something for the lowest common denominator."
[BLURB]"It's important to state that there may be fees associated. But the DOT is getting involved at a granular level. It's almost like they want to tell the airlines how to arrange the clothes in their drawer."- Henry Harteveldt, founder of Atmosphere Research Group[/BLURB][/CALLOUT]
This proposed rule addresses several additional airline customer service improvements recommended by two Federal advisory committees - the Future of Aviation Advisory Committee (FAAC) and the Advisory Committee on Aviation Consumer Protection (ACACP).
The DOT projects the proposals will cost airlines $5.1 million to adopt in the first year, and $24.7 million over the next decade. But they said the greater good of consumer protection justifies the cost.
Perkins said above all, he found the timing of the announcement to be quite ironic.
"The DOT knows the airline lobby is trying to strong-arm laws through Congress that will cancel out their rules and make airfare disclosure much less transparent," he said. "So the timing is interesting. They're reasserting themselves as the true advocates here."
The DOT established a 90-day comment window for industry and public discourse. Comments can be filed online at www.regulations.gov. Refer to docket DOT-OST-2014-0056. Or by mail, Docket Management Facility, U.S. Department of Transportation, 1200 New Jersey Ave., SE, Room W12-140, Washington, DC 20590-0001.
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