The domestic airline industry as a whole is in the process of re-imagining its business model, moving away from one in which the price of a ticket covers the basic cost of air transportation to one in which optional fees account for much of its profits.
More than 115 of the nation’s largest travel companies and organizations today launched Open Allies for Airfare Transparency, an industry-wide effort to urge major airlines to share all of their fare and ancillary fee information through the distribution systems they currently use and not to circumvent those systems through new, untested, and potentially costly “direct connect” approaches.
DOT notes that there’s been an industry-wide trend (well documented on this site) to “unbundle” fares by charging fees for individual services provided in connection with air transportation. New rules are needed to ensure adequate notice of such fees for optional services to consumers.
In a dramatic effort to gather passenger comments about the newest rulemaking proposed by the Department of Transportation (DOT) the government has partnered with Cornell University and created Regulationroom.org.
The most important facet of the proposed DOT rules, from my point of view, is the section dealing with airline ticket pricing and fees. This rule will change the way you buy airline tickets so that you can compare the true costs of various flight options.
The airlines have created one of the business world’s most complex pricing structures. Maintaining fee obscurity was a virtue as far as airline profits go, but a vice when the goal is consumer transparency.
There is a battle brewing between airlines and their main GDS distribution systems. There are two main facets to this struggle. Airlines don’t want to pay anyone any commissions for any transactions (their intent is to have sales agents pay them for access to fares) and they want to keep fees hidden from consumers and maintain control of prices, doling them as out, as needed by consumers, rather than allowing a robust competition between airlines on total cost.
The European Union’s new regulation on airline ticket transparency, which requires airlines to quote a fare including all taxes, fees and surcharges, went into effect Nov. 1. How will the new rules affect air travelers here and in Europe? I asked Meglena Kuneva, the EU commissioner for consumer affairs.