Coal for consumers this Christmas from airlines and regulators

by Charlie Leocha on December 13, 2012

© Miamism Flickr Creative Common

This festive holiday season is starting off dismally for consumers. Delta announced its purchase of 49 percent of Virgin Atlantic Airline. US Airways made a merger offer to American Airlines (AA). And, the Department of Transportation (DOT) delayed its largest consumer protection rulemaking by four months.

There is not much good to say about any of these developments. Consumers are getting the short end of the straw in every case.

Let’s look at the mergers. I am afraid that Congress, DOT and the Department of Justice will approve the Delta buyout and their request for joint venture status with Virgin Atlantic and approve the merger of AA and USAir.

Virgin Atlantic has long been a darling of consumers. They pioneered more affordable business class seats that eventually forced other airlines to upgrade their transatlantic service. They were at the forefront of creating excellent inflight entertainment and using the better entertainment as an additional benefit to flying with Virgin. Plus, spirited Virgin Atlantic was always a thorn in the side of British Airways and kept transatlantic airfares lower than they would have been without Virgin.

The Delta buyout of half of Virgin Atlantic eliminates the most formidable competitive entity on transatlantic routes. If Delta gets antitrust immunity and permission to run a joint venture with Virgin Atlantic, competition will drop. Remember, Delta already operates joint ventures with Air France and KLM. It will give Delta and its partners about 25 percent of the transatlantic lift.

This is good for Delta shareholders, but bad for consumers. The loss of competition will mean increased prices, probably fewer flights and poorer customer service.

The other industry development is the rumored merger of US Airways with AA. A proposal to merge has been made by US Airways. If this merger is completed, consumers will find legacy airline competition reduced to three airlines. That is a number that is used to define oligopolies in anti-competitive literature.

Of course, the airlines will claim more competition, more flights, no reduction of flights to any hub and better customer service. But, when will the government learn that these promises are hollow.

We heard the same stories from Delta when they wanted to merge with Northwest. Now, Cincinnati Airport is a wasteland and fares in and out of that airport are among the most expensive in the nation. Consumers lost. Next in line is Memphis. Delta is cutting back there. Get ready.

When United and Continental merged, I sat at the same table with the CEOs of those airlines. Every promise that they made to the Senate Commerce Committee during the hearings about billion dollar savings, more overall Houston jobs, no reductions in flights and smooth computer integration have turned out to be wishful thinking, if not disingenuous.

Finally, after waiting since early January 2012 for release of DOT’s Passenger Protection 3 rulemaking and having faced a series of delays, consumers learned this week that the release of the proposed rulemaking will be pushed back from January 2013 to May 2013. That’s almost a year and a half of additional time that consumers have been forced to deal with hidden airline fees that should be available for booking and purchase anywhere airlines choose to do business.

This latest delay means that consumers will have gone more than half a decade without the ability to properly comparison shop for airline tickets. All this during a time that the airlines have been determined to make the ticket-buying-process more difficult to navigate.

Hopefully, the delay has been caused by a strong proposed rulemaking that will protect consumers and force airlines to disclose their fees. If so, airline passengers will be able to see clearly how much the total cost of travel will be.

All in all, it is not a cheerful Christmas scene for consumers when it comes to transparency, competition, comparison-shopping and holding down the price of travel.

Photo by Miamism Flickr Creative Common

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  • James Jeffers

    Charlie Leocha’s been waiting since January 2011 for the release of the third passenger protection rulemaking?

    Not possible, given that the second set of rules only was published in April 2011.

    Unbelievable sloppiness, for someone who purports to be the voice of consumers? Or he is actually making up stories to mislead consumers?  (Who are you really working for, Charlie?)

  • Anonymous

    All in all, it is not a cheerful Christmas scene for consumers when it comes to transparency, competition, comparison-shopping and holding down the price of travel.
    ______________________
    BULL!

  • http://www.tripso.com/author/leocha Charlie Leocha

    You’re right. The date should be January 2012. I’ve corrected it.
    The rest of the paragraph is clear and correct.

  • Anonymous

    I have no trouble learning what the fees are for services I may wish to purchase or avoid when I book airline tickets and I prefer the chance to make those decisions whenever I want to. I do not want to be required to pay a baggage fee, or to have to choose whether I want to check a bag or not at the time I buy a ticket. I have been waiting for a clear explanation from Charlie Leocha as to exactly what he proposes should be different about my ticket buying experience. I think he is advocating in favor of some consumers (the easily confused) to the detriment of others.

  • Anonymous

    I’ve wondered the same. I’ve thought maybe he works for the travel agency industry, but I’ve seen plenty of comments by travel agents that they have no problem finding the fees for their clients either, so I too am perplexed as to who he works for.

  • http://www.tripso.com/author/leocha Charlie Leocha

    Go to ConsumerTravelAlliance.org and read about who we represent — Consumers. My bio is linked to the “About Us” page. We are funded through advertising on consumertraveler.com and individual donations. Wonder no more.

  • http://www.tripso.com/author/leocha Charlie Leocha

    You may not need any help, but here is a current airline baggage riddle. If you and your husband, who is an elite frequent flier on Delta, purchase tickets on Delta, do you have to pay baggage fees for your first and second checked bag?
    Hint: It depends on how your reservation is set up, which credit card you used for payment and your husband’s elite level.

    Delta uses a series of algorithms to calculate your baggage charges. (Other airlines have their own agorithms.) The total cost of travel should be clear to you while you are purchasing your tickets. You should be able to compare the costs of flying on Delta, including baggage charges and seat reservations, vs. other airlines in an easy manner.

    Of course, every seasoned traveler can eventually figure out their baggage fees and seat reservation fees, but at the cost of lots of time; and after they compare prices + fees, and factor in FF levels and PNR requirements, the original airfare may be gone.

    Travelers should be able to load basic information into their flight search — Family of four flying from Orlando to Seattle; we want to sit together; we will be carrying on four bags and will check two — and get back a schedule of the total cost of travel including baggage fees and any necessary seat reservation fees.

    Technology exists that can do just this, but it cannot work without fee data being disclosed by the airlines.

    We want the airlines to disclose the baggage and seat-reservation fees so that programmers can develop better systems to allow consumers to comparison shop for airline tickets whether they are using traditional travel agents or online travel agents. As long as the airlines refuse to disclose their fees and share their data with software developers, consumers will continue to have to go from airline site to airline site to compare prices.

  • Anonymous

    I think the upcoming NPRM has a provision that will require travel agents to disclose their commissions. We’ll see who votes for that :-)

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