Thanks DOT, but we have some problems with the interim rulemaking solution

by Charlie Leocha on April 27, 2011

As many have heard, consumer advocates were fairly united in support of the new Department of Transportation (DOT) rulemaking that was released last Wednesday. Heck I was the set-up person for the Secretary of Transportation on Fox News and NBC telling the world that this was the biggest change in passenger protections since deregulation. But there is still much to be done when it comes to airline fee transparency and other passenger protections.

In this column, I’ll focus on airline fee disclosure by the airlines.

Never before have so many consumer protections been codified in the federal regulations at the same time. From a couple of dozen lines of consumer-protection regulations as little as five years ago, the new regulations and their explanations now fill more than 200 pages in the regulations’ announcement.

As far-reaching as these passenger protections are, they still have a long way to go. Some changes to these new rules should be made immediately, before the 120-day implementation period is over, so that travel agents can do what the regulations require between this rulemaking and the next.

The biggest problem with this rulemaking comes in the handling of disclosure of airline fees. The airlines dodged a bullet and the consumers took another shot to the wallet. The Consumer Travel Alliance, American Society of Travel Agents, Interactive Travel Services Association, Consumers Union and others have all come out strongly in favor of electronic disclosure of airline ancillary fees such as those for baggage, seat reservations, early boarding, WiFi and so on. Fees presented in a database format can be used by central reservation systems to allow passengers to compare prices across airlines.

The airlines have been fighting tooth and nail to keep these fees hidden from travel agents and any traveler with the temerity to use a travel agent for their airline ticket purchase. The airlines fear an informed consumer. Their worst nightmare is the ability for consumers to compare the total cost of travel across airlines.

Heaven forbid! Just the thought of what the airlines call the commoditization of airline seats has them seeing red. Airlines claim that commoditization is a four-letter word in their marketing lexicon (unless the airlines commoditize their own product through code-sharing — the ultimate industry illustration that one airline’s seat and service is the same as another’s.)

Back to the rulemaking.

The DOT has admitted that they will need to examine this issue of airline price and fee transparency in more depth. After an extraordinary discussion last week with the primary architects of the rulemaking, even they realize that airline fee transparency and disclosure needs to be revisited and revisited sooner than later.

In the meantime here is the DOT rule:

…the Department believes that to ensure adequate protection of consumers, as well as to ensure a level playing field among airlines, it is best to require carriers to list all fees. This includes, but is not limited to, fees for checked baggage, carry-on baggage, overweight bags, meals, on-board entertainment, Internet connections, pillows, blankets, advanced or upgraded seating assignments, telephone reservations, early boarding, canceling or changing reservations, unaccompanied minors, and pet transportation.

I guess the good news coming from this interim rulemaking will be visibility of the levels of ridiculousness to which airline fees have risen. Forcing the airlines to list all of their fees in one place will underscore their immensity. Unfortunately, DOT is allowing the airlines to list ranges for these fees. So instead of knowing the fee for a seat reservation the airlines will be able to state, “Seat reservations Free-$90,” which will not be a big help for most travelers. (No, I am not making up the $90 seat reservation fee. It exists.)

OK. Let’s agree that there will be issues with an overall listing of fees with ranges of prices that don’t help consumers at all. In fact, these kinds of charts work in the favor of airlines by confusing passengers. Let’s focus on the area that the DOT requires specificity in the fees — baggage fees.

Here ticket agents are required to list the type of baggage fees that a passenger may have to pay on the itinerary. It sounds easy, but it isn’t. On Delta Airlines, for a couple traveling together, there are 64 different permutations of baggage fees that may be charged. If the airlines will not be required to provide travel agents these fees, where will they get the information? If the travel agents do not have the information, will they be fined? In any case, airlines will be sitting pretty even though they have complained vociferously.

We disagree with the assertion by some carriers that consumers cannot complete a purchase without first becoming aware of the applicable baggage fees. Given the advent of new fees, such as fees for carry-on bags, the differing price for first and second checked bags, and the price difference that sometimes exists if a consumer checks his or her bag online versus checking the bag in at the airport, the Department believes that it is not a simple matter for consumers to determine the total price to transport their baggage. Additionally, the Department disagrees with airlines that assert that the disclosure requirements are burdensome, as most carriers already provide this information in one form or another.

Yes, DOT, the airlines provide this information, but the ticket agents do not, because the airlines will not disclose this information to them. DOT needs to force the airlines to disclose at least this baggage information during the interim rulemaking period. Otherwise, what they are directing ticket agents to do will not be possible.

Note: The airlines are planning on releasing these highly proprietary fees to Google in the not-too-distant future. Why can’t they release them to travel agents? Needless to say, consumers are getting hosed and will continue to be deceived by the airline under the protection of DOT until this situation is corrected.

The proposed schedule for the third passenger protection rulemaking has relief scheduled for passengers in late 2012. DOT can do better. Airline fees are only going to increase and become more complex during the ensuing year and a half.

I urge the DOT to take another look and in the rulemaking during this interim period before full implementation. Require the airlines to use their already-tested ATPCO system to deliver baggage fees to all travel agents while DOT continues wrestling with the larger question of how to handle the hundred of fees that the airlines are creating to add more and more complexity to the airline ticket purchasing process.

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  • DaveS

    Aren’t airlines allowed to list ranges of prices for fees because there ARE ranges of prices for fees? Don’t almost all businesses offer lines of products based on options consumers may or may not want?

    I’ve been wondering what shape an ideal upfront listing would take in the minds of travel consumer advocates, when the choices available to the public may often depend on the specific flight, routing, aircraft, time of day, etc., that is selected. I would much rather look at the base price, then add on extras after I see it, if I am so inclined, rather than wade through one or many checklists of possible options first and then compare add-on prices.

    I may be completely off base, but it seems to me that an important thrust of this campaign (in the case of the organizations listed) is to push for reducing the choices to the consumer in the interest of simplifying life for travel agents. If consumers were required to pick option A or option B upfront, then it would be relatively simple to do the things this blog post wants. But if there are options A to H which vary by flight, it becomes impractical. I know that’s what some want, but to me, having the option to choose what amenities I want or don’t want on a case by case basis is good, not bad. I can go for the cheapest price, or if I’m in the mood, can add other options depending on any number of factors, sometimes up to the moment I’m on the plane. I’m open to hearing why my interpretation is wrong, or why the government has to take sides in favor of those who prefer not to have so many choices.

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

    @DaveS You are correct. The airline fee world has become so complex that consumers cannot figure out the total cost of what they are purchasing when it comes to travel. The airfare system is amazingly complex as well, but the airlines have figures out a system that allows them to change available airfares five times a day. We advocates are asking that the fees be “disclosed” through the same systems that the airlines use to disclose their airfares so that the airline fees can be served up to consumers based on specific flight, routing, aircraft, time of day, membership level in FF program, credit card used to purchase etc. I believe that entrepreneurs will develop new systems that allow open, transparent choice of fees. Passengers who want to wait can, and those who know what they want ahead of time, can compare airline prices including the fees.

    Perhaps you can look at it as offering a menu of services and the prices so that a consumer can select from them. When we walk into a grocery store and want to buy beans, there is not a big sign saying beans cost between 50¢ and $2.50 but you can only find out the price when you get to the cash register — each can is individually prices so that consumers can compare prices. We are looking for something that simple (yet complex).

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