Consumers are coming up to crunch time in the hard work that has gone towards mandating that airlines reveal fees to consumers. This has been a struggle that has been proceeding since spring of 2010. It has gone on through one completed rulemaking that will fully come into effect on January 24th and 26th. Another proposed rulemaking will be published around mid-2012, gather comments until late 2012 and be finalized, more than likely, early next year.
Nothing moves quickly in Washington. Airlines can decide to unbundle airfares and put partial air transportation tarrifs into effect in a day, but to undo their deeds takes years of effort through regulatory and legislative channels.
The FAA bill that includes elements of fee transparency has been languishing for more than four years and proposed and completed rulemakings are being extended with economic studies and faced with court challenges from airlines who do not want to disclose their ever expanding fees.
At the start of the Department of Transportation’s (DOT) consumer-protection process, air travelers were totally at the mercy of airlines. Since 2008 major airlines have been selling partial tickets that don’t include (depending on the airline) baggage charges, seat reservation fees and telephone reservation surcharges — basics that should be part of any decision to purchase air travel. Worse, after not disclosing these fees, airlines can change their fees at any time and stick even more charges to passengers who had already purchased airline tickets.
There has been some progress.
The latest completed DOT rulemaking requires that airlines collect all of their ancillary fees and post them on one big Web page. This page must be linked to from the home page of the airlines’ websites with a link above the fold. That rule came into effect in August 2010 and was later “clarified” by DOT.
It is a help, but only as a warning about what fees, more or less, may apply. The list of fees is presented in ranges, such as seat reservations $5-$99 for “Choice Seats” on USAirways.com for example — less than helpful. More information is needed to make these kinds of fee publication useful, such as a definition of “Choice Seats” and some kind of indication of how often “Choice Seats” are encountered. In other words, consumers need flight-specific seat reservation information available while they are purchasing their tickets.
Delta, whose website is openly flaunting the DOT rules with its link at the bottom of the home page and with no single page of ancillary fees, lists 66 different baggage fee categories. These categories include normal flights for normal passengers, military passenger rules, frequent flier categories and credit card options. What is does not even begin to categorize is the collection of exceptions that come along with whether or not a ticket is purchased under the same record locator or with the same credit card. That is ridiculous. What flier can be expected to wade through what might be as many as 4,356 different variations of baggage fees in order to figure out what their particular charges will be when traveling with a companion.
Incidentally, Delta’s link to their ancillary fees recently has slipped to the bottom of their home page and they no longer present all of their fees on a single page, making it even more confusing for air travelers.
On January 24th and 26th, passengers get some more relief
The final phase of rules that help passengers decipher prices should be coming into effect in about two weeks. Here are the highlights:
- • Airlines will have to allow a grace period of 24 hours within which passengers can cancel or change tickets if a consumer makes the reservation one week (168 hours) or more prior to a flight’s scheduled departure. Name changes and mistakes can now be handled without forking over $150 change fees and more onerous cancellation fees. Many airlines already have this provision as part of their Contract of Carriage. (Effective date Jan. 24th)
• Airfares must be advertised including all mandatory fees and taxes. That means no more collection of fine print at the bottom of newspaper ads and confusing links on the Web. (Effective date Jan 26th)
• Prices will no longer be able to be increased after tickets are purchased. This will include fees such as baggage charges and seat reservation fees. I expect that other fees such as WiFi, food, early boarding, extra-legroom, etc. will be excluded. (Effective date Jan. 24th)
• Airlines will be required to disclose passenger-specific baggage fees on airline itineraries for airfares that have been purchased. These baggage prices cannot be generic, but must specifically apply to the passenger who purchased the ticket and others who purchased their tickets under the same reservation. Plus, baggage charges imposed by the marketing carrier will be required to be carried across code-share and international alliance partner flights. (Effective date Jan. 24th)
The full-fare advertising requirement is being contested by Allegiant and Spirit Airlines (supported by Southwest Airlines). However, full-fare advertising will more than likely come into effect together with the 24-hour rule and the price-increase regulation. Though airlines claim that they cannot with their current computer systems and software handle the requirement to present passenger-specific baggage fees, DOT has announced that they will not allow an extension to that rule. DOT has noted that they will “apply its enforcement discretion in monitoring compliance with these provisions.”
Hopefully, airlines will move forward with their computer and software upgrades. Better yet, in a perfect world, DOT would mandate that all baggage and seat reservation fees be loaded into ATPCO (the distributor of airfares, owned by the airlines) and made public, as the Consumer Travel Alliance asked in their comments, so that other entrepreneurs and organizations can work on upgrading software to handle the amazingly complex fee structures that the airlines have created.
Better yet, airlines should voluntarily load baggage fees and seat reservation fees so that their passengers know the full cost of travel.
DOT announced a delay in upcoming passenger protection proposed rulemaking
DOT just announced a delay in the notice of proposed rulemaking for the third phase of Enhancing Passenger Protections that promises to be the rule that will mandate airlines disclose baggage and seat reservation fees at the same time they reveal airfares so that air travelers can compare total flight costs. Hopefully, DOT and the Office of Management and Budget (OMB) will expedite their reviews of the rulemaking and move it forward prior to the currently announced publication date of August 2012.
By the time the final rule is published after the comment period and final review, consumers will have been forced to purchase air transportation for half a decade without the ability to compare the full price of what they are purchasing. Plus, corporate customers will have faced a similar delay in being able to manage travel budgeting and reimbursements for their employees.
The free market cannot function without open pricing information and consumers suffer when industries make it difficult to compare prices.
The best-case scenario, in the short term, which would eliminate any need for government intervention, would be for the airlines simply to release their baggage and seat reservation data with all of its variations, exceptions and caveats to all travel agents — retail, online and corporate — so that systems can be developed to smooth the comparison and purchase of airline tickets through every channel where airlines choose to sell air transportation.
The airlines can keep their other fees — early boarding, more-legroom, pillow and blankets, WiFi, airport lounges, food and beverage, etc. — hidden as much as they like and mix and match them to create various marketing packages. But, I’ll bet that once the airlines see how much money they can make, these extra fees and any new marketing bundles they create will find their way into traditional and newly created booking processes as well.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
