Is the Transportation Department about to turn up the heat on airlines?

By | February 19th, 2010

Are the government’s airline cops about to get tough on crime? The Department of Transportation says it is, and now there’s new evidence that it’s following through.

The first is a small fine against an airline with big implications. The second is a little-noticed plan to overhaul some important rules for air travelers — presumably in their favor.

Taken together, these developments have DOT-watchers and consumer advocates wondering if air travel is about to improve for everyone.

Let’s have a look at the agency’s recent action against Southern Sky Air & Tours and Direct Air (PDF). DOT fined the six-employee company $35,000 for “unfair and deceptive” fare displays and inadequate disclosures for fees, among others.

Among the highlights:

Direct Air violated the Department’s full fare advertising requirements by displaying fares on its website which, on their initial presentation, did not include a carrier-assessed convenience fee.

Direct Air separately violated the Department’s full fare advertising requirements by failing to provide proper notice of certain government-imposed taxes and fees in its advertisements.

Direct Air [also] failed to provide consumers adequate notice on its website of additional fees associated with checked baggage, in that consumers were not told the amount of such charges until the latter stages of the booking process.

For a company of Southern Sky’s size, it’s a huge fine — even when half of it is waived, as is the custom. That comes to $5,833 per employee. To put it into perspective, a comparable fine for American Airlines would be $490 million and for United Airlines, it would be $279 million.

I’m not suggesting the DOT would ever impose such fines on a big airline, but you never know …

Exhibit two is the still-internal DOT rulemaking that began circulating Feb. 10. The new rule, called “Enhancing Airline Passenger Protections,” is scheduled to be released Jun. 1.

Here’s what it will cover:

(1) contingency plans for lengthy tarmac delays
(2) reporting of tarmac delay data
(3) customer service plans
(4) notification to passengers of flight status changes
(5) inflation adjustment for denied boarding compensation
(6) alternative transportation for passengers on canceled flights
(7) opt-out provisions (e.g. travel insurance)
(8) contract of carriage provisions
(9) baggage fees disclosure
(10) full fare advertising.

No one outside the DOT knows what the rules will say, but one insider reports that the agency is mulling a rule that would require airlines to disclose information about changes in bag fees online for several months after the changes have been announced.

These are positive signs that the government really wants to protect the interest of consumers. And that would be good news for all of us.

(Photo of the southern sky at night by coda/Flickr Creative Commons)

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