The truth about the government’s new “full fare” disclosure rule

Editor’s note: This is part seven in a series about the Transportation Department’s sweeping new airline passenger protection rules. You can read the entire document here (.DOC). Please take a moment to comment on these proposed rules at Regulationroom.org. The future of air travel depends on it.

When you get a fare quote from an airline or online agency, you should expect to pay that price. Right?

Wrong.

It’s not that the travel industry lies — although it often does — but that quoting a less-than-inclusive ticket price has so many advantages.

For starters, the government doesn’t make you do it. It’s also easier to quote an “unbundled” fare. Plus, it makes you more money ($7.8 billion in airline fees last year, most of it tax-free).

All that could change if the Transportation Department has its way.

I’ve already written about Section 7 of the rulemaking because it’s so important. So have airline critic Joe Brancatelli and travel expert Pauline Frommer. So has my colleague Charlie Leocha.

I spoke with Leocha, who is lobbying for sensible airfare transparency laws, and he said there’s a disconnect between the proposed government rules and pending legislation. More on that in a minute.

First, though, let’s look into what the government presently requires of airlines.

Existing regulations say advertising of air travel prices has to include all fees, surcharges, and taxes. But the Department of Transportation has a long-standing enforcement policy that allows air carriers and other sellers of air transportation to break out from the advertised price any airport or government fees that are charged on a fixed or per-segment basis.

Earlier this year, as part of its regulatory analysis (PDF), researchers conducted a review of the prices advertised on the sites of five mainline carriers, three low-cost carriers, and the four largest online travel agencies.

Of the eight carrier sites, only Delta’s displayed the full-fare prices along with the pre-tax prices at the flight selection stage. All eight carrier websites displayed the additional fees at the flight booking stage. Full-fare prices were displayed for each available option at the flight selection stage on all four OTA sites, along with prices that did not include the additional taxes and fees, according to the analysis.

(The full-fare prices were shown more prominently on the Expedia and Orbitz flight selection pages than on those for Priceline and Travelocity.)

What’s the problem?

Inexperienced travelers may find themselves purchasing tickets at prices that are higher than those for other alternatives they reviewed once the charges for all mandatory fees and taxes are included. They may also unwittingly purchase optional services at prices that exceed what they would be willing to pay for these additions.

That doesn’t work for the government.

We believe consumers would be better served if we enforce our existing full-price rule as written and prohibit the practice of advertising fares that exclude any mandatory fees or surcharges, regardless of the source.

I don’t think you’ll find anyone who disagrees with that.

For more on the specifics, you can check out my original post.

But there’s more.

The government is considering adding two new paragraphs to the price advertising rule. The first would codify the Transportation Department’s current enforcement policy on each-way airfare advertising. Currently, it allows sellers of air transportation to advertise an each-way price that is contingent on a roundtrip ticket purchase, so long as the roundtrip purchase requirement is clearly and conspicuously disclosed in a location that is prominent and proximate to the advertised fare amount.

That would essentially stop airlines from referring to such fares as “one-way” fares, which they are not.

The second provision would prohibit so-called “opt-out” provisions in price advertising. According to the government, there’s been a trend to add fees for ancillary services and products to the total price of air transportation, which charges consumer are deemed to have accepted unless they affirmatively opt out of the service and related charges.

For example, carriers may allow a consumer to select a preferred seat or receive priority boarding status if he or she pays a predetermined fee. In some cases the optional services and accompanying charges for those services is pre-selected and added to the total fare without the consumer affirmatively choosing those optional services or fees.

This often is accomplished on a website through use of a small box that is pre-checked and must be “unchecked” by a consumer in order to avoid the charge. This can be deceptive depending on the layout of the webpage and instructions accompanying the service and charge.

That’s something I’ve noticed, too.

Now, regarding the possible disconnect between the rulemaking and pending legislation. If the Menendez amendment, which I’ve already written about here, passes in its curent version, it could reverse some of these positive changes.

The Menendez legislation has to be brought into tune with the new rules. Otherwise, airlines and online agencies will be able to wait until the last booking screen to quote a full price, according to Leocha. And that’s unacceptable.

Section 6 is by far the most interesting part of the new airline rules, if not the most controversial. How all of this turns out should be of concern to anyone who travels.

The Rulemaking Series

I’ve written this series of posts in order to help you understand the Transportation Department’s proposed rules and offer the most informed feedback during its commenting period. Please take a moment to read them and then tell the government what you think at Regulationroom.org.

Part 1: New tarmac delay contingency plans — what’s in it for you?

Part 2: Government will require airlines to offer “complete picture” of ground delays

Part 3: New rules would require airlines to meet “minimum” customer service standards

Part 4: Government to airlines: Put it in the contract!

Part 5: New requirements would force international airlines to monitor and respond to passenger complaints

Part 6: Everything you need to know about the new denied boarding compensation rules

Part 7: The truth about the government’s new “full fare” disclosure rule

Part 8: Transportation Department wants airlines to reveal all fees and an airfare — or two

Part 9: New rule: No more price increases after you buy a ticket

Part 10: Airlines must “promptly” notify passengers of flight delays under proposed rule

Part 11: No more lawsuit limits for passengers under proposed government rules

Part 12: The hard facts about the peanuts-on-a-plane rule everyone’s talking about

If you have any feedback on this series, please send me an email. And thanks for reading.

(Photo: western dave/Flickr Creative Commons)

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