The Business Travel Coalition (BTC) took its opposition to hidden airline fees to a new level, applauding the Federal Trade Commission's (FTC) warning letters to 22 hotel operators concerning drip pricing, or hidden fees that surprise consumers upon arrival at hotels. Mandatory fees can be as high as $30 per night, the FTC said in its letter.
BTC noted the the typical carve-outs include “resort,” “housekeeping,” and “Internet access" fees..
"Drip pricing is a deception scheme whereby a supplier carves out a portion of its true price; labels that portion as a mandatory extra fee or charge; deducts it from the true price; and features the artificially reduced remainder of the true price in advertising, online postings and price information supplied to global distributions systems and travel agencies, " BTC said.
BTC cited consumer advocate Ed Perkins and the Consumer Travel Alliance as well as BTC's earlier position that called on FTC Chairman Jon Leibowitz to aggressively address the widespread practice of “drip pricing” by some hotels, motels and resorts.
“Consumers are entitled to know in advance the total cost of their hotel stays,” said FTC Chairman Jon Leibowitz. “So-called ‘drip pricing’ charges, sometimes portrayed as ‘convenience’ or ‘service’ fees, are anything but convenient, and businesses that hide them are doing a huge disservice to American consumers.”
The FTC warning letters cited consumer complaints that surfaced at a recent conference the FTC held on “drip pricing,” a pricing technique in which firms advertise only part of a product’s price and reveal other charges as the customer goes through the buying process.
“One common complaint consumers raised involved mandatory fees hotels charge for amenities such as newspapers, use of onsite exercise or pool facilities, or Internet access, sometimes referred to as ‘resort fees.’ These mandatory fees can be as high as $30 per night, a sum that could certainly affect consumer purchasing decisions," FTC said.
The FTC warning letters also noted that consumers often did not know they would be required to pay resort fees in addition to the quoted hotel rate.
"In the case of the airline industry, since 2008, most major U.S. airlines have been charging for so-called ancillary services, such as for accessing premium seating, and have been hiding associated fees by withholding fee information from travel agencies, " BTC said
"As such, agents and travelers cannot efficiently compare 'all-in' prices (base fares and fees) of air travel alternatives and must visit numerous airline websites to search for fees and pay separately for the services. These hidden fees represent an unfair and deceptive marketing practice that is costing all air-travel consumers dearly," BTC argued.
The FTC’s authority in this area comes from Section 5 of the Federal Trade Commission Act, BTC said. This is virtually the same wording as in the Airline Deregulation Act at 49 U.S.C. § 41712 that vests authority for airline consumer protections solely at the U.S. Department of Transportation (DOT) with regard to hidden airline fees and other unfair and deceptive practices.
Earlier this week, BTC launched an official White House “We the People” petition-campaign requesting that true air travel comparison-shopping be restored for consumers through an early 2013 U.S. Department of Transportation (DOT) Notice of Proposed Rulemaking (NPRM).
The coalition has until December 25 to secure 25,000 signatures. BTC Chairman Kevin Mitchel commented, “If successful, then the White House is committed to formally reviewing this request and providing a public response. DOT must require airlines, via a rulemaking, to provide fee information to sales channels where they offer base fares so consumers can see, compare and buy the complete air travel product."
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