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BTC Urges DOT Action on Ancillary Airline FeesJune 2, 2011 By: George Dooley
U.S. Department of Transportation Secretary Ray LaHood has been without doubt the most pro consumer advocate and leader of the Department in its history, says Kevin Mitchell, chairman of the Business Travel Coalition(BTC), urging DOT action on ancillary fee disclosure to protect consumers. “ Consumers today are foreclosed on true comparison-shopping, a situation the airlines could reverse immediately with minimum cost,” Mitchell says, noting the importance of the travel agency sales channel to consumers and the need agents have for access to fee data.
Mitchell cited Secretary LaHood’s 2009 3-hour tarmac delay rule as an historic example of the DOT’s pro-consumer policies. “ His senior staff intensely shares his passion for fair treatment of airline consumers and goes about their complex regulatory work with pronounced thoughtfulness as evidenced by the recently publicized second consumer protection rule. As the U.S. airline industry consolidates and immunized global alliances gather strength, such advocacy is of paramount and growing importance. However, there is a consumer protection opportunity at DOT that requires the Secretary’s attention.”
“In conjunction with the April 2011 consumer-protection rule unveiling, a third rulemaking was announced that will address the expanding problem of hidden airline ancillary fees, e.g., checked baggage, seat assignments, etc. At issue is that this rule - according to DOT’s current schedule – will not be finalized and implemented until the first quarter of 2013. This will mean that consumers will not have had the ability to comparison shop for the “all-in” price of air travel (airfare plus fees) across relevant airline offerings for 4-1/2 years (airlines began aggressively implementing fees in 2008). That’s right, a hallmark-benefit of airline deregulation will have been stripped from consumers for nearly half a decade, and that assumes the rulemaking does not get bogged down. Airline consumers have never been at greater risk,” Mitchell said in his analysis.
“Some 40 percent of consumers purchase their air travel at airline.com because either they are brand-loyal, or they have shopped at an online travel agency before jumping to an airline website to make a purchase. However, a majority of consumers (60 percent), and virtually all corporate managed travel programs, depend upon the travel agency sales channel where they shop for and purchase air travel and where airlines participate but refuse to share ancillary services fees.”
“Consequently, without fee information consumers can pay substantially more for air travel. Prices are inflated as all-in fares are unable to be compared across competing airlines, and thus, are not disciplined by the marketplace. And travel agencies must charge higher transaction fees due to added search and booking complexity and time. What’s more, consumers are not driving the rapidly evolving marketplace structure as they are being blocked from making the millions of informed purchasing decisions, based on comparison shopping, that would help shape pro consumer airline policies.”
“Some individual airlines gratuitously claim they are for transparency and comparison-shopping. Of course, that does not reconcile with the facts. Consumers today are foreclosed on true comparison-shopping, a situation the airlines could reverse immediately with minimum cost. The airlines have built and successfully tested a very low-cost transmission system for the dissemination of fees through the airline-owned Airline Tariff Publishing Company.”
“As it stands now though, some airlines find profit in consumer confusion and are refusing to fully disclose in an electronic and transactable format, ancillary fee information to the sales channels in which they participate. Consumers cannot evaluate the full cost of travel across multiple airlines. This intolerable situation creates the most harmful purchasing environment air travel consumers have ever faced,” Mitchell says.
“Short of Congress directing DOT to complete a rulemaking within 180 days of FAA reauthorization legislation, there is only one viable public-policy option for fixing this problem for consumers. Secretary LaHood needs recognize that consumers are being financially harmed each and every day ancillary fee information is withheld by airlines and expedite the new DOT rulemaking process as much as practicable,” Mitchell said.
Founded in 1994, Business Travel Coalition empowers the managed travel community to influence issues of strategic importance to their organizations.