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Competition, Not Costs, May Hold Up Airline Fee Compliance

September 13, 2010 By: George Dooley

Fear of being at a competitive advantage may be the biggest hurdle in getting airline agreement to offer hidden fee transparency, despite the availability of affordable technology, the Business Travel Coalition (BTC) argues— urging travel managers support of changes in Department of Transportation (DOT) rules. An online letter has been posted for signature.

"If DOT issues a rule requiring airlines to submit data to travel intermediaries, the vast majority of problems emanating from ancillary fees would be fixed straightawa" argues Kevin Mitchell, chairman of the BTC. "Without the rule, we are facing perhaps years of inefficiency and untold attendant damage to managed travel programs. The ATPCO OC fare filing and ARC/BSP EMD processes that would put these fees into the marketplace and facilitate payment have been successfully tested by some 26 airlines and three distribution systems and are ready to go.

"Virtually all current airline fees are either fully covered by today’s tested ATPCO OC fare filing, or are in work for near-term solutions," Mitchell continued. "Moreover, the OC filing structure will continue to evolve as the airlines’ selling practices evolve. The OC/EMD processes should provide clarity – end-to-end – from shopping and purchasing through payment, settlement and reporting. The maximum cost per carrier for using the ATPCO OC system is $3,000 per month, hardly an impediment considering the $7.8 billion in ancillary fee revenues the carriers collected, in significant part from business travelers, last year."

The DOT is accepting industry comments until September 23 on a Notice of Proposed Rule Making (NPRM) regarding enhanced passenger protections.

"Of course no individual airline wants to be the first to use this OC/EMD process as its accurate, all-in airfares immediately would look 20 percent, 30 percent or more higher than competitors in places where consumers go to comparison shop," Mitchell said. "It would represent competitive suicide. Indeed, the U.S. General Accountability Office recently concluded in a report to Congress that airlines are not likely to disclose these fees unless compelled to do so. Only a DOT rule would make it economically and competitively feasible for all carriers to participate,” Mitchell says.

BTC is urging travel management corporations to sign a letter to the DOT by September 23 that will help secure a rule from DOT that will preserve the integrity of managed travel programs.

Among DOT’s proposals is a requirement that airlines make ancillary fee information available on their websites for the 50 percent of travelers who purchase their tickets there. As it relates to the other 50 percent of travelers who use online travel agencies and travel management companies (TMC’s), such as business travelers, DOT is asking for comments on whether airlines should also be required to make fee information available to these distributors via any global distribution system in which a carrier participates, BTC says.

DOT wants to know what TMC executives and corporate travel managers think about this proposal, whether they are based in the U.S. or overseas and have employees traveling to and within the U.S., Mitchell says in an appeal to TMC’s for support.

"We are not asking DOT to say what services are fair to charge a fee for, how much those fees should be or how to package their re-bundled services," Mitchell said. "Those decisions are the airlines' to make. We are simply asking DOT to require full and real-time disclosure of these fees in whatever channels airlines choose to sell their products. There is no new ground being broken here. This is the exact same thing DOT required of airlines with respect to change of gauge and code sharing disclosures."


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