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New DOT Report Shows Need for Greater Consumer ProtectionsSeptember 25, 2012 By: George Dooley Travel Agent
The Business Travel Coalition (BTC) said that a new U.S. Department of Transportation (DOT) Inspector General's (IG) report on the airline industry provides "clear and compelling evidence for the need for increased consumer protections."
The BTC said the report concluded that in the future there will be "less competition and increased fees for services previously paid for by consumers in the price of tickets."
Indeed, the BTC notes that the IG report says that in 2000 ten airlines controlled ninety percent of the market compared with five airlines controlling eight-five percent today. Industry concentration could increase further if American Airlines and U.S. Airways combine, BTC said.
Among the reports conclusions: "Although the industry is still in transition, the data in this report suggest that some of the most significant trends of recent years—including but not limited to a more consolidated industry with less competition, fewer flight options for small communities, and revenue-enhancing baggage and other fees—may continue for the foreseeable future as airlines further improve their adaptability to changing market forces."
"The good news for consumers is that airlines might have finally implemented a business model that can generate sustainable and profitable revenue streams by unbundling their product and charging ancillary service fees supported by a substantial reduction in industry seat capacity," BTC said.
"All consumers benefit from a financially viable air transportation system. However, the ongoing risk, and reality for consumers today, is that fewer competitors allows some airlines to mistreat, mislead and malign consumers - including major corporate buyers of commercial airline services," BTC says.
"For example, since 2008, when U.S. airlines began to aggressively unbundle their product and offer ancillary services, despite corporate buyers and travel management companies substantial purchasing power and calls for ancillary fee transparency, airlines have refused to provide this fee information in a salable format to the marketplace," said BTC Chairman Kevin Mitchell.
"At issue is that when deciding about the framework of airline industry deregulation, Congress consolidated virtually all consumer protections via the federal preemption doctrine with the DOT. As compared with all other industries, airline travelers are in a consumer protection No Mans Land as consumers have virtually no rights at the state level and no protections under Federal Trade Commission authority," BTC's Mitchell said.
"As the airline industry further consolidates, the importance of DOT's consumer-protection role grows considerably more vital. To that end, DOT needs to issue a rule that finally restores for consumers comparison shopping and purchasing of the true cost of air travel options (base fares and ancillary services fees) that has been lost since airline product unbundling accelerated in 2008," added Mitchell.
(The IGs report can be downloaded at http://www.oig.dot.gov/node/5948)