In January the Department of Transportation published a ‘supplemental notice of proposed rulemaking’ on their existing rulemaking docket from 2014 regarding transparency of ancillary fees.
DOT proposed that fees for first and second checked bag and carry on bag be disclosed “wherever fare and schedule information is provided to consumers” and this would have to be provided “at the first point in a search process where a fare is listed in connection with a specific flight itinerary, adjacent to the fare.”
They’ve withdrawn the proposed rulemaking. Because it was dumb. (HT: Point Me to the Plane)
Credit: US Department of Transportation
Priceline has already gotten out of the ‘name your own price airfare’ business but opaque bookings through Hotwire and elsewhere remain. There goes that business model, since this disclosure requirement helps consumers identify the travel provider.
The Department of Transportation had decided exactly what information consumers should consider when buying a ticket, and has proposed to require that consumers wade through additional information (in an already crowded and confusing landscape) in order to buy a ticket.
The DOT had been considering this and other rules for three years, and declined to actually promulgate regulations even knowing that the new administration would be less friendly towards new rules. That’s because while they loved the concept, in practice it would do far more hard than good for consumers as I (and my co-author, a former DOT senior economist) explained to them in a regulatory comment we filed with the docket.
Locking in what information is displayed to consumers prevents innovation and protects the incumbent large online travel agency sites, immunizing them from the competition that comes from new entrants doing a better job helping consumers find the travel solutions that are best for them. It also would have locked in the pure focus on price at a time when differentiated onboard passenger experience becomes more important than ever.
Helping consumers with questions like what connection is best?, is there enough connecting time?, what seat should I choose? and will there be onboard entertainment, more than 30 inches of seat pitch, and lavatories big enough to change a baby in matter to consumers but would be disfavored information harder for customers to find when less relevant information is forced up the information funnel as a matter of law.
A better approach I think is the innovation we’re seeing from companies like RouteHappy that customize information to provide consumers with what actually helps them make the best decision about products. Is second checked bag fee really more important than the amount of legroom an airline provides, or for a business class customer whether the seat is angled or flat? Is showing a $0 carry on fee more important than knowing about inflight internet? (To some people yes, to others no.)
Fees are all already available, easy to find, online. The DOT didn’t think consumers are smart enough to find the information or to ask their travel provider for it and instead they need circles and arrows. But studies show that consumers already go to many websites when planning a trip, forcing the same information onto each makes little sense.
Instead of making them wade through irrelevant information we shouldn’t crowd consumers with information the government decides they need and should instead allow competition to provide consumers with the best possible information for their needs to win their business.
It’s an important debate that won’t end with the withdrawal by DOT of its supplemental notice of proposed rulemaking.
Meanwhile the amount of misreporting on this issue is staggering. No rule has been ‘reversed’ making it ‘harder’ to compare air travel prices. The current administration basically did what the Obama administration did on this issue which is not to promulgate a rule.
Ah, Gary, you never found a regulation you like. Never mind that 90% of customers don’t even know what RouteHappy is, and 50% of travelers couldn’t name more than 1 airline, nor if they charge fees. It seems that many people in your camp are very happy to go to $0 airfares, and tons of fees, all of which surprise customers. Clear pricing is something that should be regulated 100%, full stop. Listing price for airfare, all fees, and then bag 1 and bag 2 is not a technological hurdle, but yet it helps people and not companies, so we can’t have that. The fact that business that makes the fees more obvious comes out of the majority of companies hiding the fees is NOT a reason to hide more fees.
Joelfreak you’ve never met a government regulation you didn’t like, you’d probably argue with me if I said the DOT rules under 49 CFR Part 230 are outdated and worthy of repeal.
When airlines go to dynamic checked baggage fees, where the fee for checking in a bag varies like the cost for upgrades, then what? 😉
The government should be mandating disclosure of pricing information to enable consumer shopping decisions to be more efficient than the airlines want them to be. Increased informational assymetry in the marketplace for retail transactions undermines free-market capitalism, and that is exactly what the airlines and the ideological zealots claiming libertarian values are doing when they oppose regulations in favor of increased disclosure.
Should we also scrap food labeling laws, Gary? 😉
It is difficult to codify every little detail on a website. At some point competition has to keep airlines in check. It is not difficult to prominently advertise typical fees associated with a fare. Airlines should want to do this to gain REPEAT customers.
Since airlines and fees are highly regulated, it would be nice to see third party websites gain access to the data the airlines is presenting on a webpage, and format it and present it to customers.
So the endless fees and fare classes and surprises and luggage size limitations that are or should be publicized in advance will be available to Expedia and Priceline and Google flights, or whoever, so that they can peel it out of the middle of the garbage text and show it to their website viewers.
The web page advertisements and potential bookings would be a profit incentive and the government wouldn’t need to dictate details like this.
“DOT proposed to that fees” — Gary, doesn’t anyone proofread for you?
@Joseph N. You must be new to this website. Apparently being a thought leader means “read my thoughts.” Though to be fair, the number of dropped negatives, or verbs, or entire predicates has dropped quite a bit in the past few years
You give the general public FAR too much credit.
Yesterday I went to the drive-thru at Dunkin’ Donuts to pick up a coffee, the holiday special that is released only this time of the year.
Me:. Could I have one of your cinnamon and brown sugar coffees, size medium, please?
DD employee:. We don’t have that.
Me: Oh. (Pause). But I heard them advertised on the radio. The holiday special. Cinnamon and brown sugar. You don’t have that?
DD employee: No, we don’t. The only coffee we have like that is a brown sugar and cinnamon.
God help the future of this nation.
LOL KimmieA!!!
Leef33, I totally agree with your thoughts. Regulations won’t necessarily help the average consumer… but a customized search engine WOULD.
For example, I have a couple airline credit cards which entitle me to free baggage. I’d like to enter my status as a cardholder into my search profile. Likewise, if someone gets free perks because of their airline status, they should be able to checkmark the box of that status. If they plan to check 2 bags, they should checkmark that box. If you want to choose your seat, check that box. If you want business class, check that box. If you expect an onboard meal, check that box. Etc. Checkmark every box that applies to you, that would affect your overall TOTAL cost.
Then let the search engine crunch the numbers, and spit out each airline’s total cost to meet your request. True bliss… you get your exact preferences and get to easily discover the cheapest way to achieve those preferences.
Here’s the downside: I can see myself searching for hours and hours looking for ways to find a cheaper ticket. “Let’s see what happens if I don’t want to pick my specific seat?” (Southwest & Spirit get cheaper) “Let’s see what happens if I don’t need a meal on the plane?” (Frontier flights will now appear.) “Let’s see what happens if I keep 1st class on Leg 3 but don’t need it on Legs 1 & 2?” I could really get embroiled in the search for a bargain.
But still — I sure would like the chance to search to that specificity.
Gary, are you saying RouteHappy offers that level of customization?
“Instead of making them wade through irrelevant information we shouldn’t crowd consumers with information the government decides they need and should instead allow competition to provide consumers with the best possible information for their needs to win their business.”
Your argument is self contradictory. You claim that full disclosure of pricing information will only confuse customers that aren’t interested in pricing, just in perks (which is, of course, ridiculous the majority of travelers are interested in price first and perks second) and that we should just leave it up to fair competition to create the services we need. Except that argument applies directly to your “we need to be able to search by perk” argument. If shopping by perks is really something people are clamoring for than a search engine will emerge which only lists perks and doesn’t “confuse” people will all that price nonsense. Obviously it’s not, because the most used services are always price focused. Honestly this argument is so incredibly weak I have to wonder if you are in fact a lobbyist. I know nothing about you, so I’ll try to assume the lesser of two evils, in that you are just such a frequent flyer that you’ve lost touch will the reality of the average traveler.
No, not full disclosure. That’s already available. Putting front and center information that’s not relevant to many travelers, that they have to wade through to find other more relevant information. Very different.
Are you high? By far most airline passengers choose based on price, not perks–that’s why there are only a handful of first class seats and tons of economy. Once again the Trump adminstration scraps a proposed rule in favor of corporate America (though this of course doesn’t just help American companies) at the cost of letting the airlines do their best to squeeze every dollar possible out of the average consumer. But now at least there’s someone for news stories to quote to support yet another idiotic decision from this White House.
Tell me dear author, do you or anyone you’re close with have a pecuniary interest in the profit margins of any airlines? That’s the best explanation for this otherwise mind-boggling article.
I mean, if you think baggage fees “are not relevant to many travelers” as you said in your last comment, you’re clearly out of touch with the vast majority of travelers who pay for travel with their own hard earned dollars.
Average Passenger SECOND checked baggage fee is far less relevant than first, and first isn’t relevant to EVERY traveler. What’s helpful is driving towards a goal of giving customers the information that’s relevant to them and not forcing them to wade through the information that isn’t. Regulating what fees are shown — by all sites, at the beginning of display of fares and schedules – prevents this kind of innovation that would help travelers.
And you can’t blame ‘the Trump Administration’ when the Obama administration also refused to regulate here. They offered a notice of proposed rulemaking years ago. They acted on some elements of it. Then they punted on this. Because they couldn’t figure out a way to do this that would actually benefit passengers!
“prevents this kind of innovation that would help travelers”
I take airplanes to get where I’m going.
I’ve found that most airline companies offer the same nickel-and-dime travel misery with subtle, barely perceptible shades of relief.
I don’t care about those anemic marketing “innovations” hatched in some publicity office and dumped onto the coding people to load onto the internet.
I care about the price. When unexpected fees start cropping up after I’ve bought the ticket, I feel cheated with a classic Bait-and-Switch con.
You can dither all you want about difficulties the various middle-man web systems operating between me and the airline are going through. I don’t care about that. I really don’t.
I care about knowing how it’s going to cost me to get where I’m going.
I care about upfront, straight and honest business.
You surprised me with this Gary (here I go again surfing the archives!)
yet you complain about hidden resort fees. I guess technology wise they are different issues?
Anyway, I am constantly impressed with your ethics, your intelligence and your overall “Views from the Wing” so I trust you. And I don’t mind your fast typing (leading to typos) because it means I get more wonderful, interesting and honest content. Thank you for being you!