The Department of Transportation Wants to Regulate Google, to Make Sure You Know About Baggage Fees!

Back in May the Department of Transportation filed a “notice of proposed rulemaking” laying out the direction they intended to take with new rules for how airfares are displayed… everywhere.

As airlines have added on lots of fees, and new websites have popped up that search for travel, the Department of Transportation has been considering whether to regulate the way that fees show up (at the front of the booking process next to ticket prices, or just shown on an airline website?) and whether consumers have to be informed about the way websites sort the options that are displayed and whether or not all possible airline options are displayed.

More disclosure is usually considered a good thing, but telling every consumer the same information that may or may not be relevant to them on every single trip might not be — and there may be better ways to give consumers customized information that this sort of regulation can short-circuit.

There’s a lot in the DOT’s proposed rules, but the meat of it is how ancillary fees – like baggage, assigned seats, and priority boarding – have to be displayed.

I filed a regulatory comment with the Department of Transportation, along with a co-author, Dr. Patrick McLaughlin, who is a former senior economist for a division of the DOT.

I didn’t address the mistake fare issue that they raised. And I didn’t try to get involved in the thicket of how airline fee data is provided to online travel agencies and through computer reservation systems generally. These commercial disputes are shaking themselves out, there are complicated issues involved, though of course if the DOT is going to mandate everyone display fees alongside tickets prices early in the booking process then they are going to have to require that those fees be easily accessed.

Instead, I offered that while the idea of transparency — more information, sooner, everywhere — is a compelling principle, requiring all consumers to wade through specific government-defined information before booking a ticket is a bad idea. And every piece of information doesn’t have to be on every website, since consumers don’t generally just go to one place when booking. Research suggests that on average consumers consult many sites when they book.

Rather than making every airline site show the same fees, note when they do not offer schedules for every airline (free advertising for Southwest!), and prohibit exercising judgment in how schedules are displayed without clear warnings (like recommending which flights might be ‘best’ for you, without disclosing its formulas), they ought to focus on things that are more useful.

The rule does also include things like requiring disclosure of on-time performance by more airlines, like regional carriers. It won’t make a difference in their performance, as the DOT hopes, but there’s little wrong with the idea.

But the DOT shouldn’t require one set of fees that every traveler has to be presented with. They wind up picking the wrong information.

What’s far better is the customization that websites are working towards, to actually guide travelers and help them pick the flights that are best for them and understand costs.

We lost something in travel when it all went online. Some customers do need handholding, the kind they used to get from travel agents of varying quality.

  • What connection is best?
  • Is there enough connecting time?
  • What seat should I choose?

When airfare went online, travel became a truly mass experience. The current wave of online travel is customization – figuring out the relevant fees, amenities, and making recommendations to travelers rather than just displaying prices and schedules. That’s a process that should be allowed to continue.

My contention is that the DOT isn’t necessarily picking the right fees for everyone that will be relevant every trip into the future, and it’s better to allow customization of information. And it’s better to allow customized sorting of information based on what a new site believes will be best for travelers – based on a “pain index” or recommended connections in the winter, or what have you. Prohibiting ‘undisclosed bias’ gets in the way of improving travel.

People hate airlines so it’s great fodder to beat up on them. And transparency is always popular. But it doesn’t make sense to say that customers don’t know checked bags have fees – it’s precisely that they do know which is why checked bag fees are so unpopular.

Fees are pretty well disclosed now, as they’re required to be. Taking it a step further, to require specific fees be shown on every single website that displays schedules and fares – at the start of every search process – is going to be cumbersome. We want nimble. Travel searches should get better, not frozen in time by regulatory requirements.

And though it’s not popular to say, we don’t actually all want more information. Priceline and Hotwire offer us discounts precisely by giving us less information in advance about our travels.

Consumers go to many websites in their searching. They don’t need every site to be one-stop shopping, as the rule would move us towards. I’d rather see a ton of new sites like that introduced an interactive tool in August that lets consumers pick the fees and services most relevant to them.

Of course, you should read the full comment!

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. We can argue over what regulation is needed, but it is VERY clear that the marketplace as devolved into trying to scam consumers into thinking they are getting a deal, and when they get to the airport and finally finish paying, they realize they are NOT. In no other business are so many fees hidden, and BS charges tacked on. Discussion over what regulation is needed is welcome and healthy, but just as the market is evolving to create products to help consumers choose, there are bad actors who are trying to scam them into paying less up front but more later. I see nothing wrong with a ‘nutritional information’ type label with all the possible costs spelled out.

  2. @joelfreak – it’s precisely the confusing nature of travel that the startups have an opening to improve things, google is working on it too.

    In the comment I focus on what should be done differently, or could be improved in the regulation. As I say there’s plenty here that I do not focus on, such as how data gets distributed and how on-time stats are reported.

  3. How about they walk before they try to run. Start working on drip pricing and price shrouding by attacking resort fees.

  4. “Passenger advocates are pleased with the proposed regulations. “DOT’s actions reinforce the agency’s unique role as the only forum — state or federal, judicial or regulatory — where consumer protections exist for airline consumers,” says Kevin Mitchell, who runs the Business Travel Coalition, a group that represents corporate travelers. Mitchell notes that the proposal is particularly necessary in light of an effort in Congress to turn back the DOT’s previous rule, which created the so-called “full-fare” advertising rule for airline tickets, requiring airlines to quote a ticket price that includes mandatory taxes and fees.”

  5. Other than masochists who would fly Spirit Airlines, who is actually “surprised” by fees on the airline? Not saying that people like the nickle and diming to death with various fees from airlines, but what able-minded person under 90 years old doesn’t know airlines charge for bags and to cancel/change a ticket? For those who prefer not to play along then they have a nice choice in Southwest Airlines.

  6. I am not sure bag fees, etc. are all that necessary, but I think taxes and fuel surcharges (ie fees that must be paid in order to fly) should be mandatory to include in prices.

  7. @Stuart Falk — KEVIN MITCHELL??

    In any case his argument makes no sense, he thinks that a DOT rule is going to trump legislation that Congress might pass? It works the other way around.

    The stuff in the rule I criticize has nothing to do with the full fare disclosure provisions of current regulations (and indeed, this regulation doesn’t really deal with those at all).

  8. I personally like the work Gary is doing here. I’ve been wary about all this proposed rule making, since I see no benefit to me, and presumably many others who travel as I do. I seldom pay a fee, and when I do it is almost always a late decision (“OK, I guess I’ll check a bag this time since I have more stuff to carry than I thought”), not something I’d do when making the reservation initially.

    I have not understood how the micro managers want the customer experience to change, exactly. If it would be a simple “opt in” for the new formats, then I and many others could simply ignore it in favor of just getting the fare quickly and simply as is the case now. If when making a reservation we will now have to first fill in an extending questionnaire listing our preferences regarding bags and seat assignments; a listing of all potentially relevant credit cards; a listing of all program memberships and statuses; and a description of what our moods and the phases of the moon will be at the time of travel; then I think this is a disaster in the making.

    Everybody has a different set of priorities. To assume and require that the airlines and websites cater favorably to those with certain specific needs is unneeded and unwelcome government meddling in our decision making process.

  9. @DaveS: The more complicated these systems are, the more advantage we obsessives have over people who have lives.

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