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.”
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.