RADNOR, PA - Business Travel Coalition (BTC) today characterized the U.S. Department of Transportation Inspector General’s (IG) just-published report on the airline industry as providing clear and compelling evidence for the need for increased consumer protections. The report’s conclusion is 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 IG notes 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 US Airways combine. (The IG’s report can be downloaded at http://www.oig.dot.gov/node/5948)
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. 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.
“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,” stated 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 Man’s Land as consumers have virtually no rights at the state level and no protections under Federal Trade Commission authority.
“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.