September 4 - Changes To Fee Transparency Rule

Transparency/Transactability Changes to Proposed Rule

Overall Analysis:  

Consumers should be able to see, compare and purchase basic ancillary services through all of the distribution channels that airlines have opted to use.  We thus favor the critically important DOT proposal that an airline be required to provide ancillary fee data to ticket agents who are authorized to sell travel services on behalf of an airline. 

However, that core proposal needs to be accompanied by certain other elements in order to fully serve the interests of airline consumers. The three most critical elements that need to be incorporated into any final rule are outlined below. 

Three Critical Changes to Proposed Rule:

1) The rule should include a requirement that fee data provided to ticket agents be transactable.

Rationale: To airline consumers, transparency and transactability are interwoven, and consumers should be able to buy basic ancillary services during the ticket purchase process. A rule that does not require airlines to enable consumers to purchase basic ancillary services (i.e., transactability) would not resolve the problems that confront airline consumers.   

Without transactability, prices for ancillary services would change and specific seats, for example, might no longer be available when a customer attempts to purchase them, undermining the principle of transparency.

Airlines now change prices for ancillary services like seat assignments on a dynamic - potentially minute-by-minute - basis, so a price presented to a traveler or travel agent during the search process may not be the same price later charged for that service, unless the ancillary service can be purchased along with the ticket.

As a result, there is a strong potential for bait-and-switch pricing when travelers are offered low prices during the search process, then charged higher ones when they try to complete the transaction, particularly after a traveler has been locked into a non-refundable ticket.  In addition, desired seats, such as four adjoining seats for a family, may have disappeared when a consumer tries to buy them later.  

Without transactability, ancillary service bookings would be more confusing, time consuming, complicated, and counterintuitive, as consumers or their agents are forced to take multiple additional steps to purchase a core component of their flight, only to see prices rise or inventory disappear when they attempt to do so.   

Solution:  The rule should require airlines to make all of the basic ancillary services that they offer transactable at the time of ticket purchase through the distribution channels they choose to use. Some airlines already make a limited portion of their ancillary services transactable today through ticket agents, so there is no technical limitation preventing it.  Ancillary fees are transacted smoothly and efficiently through existing industry protocols and technical standards. 

2) The rule should require airlines to share information on ancillary services with all ticket agents they have opted to use, including GDSs (i.e. “Option A”).

Rationale: Requiring disclosure of ancillary service fees to ticket agents that sell directly to consumers but not global distribution systems (GDS) (i.e. “Option B” in the NPRM) is not a viable option. There is no usable, workable mechanism by which airlines can electronically disseminate their ancillary service information to tens of thousands of individual travel agents other than the GDS networks, and most travel agents depend on the GDSs for nearly all of their pricing information. 

GDSs have had the proven and tested capability to receive and efficiently disseminate this information to travel agencies since late 2010. The rule should utilize that capability to ensure that ancillary fee information can be disseminated through all of the channels that airlines and consumers use. 

Solution:  The rule should combine Option A with transactability to ensure that travelers are able to see, compare and purchase the ancillary services they need through any available distribution channel in which the airline offers its services. 

3) The rule should include boarding and change/cancel fees as basic ancillary services, as well as any ancillary bundles offered, not just checked and carry-on baggage and paid-for seat reservations. 

Rationale: Airlines made the strategic business decision to break apart the base ticket price into its component parts, including boarding, seating, and baggage, thus depriving consumers of the ability to readily compare all-in pricing. This rule should address that consumer harm by making all of the original components of the ticket price subject to the rule. As baggage and seat fees are already covered in the proposed rule, any fees for boarding also should be covered.     

Change/cancel fees are already transparent – and generally transactable – and this rule should codify that protection. Ancillary bundles (that is, combining two or more basic services with or without other services not covered by the DOT rule, e.g. Wi-Fi services bundled with a seat) should also be covered, or those bundles may be used as a way to avoid the requirements of the rule.

Solution: The proposed rule should be expanded to include fees for boarding and change/cancel fees as “basic ancillary services” under the disclosure and transactability requirements.  The rule should also require that airlines must treat ancillary bundles as “basic ancillary services” covered by the rule if they include any of the covered ancillary services.

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