PRICING & ADVERTISING Overview:
Consumers have a lot of options for buying airline tickets and air tour packages. Dozens of travel service websites now compete with the airlines’ own sites (as well as with the “old-school” ways of using a neighborhood travel agent or calling the airline reservations number). Competition can be good, but the government is worried that sometimes consumers aren’t getting quite the bargain they think. DOT Department of Transportation is now considering stricter advertising requirements to make sure that ticket buyers aren’t fooled by fees and charges hidden in the fine print. And it’s thinking about whether to ban the practice by some tour operators of reserving the right to increase the ticket price after purchase.
This post will tell you more about what the problems have been, and what solutions DOT Department of Transportation is considering — and alert you to questions DOT particularly wants people to comment on.
Federal regulations now make it an “unfair and deceptive practice” and “unfair method of competition” to advertise a ticket price that is not the total price the consumer will end up paying. However, with the growing popularity of travel advertising on the Internet, by email, and through other electronic means, some ticket-selling practices have developed that violate the spirit of this rule, such as:
- Quoting ticket prices without taxes and fees, then listing those charges separately — sometimes with the total cost calculated, but sometimes requiring the consumer to do the math;
- Advertising prices for “one-way” fares that are actually available only if the consumer buys a round trip ticket;
- Advertising air/hotel packages at a price for double-occupancy, but making them available only if travelers purchase two packages at that price;
- As part of unbundling services that used to be included in the ticket price (see Baggage and Other Fees), adding charges for extra services (e.g. premium seat assignments, travel insurance) to the ticket price unless consumers affirmatively “opt out” of buying those services. (Often this is done through a small, pre-checked box — buried in the long set of terms and conditions — that the consumer has to uncheck to avoid the charge.)
Also, there’s been some doubt about whether the pricing/advertising regulations even apply to ticket agents someone other than an airline that sells, provides for, or arranges air transporation not affiliated with the airlines.
Finally, some ticket sellers (particularly air tour operators) reserve the right to raise the price or change the conditions of travel after the consumer has already purchased the services. Usually, the stated reason is something like passing along “fuel surcharges,” increases in the price of seats, etc. DOT Department of Transportation regulations now allow this as long as the consumer gets “conspicuous written notice”, but some sellers still bury the notice in the fine print. Then consumers are caught off guard with post-purchase increases.
DOT is thinking about beefing up the existing “unfair and deceptive practice” rules with some additional requirements and clarifications:
- Advertised fares may not show a price different than the entire price paid by the consumer. So, for example, many sellers would have to reverse current practices, and use the fine print or links/popups to break out taxes and fees from a clearly presented total price. This would apply to hotel, tour, or other packages as well as to ticket-alone advertising.
- Fares may not be advertised as “one way” if in fact the price is available only for roundtrip travel. Instead, sellers must refer to these fares as “each way” if they reflect only one part of the required roundtrip price.
- The new rule would apply to everyone who sells airline tickets — including independent travel agents, online ticket sellers, etc. — not just the airlines.
- Optional services like travel insurance and premium seating must be offered on an opt-in rather than an opt-out basis.
- The practice of post-purchase price increases in the air transportation portion of packages or tours would be banned outright.
DOT thinks it would be justified in ordering these changes in airfare advertising practices because no other state or federal agency or court has authority to decide what is unfair and deceptive in airfare advertising.
Should DOT Department of Transportation also have a new rule like the “one way” fare proposal, to deal with advertising double occupancy rates for hotel/air and tour packages?
Should DOT Department of Transportation adopt some less strict approach to post-purchase price increases than a complete ban? Possibilities include:
- Allowing the increases so long as the seller (i) “conspicuously discloses” the possibility of an increase, (ii) states the maximum amount, and (iii) requires consumers to affirmatively agree to this.
- Same as above, except also prohibit increases within 30 (or 60) days of the first flight in the itinerary
How will these possible advertising changes be viewed by consumers? Will they really help airfare purchasers make more informed decisions?
How would the changes affect ticket sellers — including potential costs of changing current websites and other advertising structures?
See what DOT Department of Transportation said on this issue: NPRM Section 7.
See the proposed rule text on this issue: Section 399.84.
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