PRICING & ADVERTISING DRAFT SUMMARY

What’s Going on Here?

This is a summary of the discussion on the Pricing & Advertising post between June 2 and September 10.  (On September 11, the post was closed to further discussion.)  The summary was written by the Regulation Room team based on all the comments people made.  This version is a DRAFT. We need YOUR help to make sure that nothing is missing, wrong or unclear.

Important dates:

Sept. 13 – Sept. 19:  Comments can be made here on the draft
Sept. 20 :  Commenting on the draft summary closed
Sept. 20 – Sept.  22:  Regulation Room team reviews comments and revises draft
Sept. 23:  Final Summary of Discussion is posted on Regulation Room and submitted to DOT Department of Transportation as a formal comment in the official rulemaking record.  (Sept. 23 is the last day of the official commenting period.)

Things to keep in mind as you read through the draft summary and make comments:

1. The goal here is to give DOT the best possible picture of all the different views, concerns, and ideas that came out during the discussion.  This is NOT the place to reargue your position or criticize a different one.  Focus on whether anything is missing or unclear, not whether you agree or disagree.
2. Rulemaking is not a vote. DOT is not allowed to decide what to do based on majority rule.  (Why? See Effective Commenting).  Approximate numbers are provided in the summary only to give DOT a sense of the frequency of views, concerns, and ideas.

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Pricing & Advertising generated a lot of discussion. 94 comments were made on this post:

• 79 comments were made by 52 users
• 15 comments were made by Regulation Room moderators

Commenters included people who identified themselves as frequent flyers, occasional travelers, and business owners. Four who identified themselves as working for a travel agent or Global Distribution System (GDSs), one as working for a U.S. air carrier, and one who described their interest as “other” also commented.

In both this discussion and the discussion on Baggage and Other Fees, many commenters saw DOT’s proposals on full and fair advertising as an invitation to express their unhappiness about airfare cost and pricing practices.  So, although there is generally broad support for requiring additional disclosure of prices, fees and costs, commenters frequently seek regulatory action on the underlying pricing practices (even when this was not part of DOT’s proposal.)

Because of this, there is some overlap in the comments on the two posts.  We have not tried to combine overlapping comments, so the Baggage and Other Fees Draft Summary should be consulted along with what is said here.

Commenters are frustrated that airlines and other air travel sellers do not present information about fares, taxes and fees in consistent, easy to understand ways that enable intelligent comparison shopping.  For example, some include fuel surcharges in the fare while others list them separately.  Several commenters complain that airlines impose various surcharges and fees that are misrepresented as required by government.   Many recount experiences of believing they are getting one price for a ticket only to discover that undisclosed taxes, fees, etc. makes the final price much higher.  Some commenters believe that the level of confusion consumers experience from current methods of pricing and advertising is so great that it borders on fraud and bait-and-switch tactics.

Many commenters seem concerned that even with mandatory disclosure of fees, consumers will still be confused and mislead.  They emphasize that regulation in this area must be very clear and specific, with no loopholes that could lead to exploiting consumers.  In addition, commenters stress that price and fee disclosure has to be easy to view and understand, rather than coming in the form of many pages of fine print.  Moreover, they insist, the same disclosure standards should apply to all forms of advertisement – print, electronic, broadcast, and in person – and to third party ticket sellers as well as the airlines.  Several commenters urge that foreign airlines should also be covered for flights to and from the U.S., for undisclosed taxes and fees can be substantial for international flights.

Commenters had a number of suggestions about what disclosure regulations should cover:

There is broad support for requiring that the total final airfare cost, including all applicable taxes, fees, and surcharges, should be fully disclosed and clearly disclosed in advertising and before purchase.  (One commenter suggests that if airlines want to list a base price without taxes, the typeface should be no more than half the size of that used for the total fare.  Another would specify 12 point font.)  One commenter notes that the European Union already requires this, and that US airlines comply by providing full price information for tickets purchased on the foreign version of their website even while they are not providing the information for the identical flight on the American version of their site.  Another points out that if federal excise taxes can be included (as is currently the practice), there is no reason why other taxes, fees, and surcharges cannot be part of an advertised price.  Two commenters dissent from this, however.  They are concerned that airlines may not be able to fully anticipate all associated fees and taxes when advertising fares; these can vary considerably by individual flight depending, for example, on which connecting cities the flight is routed through.  One commenter in particular fears that airlines will respond to this uncertainty by simply raising prices across the board to be safe.  The other believes that the entire structure of taxes and fees would have to be revamped before fare prices can be stated in advance with complete accuracy.

Most commenters who addressed the issue support requiring fuel and other surcharges imposed by the airlines themselves to be disclosed separately.  These charges should not be misrepresented as government-imposed taxes and fees. Many commenters argue that these charges, along with taxes and fees, should be refundable if the ticket is cancelled (see below) but if not, urge that non-refundability be clearly disclosed.

Restrictions on change and cancellation should be disclosed clearly and fully.  Commenters complain that consumers are often unaware of hidden fees associated with changing or cancelling flights; these fees should be clearly disclosed at the time of purchase so that consumers can to make informed choices before buying.

Baggage and all required additional travel costs should be fully disclosed and, where possible, paid for by the consumer at the time of purchase, so that people are not surprised at check-in.

Optional services should be clearly distinguished from mandatory charges.  All commenters who addressed the issue agree that optional services should be presented as opt-in, not opt-out.

One commenter proposes that sellers be required to disclose the “agent’s fee,” separately from the base fare.

Dissenting from calls for more required disclosure, one commenter objects to additional regulation as taking basic responsibility out of people’s hands. He/she argues that so long as the total cost must be listed before the ticket charge is made, it’s up to the consumer to ask what the additional fees and charges are.  (Another commenter responds that ticket websites often do not have a place for consumers to ask such questions, and that sellers impose an additional charge for phone purchased from a person who could provide answers.)  One commenter believes that disclosing more than the total cost will be confusing.

One commenter answers DOT’s question about costs to sellers of changing their websites and adjusting their selling practices by saying that air travel sellers brought these costs on themselves when they created their current websites and other “semi-deceptive” sales methods. Another argues that all the small print “gotchas” in advertising cost sellers more the changes needed to make the site “cleaner, leaner and fairer.”

A few commenters specifically address the issue of what a “total fare” cost should include now that airlines are charging separately for so many services.  These comments are not always clear whether the commenter is calling just for advertising of the cost of traditionally included services,  or whether he/she is asking DOT Department of Transportation to require that these services be rebundled into the base ticket price.  (See the similar question in Baggage and Other Fees Draft Summary.)

In any event, these are the elements suggested as traditionally included in the total fare cost: roundtrip fare with all taxes and fees; one checked bag; advance seat selection )with at least one commenter urging DOT Department of Transportation to prohibit airlines from declaring window and aisle seats “premium” for which there is an extra charge), and beverage service.  As an alternative, one commenter proposes that all airlines be required to quote a “typical” fare that includes the price, fee and tax inclusive, to fly round-trip with one checked bag to the destination – regardless of whether the airline bundles these services or not;  the point is to give consumers a common point for comparing fare across carriers.

One commenter suggests that airlines should bundle services as on cruise ships, where different fares correspond to location of seat (this commenter would allow charging more for aisle seats) and set of services.  Yet another says that airlines should be able to charge separately for everything but water so long as there is full disclosure.

Five commenters strongly support DOT’s proposal to ban advertising one-way air fare prices that are really available only as part of a round-trip flight or with other additional fees.  Some would go further than the proposal and require that only the round-trip fare can be advertised in these circumstances.  Two commenters believe that analogous disclosure should be required of any restriction on occupancy rates, etc. in flight-accommodation packages.

Many commenters addressed the issue of post-purchase price increases.  (The nature and intensity of the comments suggests there was some misperception of the circumstances in which this issue could arises – i.e., commenters thinking that such increases were possible in run-of-the-mill ticket sales, rather than in the limited situation of a package tour offered by a tour operator.)  Most favor banning the practice regardless of whether the increases are conspicuously disclosed or affirmatively agreed upon, with several characterizing the practice as fraud or coercion.  Three suggest that if post-purchase increases are allowed, consumers should be able to cancel or change their plans without penalty.  Two others suggest that post-purchase increases should only be allowed if consumers are entitled to refunds if the post-purchase price falls below the price originally paid. Two commenters disagree with the rest on this issue.  They believe that consumers are adequately protected by DOT’s proposed alternative of requiring “conspicuous” disclosure of the possibility of an increase and of the maximum possible amount, and requiring that consumers affirmatively agree to this term.

Several commenters express frustration with advertised airfare prices that seem to change rapidly for no apparent reason.  In particular, some complain, price-comparison is difficult when a fare advertised on one website is gone in the time it takes a consumer to check another website for a different carrier – or even in the time it takes to actually try to make the reservation after selecting the desired flights.  One commenter, calling this problem a ‘bait-and-switch’ tactic suggests that websites be required to honor the offered price for a certain amount of time (e.g., 10 minutes).  Unless the flight has fully sold out, any available seat should be provided at the offered price.  Another commenter proposes that airlines be required to list the number of seats available at each price.

Several commenters complain about airline-initiated changes in flight schedules after purchase that leave travelers with a flight longer, at a different time, or otherwise less convenient than the one for which they purchased tickets.  These commenters urge DOT Department of Transportation to require airlines to address the problem by at least waiving change or cancellation fees and refunding “non-refundable” tickets if the traveler wants to make alternate arrangements.  Some would go as far as requiring airlines to provide satisfactory alternative arrangements to the original flight.  One commenter suggests that this situation be treated like involuntary bumping in terms of required compensation to passengers.  Another notes that such changes often result in less desirable seating, especially for parties traveling together.  This commenter points out that airlines penalize passengers heavily for making schedule changes, and yet passengers get no accommodation for airline-initiated changes.

In a related complaint, one commenter strongly urges that airlines be subject to a penalty for cancelling flights on short notice, since other arrangements (such as tours or cruises) are often timed to coordinate with the originally scheduled flight.

Commenters who addressed the issue strongly agree that taxes and fees collected with nonrefundable fares should be refunded if the consumer cancels the flight.  They consider the airline to be unjustifiably pocketing money that it will not be paying out to the entity imposing the charge.

One commenter complains that airlines can be very slow to post credits to the consumer’s credit card.  He/she urges DOT Department of Transportation to require prompt crediting of refunds and to impose a fine for noncompliance.