The Department of Transportation (DOT) is at it again. In its latest proposed rulemaking, DOT tackles a lot of issues behind the veil of trying to protect the consumer. In a shocking move, most of them aren’t bad. In fact, many are downright good ideas. But I’m going to talk about the bulk of those tomorrow. Today, I’m just going to focus on the one biggest piece of the 100+ page document. Let’s talk about airline fee disclosure.
Over the last several years, as airlines have added fees, DOT has created a variety of rules to try to make them transparent, or something like that. In general, I’d say the rules have been fairly benign and not all that useful. For example, airlines have to disclose a change in bag fees on their website homepage. Whoop de doo.
So DOT has decided to take another stab at this issue, and airlines have long been fearful of what it would look like. I have generally sided with airlines on this one, but now that we see the proposal, DOT is leaving the door open here to treat it with actual finesse. I didn’t think that was something DOT was capable of doing.
There are really two pieces being debated here. The first is how fees should be distributed to third party travel sellers, and the second is how the fees should be disclosed during travel search and booking. And since this is a proposed rulemaking, DOT has provided multiple options and is asking for public feedback. (You can give your feedback here. Just click the big blue “comment now” button.)
Airline Fees and Third Parties
The first question is centered around whether or not airlines should be forced to distribute real-time fee data to third parties, and if so, how should they do it? The Global Distribution Systems (GDS), the big central reservation systems like the behemoth in the US market, Sabre, have been lobbying hard to make this happen. Granted, you might not see it since it’s usually hidden behind third parties so it looks like “Americans for Freedom” or something that sounds impossible to refute. But the intent here is to get the data spoon fed in a format that is already supported by the GDS. The airlines don’t like that.
The airlines think that it should be a business decision. If the GDSs want to get the data spoon-fed to them, then they need to negotiate it. It’s way more complex than that, but the airlines are really trying to just get some leverage back from the GDSs and move forward with better technology. It’s a big struggle.
With that background, DOT decided to dive in. The general consensus is that real-time fee data needs to be disclosed in a timely fashion, but DOT has so far kept this broad. There are two proposals. One would require fee information to be provided to ticket agents and GDSs while the other would only require it be given to ticket agents.
Here are a few bullet points on what this is and what this isn’t.
- No proposal would require that airlines allow third parties to sell their ancillary products, though DOT asks for comments on if that should be required. (My answer: no way.)
- No airline would have to distribute frequent flier information so that the third parties would be able to show discounts associated with frequent flier status. In other words, the airlines would just have to distribute the rack rates for fees.
- The proposed rule doesn’t say anything about how the data would have to be distributed. Any reasonable format would work, in theory. (I’m guessing writing it in crayon and mailing it daily would not be reasonable.)
- We’re just talking about four core fees here. It’s the first checked bag, second checked bag, carry-on bag, and seat fees that would need to be distributed.
Looking at both these proposals, I like the one that mandates distribution only for ticket sellers. Why should it matter if the GDS has it as long as the ones actually selling tickets have it? Though I don’t know for sure, I’m assuming the airlines could simply provide direct links to the information on their own sites or provide an API if they wanted. The third party sites could then just integrate links into their booking path.
This gets the right information to the person buying the ticket, but it doesn’t take away the airline’s ability to negotiate for better access to fee data. And of course, it leaves it up to the airline and third parties to negotiate to allow the sale of those ancillary offerings.
How Fee Data Needs to be Displayed
The other part of the issue is about how it has this fee data has to be displayed publicly. This would apply to airline websites as well.
Sites would be required to show those four core fees on the first page where an itinerary-specific fare is shown. It doesn’t have to be listed – it could be via a link or a mouseover, but it would have to show accurate fees as they pertain to that set of flights.
This is good for bags though bag fees are fairly uniform among those who charge them. This is way more useful for seat fees which can vary so much. On most airline websites now, you have to put in fake passenger information just to see the seat map with individual seat pricing. This would make them move that part of the process forward. Why hasn’t this been done yet? Well, it’s probably because it’s expensive to get the systems to behave this way. But it would be a big improvement for the traveler.
It should be noted that none of these proposals would do something silly like require the fees be included in the total price. It would just require that the fees be made available in real time early in the booking process.
Like I said, this was just one part of the rulemaking. I’ll review the rest tomorrow. But this one has turned out to be much less painful that I was expecting.