DOT Moves Forward on Mandating How and Where Airline Fees Should be Displayed

Government Regulation

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.

DOT Fee Rules

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.

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29 comments on “DOT Moves Forward on Mandating How and Where Airline Fees Should be Displayed

  1. What is meant by “seat fee” here? Is it a fee to reserve any seat? Or is it the fee to reserve premium seats in the class (eg domestic economy-plus or exit rows)? How does the proposal mandate things when different seats cost different fees to reserve?

    1. Richard – This would refer to any cost to reserve a seat in the specified cabin. So an Economy Plus-style seat would be included on a coach itinerary since it’s considered coach and is just a pay per seat thing.

      The specifics of how it would be displayed aren’t fully mapped out in the proposal, but the suggestion is that airlines could just link to a seat map with the prices attached, as they do today later in the booking process.

  2. It is not that different from Europe where the essential fees should be available early in booking, so prices on different airlines can be reasonably compared.

  3. Rental Cars need these pricing rules. I just rented a car in MSP. Mandatory fees and taxes are 60% of the rental charge. Alamo 2 day rental is 21.20. Taxes, mandatory fees are 12.57. Alamo shows total cost on first page. Others don’t.

    1. Don Beyer – Amen to that. Rental cars and hotels have somehow magically avoided all of the rules that apply to airlines.

  4. Good morning cranky I hope is well. Why would it be silly to include the fees in the total price? By selecting all the options you have upfront with seat location, bag fees and other amenities and getting a ticket price would be the best way to pick and choose which option to go with.

    1. Seat fees are difficult because theoretically you can have as many distinct fees as there are seats; in practice, some airlines do have more that 10 different seat fees for each flight (I’m thinking of Allegiant). It makes little sense to pick your seat fee upfront — a seat fee has to be tied to an actual seat that’s available on a particular flight.

    2. Olamide – It would be silly to include the fees in the total price because not everyone wants those options. Now, if a website wants to let people pre-enter what services they want, then they could include it all in the total price. That would be smart for a website to do that.

  5. If you can see the prices upfront when looking at a menu, walking the aisles of a store, ro driving past a gas station, why can’t you check all the prices first thing when checking the price of an airline ticket?

  6. Personally I think airlines (some more than others) are walking on shaky ground with the fees, aka, tying products. Upfront disclosure is often murky and in some cases it’s near impossible to avoid paying a fee. I applaud the DOT for anything that would provide uniformity across all airlines and GDS. That said, the fees are at least fixed prices. Actual ticket prices and the taxes/fees hidden in there is much more frustrating. Comments on the Transparent Airfares Act?

    1. Except not all the fees are the same. Spirit charges different prices for each seat depending on aisle/window/middle. What about regular vs. preffered seating? Extra legroom? What if a customer wants their seat unassigned to avoid the fee? Is it really helpful to a customer to see “fees of $0-$100 to select a seat may apply”? Bag fees can vary by status, destination, fare bundle, etc.

      The hard part about making fees “transparent” or like a “menu” is that airlines are not all offering the exact same items at flat prices. I applaud the DOT for trying to find ways of improving this, as doing nothing is seemingly not sufficient, but it is a complicated issue.

      I would like to see them go after any and all mandatory, non-government fees first: fuel surcharges, hotel resort fees, etc.

    2. A – Regarding Transparent Airfares Act (this would allow fares to once again be displayed without taxes), I don’t have a problem with it but I think that ship has sailed. They should stop messing around with this issue and just move on.

  7. On some airlines the seat fee just gets you an assigned seat. This has two advantages. Say you and a companion are travelling together. With assigned seats you sit together. Without assigned seats on a full flight both of you probably end up in middle seats in different locations. If you are travelling by yourself the assigned seat lets you pick an aisle or window rather than getting stuck in a middle seat.

    Air Canada Rouge, a downscale offshoot by Air Canada with most seats having a knee-busting 29″ pitch, for one price will sell you an assigned seat and for a bit more will sell you a seat with extra leg room if available.

  8. I chuckle. I’m actually reading this notice of proposed rulemaking. As to others reading it, my guess is that they too, grew up collecting airline timetables. Probably subscribed to ATPCO tariffs, too. Whatever!

    Have at it, DOT, but I still don’t understand why we have to enlist a separate govenrmental group to do all this stuff to “enhance protections for air travelers and to improve the air travel environment” when we already have an agency, the FTC, that handles this for most if not all of the rest of the industries in this county. Give them the the statutory authority. (Airline lobbyists, I’m sure, would fight that tooth and nail.)

    So, the airlines go nuts with their rules, regulations, and fare structures, ways to hide, bias, or otherwise not fully disclose this or that, using asterisks, anecdotal comments, or words that mock Webster or defy basic logic. As to anything dealing with code-share, I’d rule: “Sorry, can’t do it” and that would solve that! Anyway!

    I still have the nerve to complain that DOT didn’t address “transparency” on certain other areas, service, for example–1-stop flights–where airlines market and advertise these flights without any information that they will require a change of planes at the intermediate point, or in another example–the co-called “change-of-gauge” flights–where the airlines market and advertise them, or more accurately lists them in a flight-display manner that suggest no plane-change will be required.

    Well, I await the acutal Federal Register filing. I continue my spreadsheets, my…whatever!

  9. I have to disagree with you about not requiring all-inclusive fares. I think that a fare should include first and second bag fees, meals, seat assignment, carry-on, non-alcoholic drinks, oversize for the seat fees, etc. This feeing people to death needs to stop, an all-inclusive fare would be a step forward in the airline industry.

    1. mharris127 – You may think that, but I don’t want to see that. And there are plenty of others who don’t want to see it either. If you require an all-inclusive fare, then the base fare has to rise to make up for the lost fee revenue. That means that people who don’t check bags or care about meals will pay more. Meanwhile, those who do check a bunch of bags and care about meals will pay less, subsidized by everyone else. Sounds terrible to me.

      1. Hi Brett. Fares are not lower because of a la carte. I see higher fares for different flights yet those fees are still there on the higher fare. If one buys a full coach fare, aka walk-up fare, is that fare an all inclusive fare?

        1. The problem with that theory is that yes, while fares might not have come down in actual dollars, you get a very different answer if you look at inflation-adjusted dollars. Back in 1987, I remember going to the local travel agency with my mom and her paying $198 for a ticket from DFW to SFO and back for my sister to get to attend school out there. Just using CPI, $198 in 1987 would equate to roughly $415 today. Plugging in random dates in July, you can get a round-trip fare, departing on Thursday and returning Monday, from DFW to SFO for $347. That $68 difference would cover a checked bag each way, with $18 left over for a “preferred seat” or meal for sale. And you can get that price on Virgin America or United, without having to stoop to the level of Spirit. Bottom line is, Chris Elliott and others like to spin this tale of “windfall profits” at the airlines thanks to ancillary fees, but even with the fees, the numbers just don’t back up that up. You are paying roughly the same, if not a little less, than you were 25+ years ago. (Yes, I cherry picked this one route because I had information at the top of my head. Your individual results may vary.)

          To answer your question, it depends. Some airlines include ancillary services in a refundable fare; others don’t. AA for example doesn’t include a checked bag even in a refundable coach fare.

          1. The problem with the “windfall profits” line is airlines really aren’t making that much profit when compared to other industries. Yes, they’re finally making a profit, but they’re making a $150 million or so in profit on $30,000+ million in revenue. That is middling to average in other industries.

        2. Don – It is simple math that if fees go away, fares will be higher. Airlines need to make a profit and they’re only doing that today with fee revenue. If that goes away, then fares have to rise to enable profits. I’m not sure I’m following your question about if full coach fares have fees or not. The point is that fare revenue will have to rise if fees go away.

    2. Mharris, the product you are asking for exists: First class. It has every service that you’ve demanded at a fair market price and everything is included.

  10. And when do we apply taxes to some of these fees? Splitting things out from the base fare, and selling them as a la carte items with fees that aren’t taxed, is a form of tax avoidance.

  11. Putting fees upfront in the buying process is just a matter of programming. In my view airlines should disclose all fees before the ticket is purchased as well as the total cost of the ticket including tax. If they want to show the tax as a separate line item that’s fine. Show everything as a separate line item, including fuel surcharges, various “Q” charges – everything. And tell us what they’re for!

    As a corporate travel director, having ancillary products available for sale in the GDS so they show up to a corporate travel agent and also in our online booking tool is a must. The drip drip of fees plays havoc with the process.

  12. Looking forward to the time when airlines link up with booking websites to provide premium seat pricing on available seats. Every day passengers arrive at the airport with seat numbers printed on their itineraries that they didn’t know they had to pay extra for so they don’t really have a seat. This can be a disaster for passengers who check in after all the seats are assigned on an oversold flight.

  13. I support any rules that make it easier to calculate the total cost of a flight which is what the customer is actually interested in. A few years ago, airlines started low-balling the fare but tacking on fees for basically everything. This is dishonest advertising and should be stopped. Failing that, full disclosure should be regulated by DOT. And the customer should not have to plow through pages of incomprehensible legaleze on a web site to know what the total cost will be. Airlines do this because it makes it difficult to comparison-shop.

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