There’s an interesting rulemaking proposal rolling through the Department of Transportation (DOT) that caught my attention recently. DOT is looking to overhaul the way that it applies its consumer protection rules, and this new plan would tip the scales more toward the airlines. The thing is, it also tips the scales toward fairness. It just may be tipping a bit too far.
Do you have trouble sleeping? May I suggest a read through the 35-page rulemaking. No time? Ok, I’ll sum it up for you. It all circles around 49 U.S. Code §?41712 (a). That says:
On the initiative of the Secretary of Transportation or the complaint of an air carrier, foreign air carrier, air ambulance consumer (as defined by the Secretary of Transportation), or ticket agent, and if the Secretary considers it is in the public interest, the Secretary may investigate and decide whether an air carrier, foreign air carrier, or ticket agent has been or is engaged in an unfair or deceptive practice or an unfair method of competition in air transportation or the sale of air transportation. If the Secretary, after notice and an opportunity for a hearing, finds that an air carrier, foreign air carrier, or ticket agent is engaged in an unfair or deceptive practice or unfair method of competition, the Secretary shall order the air carrier, foreign air carrier, or ticket agent to stop the practice or method.
Now, you’ll notice a whole lot of links in there, and those will take you off to definitions. Notice, however, that “unfair” and “deceptive” do not have links. That’s because they aren’t defined, and that seems strange since DOT can not only tell the airline to stop practices but it can also levy fines.
Back in 2017, President Trump signed an order looking for regulations to ditch or modify, and the airline lobbying group Airlines for America (A4A) took note. They asked DOT to define these terms, because they felt that airlines had been wrongly punished in several instances where it didn’t make sense. What has been so bad? Well, A4A gave some examples in this document. For instance…
- Back in 2017, there was a rule that almost went into effect which would have required airlines to display optional services/fees through every outlet which sold tickets. It also required baggage fee info to be disclosed during the search. DOT never said why it was unfair or deceptive to do it the way it was being done previously, but it used that statute as justification anyway.
- Airlines have been required to only display pricing including all government fees and taxes for several years now, but no other industry has that requirement. Fuel surcharges, yes, that’s deceptive to leave those out, but if it’s just government add-ons, then it’s hard to see how that’s unfair or deceptive when consumers generally expect to have to add tax to an advertised price for everything else.
- DOT also requires airlines to either hold a fare for 24 hours before purchase or allow someone to cancel and get a full refund for 24 hours after purchase without penalty as long as it’s at least 7 days before travel. That’s another strange rule that’s unique to the industry. You can’t call a hotel and tell them to hold the rate for you for 24 hours, nor can you buy a non-refundable prepaid hotel rate and get it refunded within 24 hours.
You can go through the document yourself to read the arguments in greater detail, but the basic point they’re trying to make is that the airline industry gets treated differently because the rules are different than the ones the FTC uses to police other industries.
In the public eye, this is a tough sell. If you look at those three examples above, they sound consumer-friendly. But then again, telling an airline it has to give a stuffed animal and back massage to everyone would be customer-friendly as well. But would it be fair? The question is, where does that line get drawn?
A4A made a seemingly sensible suggestion. Apparently the Federal Trade Commission (FTC) has a definition for the “unfair” and “deceptive” terms, so why not apply those to airlines?
What exactly do the FTC rules say? Well, “unfair” was defined under 15 U.S. Code §?45 (n) and “deceptive” was defined under a 1983 FTC policy. Instead of giving you those details (you can look them up yourself if you want to read the legalese), let’s see how DOT explains it in English:
First, it would define a practice as “unfair” if it causes or is likely to cause substantial injury, which is not reasonably avoidable, and the harm is not outweighed by benefits to consumers or competition. Second, the proposed rule would define a practice as “deceptive” if it is likely to mislead a consumer acting reasonably under the circumstances with respect to a material issue. Under the proposal, an issue is “material” if it is likely to have affected the consumer’s conduct or decision with respect to a product or service.
This sounds completely reasonable, and if it’s good enough for all the other industries, it should be good enough for the airline industry too. So why did I say this may have tipped the scales too far?
There’s another piece in this proposed rulemaking that talks about just how the process of declaring something “unfair” or “deceptive” will go. Once the decision has been made, there would be an opportunity for the airlines to ask for a formal hearing. Specifically, this would apply for “discretionary aviation consumer protection rulemakings… that are not defined as high-impact or economically significant.” This sounds like a great way for airlines to delay and disrupt, and that concerns me.
If we’re talking about something that’s economically significant or high impact, that should require more diligence, but for something that’s more minor, this is just going to bog down the process and waste everyone’s time. I think the comment period is good enough.
In the end, this does seem like an improvement overall. Having a set definition in line with the FTC should make for a more fair process. Let’s just see if the airlines find a way to abuse it.