Wednesday, March 14, 2018

Business travel leaders urge passage of legislation to help drive airline competition

Leaders from 32 prominent travel industry organizations have joined forces to press for the passage of legislation that would promote transparency and competition in the U.S. commercial air travel.

Representatives of corporate travel departments, travel management companies and travel associations representing millions of customers signed a letter to U.S. Senator Susan Collins (R-Maine), thanking her for her leadership in legislative efforts to protect companies and consumers by promoting greater airline transparency and competition to protect American businesses and consumers.

Sen. Susan Collins (R-Maine)
Sen. Collins, who is chair of the Senate subcommittee that funds the U.S. Department of Transportation (DOT), has introduced legislation to ensure that the DOT resumes collecting critical information as part of a fact-finding review, known as a “request for information” or RFI.

An RFI was launched in Oct. 2016 but abruptly suspended by DOT prior to the March 2017 deadline to submit comments. No action was taken despite overwhelming public support to do so.

Among other things, Senate bill S. 1655 specifically “Lifts the suspension of the comment period imposed by DOT on its Request for Information titled ‘Exploring Industry Practices on Distribution and Display of Airline Fare, Schedule and Availability Information.’ Requires DOT to accept additional public comment for 30 days after enactment of this bill.”

The proposed legislation comes in response to concerns that some U.S. airlines have been withholding and restricting access to complete airfare, schedule and inventory availability information from some of the metasearch platforms and third-party travel sites relied on by consumers and businesses.

According to a study conducted for the International Air Transport Association, the global airline industry’s lobbying group, “Airlines anticipate third-party retailers will account for fewer reservations between 2016 and 2021, as carriers admit they will place more focus on direct (including their own websites) distribution.” The airlines plan to make this shift despite the fact that the same study says, “Passenger loyalty to airlines has reached an all-time low,” and “43 percent of leisure passengers and 51 percent of business passengers want to spend less time researching flights.”

In their letter to Sen. Collins, the coalition said, “Airlines have reduced consumer choice by making it exceedingly more difficult to comparison shop for the best flight at the lowest price in a transparent, simple and efficient way.”

That, the coalition asserts, will result in “Consumers almost always paying more due to the fact that an airline's offerings are no longer in a competitive environment. Further, search costs increase dramatically when consumers have to visit numerous airline sites to gather information to make an informed choice.”

My take

Fare transparency is just one of the many things that need to be corrected in the U.S. airline industry. Poor customer service, nickel-and-dime charges, shrinking seat space are just some of the reasons the industry desperately needs to be re-regulated.

Ancillary revenue, which is derived in part from those nickel-and-dime charges, is at an all-time high, despite widespread calls for them to be reined in. A report issued in December 2016 by President Obama’s National Economic Council called for “[P]olicymakers at all levels of Federal and state government, the private sector, and researchers … [to] seek to mitigate or eliminate the growing use ‘hidden fees’ across a number of industries.”

Issued during the final weeks of the Obama administration, and with its call to action buried in the final lines of the last page of the report, the document did not receive the media attention it deserved.

In April 2016, in the face of lobbying from an airline trade group and misguided editorials by several major newspapers, the U.S. Senate killed an amendment to a bill that would have forced airlines to stop shrinking seat space. The amendment to the FAA reauthorization bill, introduced by Sen. Charles Schumer (D-N.Y.), would have ordered a moratorium in reductions to seat width and pitch, and would also have empowered the FAA to consult with experts and set new standards for seat dimensions that maintain “the safety, health and comfort of passengers.”

Air travel is no longer the luxury it was in the 1950s and ‘60s; it is now solidly mainstream, depended upon by most Americans for far more than their annual vacations. Accordingly, airlines must be held to certain minimum standards for service, comfort and reliability. The airlines have clearly shown themselves unwilling to embrace any meaningful standards, so standards must be forced upon them and enforced. 

Reregulation seems to be the only way that will happen.

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