Congress needs to side with consumers, not US airlines

The U.S. House of Representatives is expected to consider a six-year FAA reauthorization bill this week, and consumer advocates are petitioning both the House and the Senate to put the interests of consumers ahead of those of the airlines, which would benefit from several proposed amendments to the bill.

“The amendments to the FAA reauthorization bill, proposed by airlines, represent the worst and most deceptive Orwellian assault on airline consumers ever,” Kevin Mitchell, Founder of the Business Travel Coalition, said in an editorial distributed last week. “Under the ruse of seeking a ‘consistent level of consumer protection,’ the amendments would require metasearch sites, which do not issue airline tickets, to do what is virtually impossible.”

The net result, according to the BTC, would be the abolition of easy, side-by-side price comparisons provided by such metasites, which it calls independent providers of neutral travel information. Such comparisons save consumers billions of dollars a year. The elimination of those sites would reduce competition and increase profits for the airlines without providing any benefits for the traveling public.

In recent years, U.S. airlines have come under increasing criticism from organizations and individuals for their ever-more arcane pricing schemes and lack of transparency with regard to pricing.

Here is the BTC’s full editorial:

FAA Reauthorization Bill Amendments Are A Shameful Orwellian Ruse to Cut Airline Competition

Airlines industry’s deceptive legislation would end independent air travel comparison-shopping at consumers’ expense

Kevin Mitchell
Chairman, BTC
Business Travel Coalition (BTC) called on U.S. House and Senate leadership to put the interest of consumers first by rejecting airline industry-backed amendments to the Federal Aviation Administration (FAA) reauthorization bill once again proposed by U.S. Senator Amy Klobuchar (D-MN) and U.S. Representative Dan Lipinski (D-IL).

The amendments (U.S. House Sec. 535 & Senate Sec. 3120: Consumer Protection Requirements Relating To Large Ticket Agents) to the FAA reauthorization bill, proposed by airlines, represent the worst and most deceptive Orwellian assault on airline consumers ever. Under the ruse of seeking a “consistent level of consumer protection,” the amendments would require metasearch sites, which do not issue airline tickets, to do what is virtually impossible.

The airlines have developed this legislation with full knowledge that they are not required to give the permissions, data or tools necessary for independent travel information providers to comply with the requirements of the amendments.

The airline-proposed legislation is plainly designed to kill off independent providers of neutral travel information with annual revenue of $100 million or more, and with it, easy, side-by-side comparison-shopping that saves consumers billions of dollars each year. It will reduce competition and result in consumers paying higher airfares with no benefit for travelers, while boosting profits for airlines.

“Moreover, the language makes it unclear how the $100 million in annual revenues is calculated as some online sites, travel management company portals and other technology companies are businesses within larger travel-related enterprises and serve as ticket agents to large U.S. corporations, universities and federal and state agencies,” stated BTC chairman Kevin Mitchell. “What is clear though is if the requirements apply to the metasearch sites then they would no doubt apply to innovative new entrants like Google Flights. Perhaps killing Google Flights in the cradle, before it’s depended upon by millions of consumers, is an objective that is motivating the airlines,” added Mitchell.

The amendments say, “The term ‘ticket agent’ includes a person who acts as an intermediary involved in the sale of air transportation directly or indirectly to consumers, including by operating an electronic airline information system, if the person (i) holds the person out as a source of information about, or reservations for, the air transportation industry; and (ii) receives compensation in any way related to the sale of air transportation.”

The deceptive and unworkable amendments require those newly defined “ticket agents” to perform all the transactions airlines do through their websites, airport locations or call centers. The transactions are dependent on the legal, process, data and technological cooperation of the airlines, something they can and have withheld.

The amendments require ticket agents to:
  1. Provide prompt refunds when due, including fees for optional services that consumers purchased but were not able to use due to a flight cancellation or oversale situation (the airlines control oversales and do not share information on the passengers they remove from flights);
  2. Provide an option to hold a reservation at the quoted fare without payment, or to cancel without penalty, for 24 hours; (the airlines have a proposal pending before the U.S. Department of Transportation to eliminate this popular policy)
  3. Disclose cancellation policies, seating configurations, and lavatory availability with respect to flights; (something that airlines change at a moment’s notice due to weather conditions, equipment substitutions and other operational events)
  4. Notify customers in a timely manner of itinerary changes (also under airline control and subject to change at a moment’s notice); and
  5. Respond promptly to customer complaints (the vast majority of complaints are with airline service, not ticket agents).
It is not hyperbole to say it would mean the beginning of the end of access for consumers to independent comparison-shopping for air travel. What’s more, without independent airfare comparison sites, there will be virtually no way possible to keep airlines honest on their own websites.

Under the cynical ruse of “Customer Service Standards” language, the airlines have once again manipulated a captive Congress into doing something that is good for them and bad for consumers.

Editors note: Text of the amendments is available here and here

My take

There are other airline industry-backed amendments to the bill as well, including one that seeks to do away with the Full-Fare Advertising Rule, which forces airlines to present the full cost of a ticket, with taxes and fees included, at the very beginning of booking. Should that pass, it's not much of a stretch to envision that airlines might start offering what seem like ludicrously low fares, and it would be much later in the process that customers would discover the numerous taxes and fees in addition to the baggage fees, seat selection fees and overhead bin fees that would be added to the "ticket" price.

As others and I have said, it is well past time to re-regulate this industry. Travel columnist Christopher Elliott wrote about this topic 10 years ago. You can find his article here.  Almost all of what he wrote in 2008 applies today.

As a whole, the airline industry has shown callous disregard for its customers. It has also become quite adept at finding new ways to wring more dollars from its passengers so that it can increase revenue and profits but continue presenting ticket prices that are artificially low.

Some of our legislators have tried to reign in this rouge industry. About two years ago the airlines, via their trade group, strong-armed the Senate into killing proposed legislation that would have forced airlines to stop shrinking seat space. The airlines said "the marketplace should be allowed to decide," and legislators either did not hear or chose to ignore the fact that, when it comes to seat space, there is no meaningful difference between the major U.S. airlines, including regional airlines like Alaska Airlines (NYSE:ALK) or no-frills carrier Southwest (NYSE:LUV).

If you agree that consumers need more protection, not less, and that airlines need more regulation, not less, contact your Senators and Representatives and insist that they stand behind the consumer and not cave to the interests of the airlines industry, which has been out of control for far too long.

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Photo by Carl Dombek
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