US DOT withdraws proposed rulemakings on airlines’ ancillary fees

The US Department of Transportation withdrew two proposed rulemakings on airline ancillary revenues, saying they were “of limited public benefit.”

The proposed measures had been generally supported by consumer groups and vehemently opposed by most airlines.

The proposed rule titled “Reporting of Ancillary Airline Passenger Revenues,” which dates from July 2011, would have collected detailed revenue information regarding fees imposed by large airlines.

The airlines would have been required to file quarterly reports on ancillary revenue in 19 categories. In addition to the most common ancillary items – checked bags and seat selection – the list included sleep sets, alcoholic beverages and commissions on travel packages.

The purpose of the rulemaking was to make airline pricing more transparent to consumers and airline analysts, but the airlines noted that reporting on quarterly revenues would do little to illuminate total pricing for consumers.

Several airlines and industry groups also suggested that the department underestimated the proposed rule’s economic burden on the industry.

And some airlines suggested that the government was looking to tax ancillary revenues, an issue that has been a bone of contention since airlines began unbundling fares.

The “Supplemental Notice of Proposed Rulemaking on Transparency of Airline Ancillary Service Fees,” issued in the final days of the Obama administration, proposed to require airlines and other entities to disclose baggage fee information to consumers at the same time that fare and schedule information is provided.

Airlines, GDSs and travel agencies would not have been able to present a standalone fare, then quote the baggage fee, which could vary according to a consumer’s frequent flyer tier status and other factors, later in the process.

Airlines have for some time been required to disclose all bag fee information, as well as other ancillary fee information, on their websites, with links from the home page.

In rescinding the supplemental notice, the department noted that airlines would incur significant costs to implement the change.
Reactions from the two sides of the issue were predictable.

Charlie Leocha, chairman of Travelers United (formerly the Consumers Travel Alliance), said the department should be “ashamed” of its action:

“It is a dereliction of duty for the DOT to stop its review of unfair and deceptive pricing of ancillary fees, which make it impossible for consumers to comparison shop for the best costs of airfare. … By withholding this information from normal airline ticket sales channels, the airlines are misleading consumers about the true cost of travel.”

Leocha has long been a vocal advocate of requiring airlines not only to disclose ancillary fee information in GDSs and other channels, but to sell them through those channels as well.

But the DOT has been reluctant to act on that score since it would put the department in the middle of commercial agreements between GDSs and airlines.

Airlines For America, which represents most major US carriers, had this to say:

“We commend the Administration, under the leadership of [Transportation Secretary Elaine] Chao, for their ongoing commitment to ushering in a new era of smarter regulation focusing on jobs and economic growth, while recognizing that airlines, like all other businesses, need the freedom to determine which third-parties they do business with and how best to market, display and sell their products.”

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Michele McDonald

About the Writer :: Michele McDonald

Michele McDonald is a senior editor at tnooz. She has worked as a journalist covering the travel industry for more than two decades. She is a former managing editor of Travel Weekly (US) and former editor-in-chief of Travel Distribution Report. In 2002, she founded Travel Technology Update, a newsletter for distribution professionals. She remains editor and publisher of Travel Technology Update. She also contributes to Air Transport World.



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