Airlines Pushing Bill To Hide True Cost of Airfare
After losing its court case to overturn new pro-consumer, pro-competition airfare price disclosure rules, the airline lobby has flown into Congress. Just before the spring recess, a House committee approved a so-called Transparent Airfares Act without benefit of a public hearing. It's a bad idea.
After losing a court case seeking to overturn new pro-consumer, pro-competition airfare price disclosure rules from the U.S. Department of Transportation, the airline lobby has flown into Congress seeking relief from having to tell the truth about airfares. Just before the spring recess, a House committee approved, on a voice vote, a so-called Transparent Airfares Act, HR 4156, without benefit of a public hearing. While the bill has broad bi-partisan support in the House, we intend, along with other leading consumer groups, to make it clear to Congress that the bill has no consumer support and does not deserve to pass.
As the PIRG-backed Flyersrights.org explains on its blog:
“Those deceptive and infuriating ads that were banned years ago are sneaking back. […] The proposed law would give airlines free rein to quote artificially low ticket prices, minus taxes and government fees, leaving you with the mistaken belief that your total airfare is far cheaper than it is. The supporters of this bill want airlines to be able to advertise a flight without the fees and taxes added on. For example, a $300 flight would be advertised for $239 – omitting the fees and taxes. The DOT’s rules were meant to eliminate shocking surprise fees and add transparency to the airfare booking process.”
Here’s a screenshot from the flyersrights.org blog showing one of the bad old ads prevalent before the rules. As FlyersRights notes: “No, you cannot really fly on Spirit Airlines for $9.”
H.R. 4156 would result in the classic “bait and switch” for consumers who believe they are purchasing a ticket at one price, only to find out at the last moment that the price is much higher. The airlines have claimed that current advertising regulations hide government fees and taxes from consumers, however under the current DOT Full-Fare Advertising Rule, airlines can already disclose what portion of the ticket price goes to government taxes and fees. H.R. 4156 would allow the airlines to conceal their own extra fees and charges until the last moment before consumers purchase their ticket. This would be especially problematic on the Internet, where it might require extra clicks to obtain full price information.
The airlines also claim that when you shop for other goods, taxes are not included. That is true of sales taxes. But typically much larger federal excise taxes are routinely embedded in ads for gasoline, as well as alcohol and tobacco products. Can you imagine traveling up I-95 from Florida to New York and seeing different, partial gasoline prices at rest stops in each state?
Just as gas prices embed all taxes and fees, similarly, the DOT has ordered airlines to embed various federal safety and security-related fees into prominently advertised prices. Further, as the Business Travel Coalition, another group opposed to the bill, explains, the rules also allow fare breakouts:
“Under the 2012 DOT rule, airlines must prominently present total ticket prices in advertisements; however, they are permitted to display breakouts of government taxes and fees so long as they are less prominently displayed than the total ticket prices. Additionally, there is no DOT requirement preventing airlines from also including in an advertisement base ticket prices (net of government taxes and fees), if they are likewise displayed less prominently than total ticket prices. As such, and as a matter of fact, airlines are free today to provide consumers with a detailed breakdown of total ticket prices, including government taxes and fees.”
In the Chicago Tribune, travel writer and consumer advocate Ed Perkins headlines his syndicated column this way: “Transparent Airfares Act of 2014: A proposal based on lies.” He goes on to say the following:
“And there’s a subtext to these lies. What some airlines really want is not limited to excluding government taxes and fees. What they really want is to exclude their own “carrier imposed” fees and charges, like the notorious “fuel surcharges” they tried before DOT made them quit. You remember those bad old days: “London just $300 round-trip” in big type or on the first screen, with a footnote saying “plus a fuel surcharge of $400.””
The named plaintiffs in the court challenge to the DOT rules were Spirit and Southwest Airlines. In U.S. PIRG Education Fund’s “Unfriendly Skies” report released last week, which ranked airlines on percentage of complaints to the DOT, Spirit Airlines came in worst while Southwest generally “fared” the best in every category. Spirit so lapped the field that U.S. PIRG Consumer Associate Laura Murray, author of Unfriendly Skies, had to create some graphs without Spirit in them, so the other airlines could be clearly separated.
She did include one graph showing the discrepancy between Spirit and all the rest.
Incredibly, yesterday, Spirit issued a news release “celebrating” the “99.99%” of its customers who didn’t complain to the DOT. It offered a discount code. You don’t have to make this stuff up!
U.S. PIRG Education Fund has a new tip sheet summarizing your rights as an air traveler.
In air travel, consumers have very little protection other than from the DOT. A series of Supreme Court preemption decisions has even completely removed state attorneys general from the deceptive airline advertising beat. Fortunately, although this wasn’t always the case, the DOT has done a good job in eliminating the long tarmac delays prevalent just a few years ago, and imposing other new rules, such as the new airfare disclosures. Congress shouldn’t repeal the DOT’s good work, much of which was codified in the 2012 FAA reauthorization, including the PIRG-backed Airline Passenger Bill of Rights. Rolling back passenger rights would simply allow the airlines to run amok again.
Senior Director, Federal Consumer Program, PIRG
Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.