Bill aims to scuttle new airfare pricing rule

Enjoy the government’s new airfare rule. It might not last.

On Jan. 26, the Transportation Department began requiring airlines and ticket agents to quote fares that include all mandatory taxes and fees. Since 1988, they’d been allowed to advertise fares that didn’t include government-imposed taxes and fees.

Consumer groups cheered the move, which made airfare shopping one step simpler for most travelers and effectively put an end to those $9 fare sales that occasionally popped up online. But several airlines whose business models depend on the ability to quote a low base fare weren’t happy with the change. And as it turns out, they have friends in Congress.

This week, Rep. Tom Graves (R-Ga.) introduced a bill that would reverse the DOT requirement. His proposed Travel Transparency Act, co-sponsored by Rep. Ron Paul (R-Tex.) and Rep. Lynn A. Westmoreland (R-Ga.), gives airline passengers the right to a clear, separate disclosure of the fees and taxes they pay on each airline ticket, he says.

“If the goal of the DOT’s rule is to prevent companies from deceiving passengers about the total cost of their ticket, why is the department mandating that airlines hide the taxes, surcharges and government fees in the fine print?” Graves asked.

A spokeswoman for Graves says his constituents started asking questions about the new DOT rule “on the same day” airline industry representatives approached the congressman’s legislative staff with their concerns. But Graves’s rhetoric closely matches that of Spirit Airlines, one of the carriers that stands to lose the most from the new rule. In an e-mail sent to its passengers last week, Spirit outlined its arguments against the government’s “all-in” price rule.

“Thanks to the U.S. Department of Transportation’s latest fare rules, Spirit must now hide the government’s taxes and fees in your fares,” it wrote. “If the government can hide taxes in your airfares, then they can carry out their hidden agenda and quietly increase their taxes.”

Specifically, the Graves bill would label the failure to clearly and separately disclose both the base airfare and taxes as an “unfair or deceptive practice” and would require that both the original airfare and all required taxes and fees be shown separately in advertisements and fare displays. Spirit did not return calls and e-mails questioning whether the airline had played a role in promoting the bill.

The assertion that quoting the full fare is deceptive drew harsh criticism from consumer rights advocates and their supporters in Washington. Last week, Sen. Barbara Boxer (D-Calif.) sent a strongly worded letter to Spirit’s chief executive, Ben Baldanza, accusing him of misrepresenting the DOT regulations and urging him to stop.

“What the rule says is that you have to tell your customers the full cost of a ticket,” she wrote. “It prohibits Spirit or any other airline from advertising fares ‘that exclude taxes, fees or other charges since the major impact of such presentations is to confuse and deceive consumers.’ ”

She added, “Today’s consumers are faced with many options when planning air travel and being able to compare the full price before purchase is both necessary and fair.”

Passenger advocates didn’t mince words, either. Kevin Mitchell, whose Radnor, Pa.-based Business Travel Coalition represents corporate travelers, called Spirit’s statements “a new low” and labeled its actions “reckless” and “anti-consumer.”

“Regulators understand that there is great profit in consumer confusion and have justifiably interceded,” he says.

The DOT is defending its rule. Although he wouldn’t comment on the legislation, a department spokesman told me that the new regulations don’t preclude an airline like Spirit from listing taxes and fees separately, as long as the top number includes every mandatory tax and fee.

“DOT wants to make sure that consumers can easily determine the full price for air transportation before you travel,” Justin Nisly said. “Arriving at the airport only to be hit with surprise fees is no way to start a trip.”

The airline industry is widely expected to support the Travel Transparency Act, and if it passes, air travelers would return to the days of having to spend a few extra minutes with a calculator if they want to know the full price of a ticket while they’re fare shopping.

Even if the effort fails, all is not lost for the unhappy airlines. Three carriers, including Allegiant Air, Southwest Airlines and Spirit, have asked the U.S. Court of Appeals for the D.C. Circuit to reverse the DOT rule, saying it violates their First Amendment right to free speech. In a court filing, the airlines say they have the right to let passengers know about the “significant” tax burden on air travel.

It’s easy to understand why airlines are fighting the new DOT rules with such force: Quoting a low base fare, minus taxes and fees, makes airfares look cheaper. And people buy cheap tickets.

Critics of the new regulations say that the government has unfairly singled out airlines with this requirement and that no other industry is forced to advertise prices in this way. That’s not true. If you buy gas, you’re paying an “all-in” price at the pump, too.

For most airline passengers, none of this really matters. For them, it’s an issue of fairness. If you see a $29 ticket to Las Vegas advertised on a billboard, shouldn’t you be able to buy that ticket for $29? And that’s a question that neither the proposed bill nor some airlines’ creative parsing has answered.

(Photo: Richard Johnstone/Flickr)

Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at . Got a question or comment? You can post it on the new forum.

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  • http://profile.yahoo.com/3GKAL75XGEPOPEEIQODCPGK4WQ Snake

    False – they are finally being given a correct total price up front, without any of the airline’s high-jinx at trying to hide the cost.  The airline is welcome to provide the breakdown of taxes and fees at any point in the process, as long as they’re also prominently displaying the total cost.

  • bodega3

    I don’t know why.  I guess those who can’t figure it out should use a professional. 

  • bodega3

    Define up front?  At the start of the booking process?

  • bodega3

    The average person needs to pay attention to more than just the price. 

    The advertising medium doesn’t matter.  The law applies to all advertising.

  • TonyA_says

    The sample you just gave (w/o fuel surcharge) was DECEPTIVE even before 26JAN12.

    Prior to 26JAN12 Airlines could only legally “exclude” taxes [and airport fees] in their advertised fares. Now they have to include all taxes in their advertised fares.

    But this is so ridiculous since airlines are still allowed to advertise 1/2 of the total fare and indicate based on roundtrip ticket. So you need to multiply the “so-called” total fare by 2 to get the “real” total fare.

    Most of my customers are penny-pinchers and I suppose a lot of Americans are. They understood how to compare fares. The old law was just fine. 

  • Lindabator

    And that’s why, as a travel agent, when a client would call for a price, and we ACTUALLY quoted the real one (all taxes and fees included), they would go online instead – only to discover the fare was the same – that was the reason the airlines wnet to online sites – to make their fares look like such a bargain – even though they weren’t!

  • Lindabator

    But they always HAVE done so — this is just double speak to get around the consumer protections yet again.  Just give the total price, and then a break down of how it got there.  SIMPLE.

  • Lindabator

    Of course you still kept hearing the stories of idjots :) – like the one who supposedly stayed 8 days in an airport because she didn’t know about the baggage fees.  ’cause heaven forbid, someone whould actually READ the information.

  • Lindabator

    But the airlines don’t HAVE to bury them – they are CLEARLY evident when you get a ticket NOW – so why not show a full price, and how it breaks down?  This is a dumb-a@@ move by the Republicans to allow the airlines to continue with their bonehead pricing scams – too bad folks are drinking the Kool-Aid!

  • Lindabator

    But they could stipulate a specific nonstop or single connection flight as a basic starting point, and stipulate that additional stops may incur additional costs.  They are MORE concerned with those truly deceptive $9 fares, or when they advertise the 1-2 seats still left. 

  • Lindabator

    But you could ALWAYS see the total tax breakdown on the final document anyway, so the taxes never WERE hidden!  This is just more BS to give the airlines even more time to give misleading fares to the general public.

  • Lindabator

    That is true – but does NOT help the consumer when shopping online.

  • Lindabator

    Although I would agree (I am a travel agent, after all), i know some people won’t.  So they should have the same access to full disclosure we have.  That’s only fair, after all.

  • TonyA_says

    Linda, all these hoopla is about the so-called advertised price. So today the advertised priced should be ONLY the total price (everything included).

    Before 26JAN, the airlines had to advertise everything except taxes (if they wanted to leave them out).

    IMO before 26JAN, the airline shenanigans were already curtailed. Even if they left out taxes (they still had to note taxes not included). And, they could not not include the YR/YQ surcharges in the taxes that they did not include up front. So the only thing that they could keep quiet about in their advertisements were money that actually went to the government.

    Of course for TAs this didn’t matter since we gave our clients the whole picture from the get go – the GDS gave us everything.

    All I’m saying is that the old rules weren’t that deceitful as they sound.

  • johnitis

    This is so duplicitous and disingenuous that it could only come from a republican, southern politician.  Claiming it is for the benefit of consumers, they would rather divert our attention with anti-tax rhetoric, while they get fatter from cronyism, airports fall down, and untrained contracted individuals operate the tower.  It really ticks me off when politicians think we are as stupid as they are.