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)