DOT Taps the Brakes on Airline Fees
When I read recent news reports about new DOT regulations requiring airlines to post their fares more transparently, it suddenly occurred to me that the industry is drifting inch-by-inch back toward the regulation it threw off during the 1970s. At the time, the theory was that airline regulation, then overseen by the CAB, was a great anchor on free enterprise and eliminating it would stimulate the industry.
The long-term results are a mixed bag at best. The end of fare regulation did stimulate competition, giving rise to a host of discount airlines that have come and gone and even prompting a couple of major airlines to try their own in-house, no-frills operations. But Delta's Song and United's Ted were miserable failures, suggesting in part that maybe fare regulation wasn't so bad after all or maybe the market can absorb only so much discounting.
DOT's new regulations don't go nearly that far, of course. And let's be honest. The regulation is more good politics in an election year than any great stride for the consumer, but it is nonetheless in response to angry customers fed up with the airlines' latest cash cow trick: tacking on hidden fees to a low advertised price. You know the drill. An airline offers a $199 fare to somewhere, but when all the hidden fees are thrown in—taxes, passenger facility fees, baggage and so on—it's more like $250. The core of the complaints relate more to unbundling than to add-ons like excise taxes and facility fees. A diligent search will reveal the taxes, but other fees are harder to find.
If you book online, as most of us do these days, the popular sites vary in their degree of transparency. I use Orbitz and its format is reasonably clear on the taxes and fees, although baggage fees aren't conspicuous. Travelocity and Expedia small-print the fees, but you can find them if you look. The airlines are unhappy with this new regulation because they claim fare add-ons aren't uniform and can't be predicted. They point out that retail merchants don't have to add taxes and fees to their advertised prices, so the airlines are being treated unfairly. But what they're really saying is to hell with the customer, we think it's our right to engage in bait and switch. One airline industry group said the new rule is an infringement on their free speech. Please.
The second aspect of DOT's new regulation is that customers will have the right to cancel or change a fare within 24 hours without being charged a fee. I applaud this one, because more than once I have made a mistake on a trip date and realized it the next day. Under the current rules, the change fee kicks in instantly and the airline whacks you for up to $150. I remember when it used to be $25, and that wasn't that long ago.
Again, the airlines don't like this because it's an easy way for them to tap the customer's wallet at little or no cost to them. One airline spokesman complained that this will cost the airline because as a discounter, it gets most of its bookings within a week of the scheduled flight. So? Raise the fares to account for it. That's a fairer, more transparent deal for the customer.
I doubt if we're headed back to days of regulated fares and the route and airport oversight of the 1960s, although that system had a certain merit. In the end, less regulation is better than more regulation. But when less is too little, the airlines have shown they are more than willing to abuse their customers to make a few bucks. I'm more than happy to have DOT step in and tap the brakes on that trend.