Inside the Issue: Fully Transparent Fares (With Fees)

The Department of Transportation (DOT) recently announced a series of proposed consumer rights initiatives designed to make flying a little less frustrating for you and me. But since these are only proposals, the public has 60 days to comment on the DOT’s ideas. I’ll be doing a series of in-depth breakdowns of these proposals, and I encourage all SmarterTravel readers to head over to regulationroom.org and share your thoughts on the DOT’s plans. The DOT is trying to help you, so let’s make sure its solutions actually work for real, live travelers.

Be sure to see our previous in-depth looks at the DOT’s proposals for Bumping Compensation and Tarmac Delays.

When you see an advertised fare, what are you actually looking at? Is it round-trip? Does it include taxes and fees? The DOT, for its part, is tired of asking these questions.

The Basics: The DOT is proposing a change to airfare advertising that would remove just about every last shred of ambiguity about whether or not the fare you see is the fare you’ll pay. Advertised fares would have to include all mandatory taxes and fees, and fares could only be listed as “one-way” if they are truly available for one-way travel.

The Problem: As the DOT puts it, “Federal regulations now make it an ‘unfair and deceptive practice’ and ‘unfair method of competition’ to advertise a ticket price that is not the total price the consumer will end up paying. However, with the growing popularity of travel advertising on the Internet, by email, and through other electronic means, some ticket-selling practices have developed that violate the spirit of this rule.”

What sort of violations are we talking about, exactly? Listing fares without taxes and fees included and listing those extra charges separately, offering “one-way” fares that are only available as part of a round-trip purchase, offering vacation packages at double occupancy prices but requiring customers to book two, and offering extra services, such as travel insurance, as an opt-out, in which the service is pre-selected for the consumer, rather than opt-in. The opt-out method can trick users into buying something without realizing it.

The DOT also has its eye on ticket sellers, typically air tour operators, that sometimes raise the price of a fare after it has been booked.

Additionally, the DOT is concerned about all the new fees airlines collect for services previously included in the ticket price. (The DOT is treating this issue separately, but it’s worth discussing here.) Further, the issue of add-on fees becomes complicated in codeshare situations, because codesharing airlines may not have the exact same fees.

The Details: The DOT has proposed a number of fixes to these issues. First, it would require all advertised fares to include all mandatory taxes and fees, meaning the customer can compare the true cost of available fares, rather than base prices.

The DOT would address the “one-way” problem by limiting the term “one-way” only to fares that are truly available for one-way travel. If airlines wish to advertise a round-trip fare based on the segment prices, it would have to use the term “each-way.”

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The DOT would also ban the “opt-out” method of selling additional services. Similarly, it would ban the practice of raising prices after the purchase is made.

As for fees, the DOT would require airlines to maintain a webpage listing each of its additional fees, and provide a prominent link to this page from its homepage.

The DOT is also considering mandating a second, “full-fare” price, which includes all the services traditionally included in one’s airfare, such as food and bag fees. This fare would be listed alongside the advertised fare. Alternatively, the DOT would require ticket sellers to allow customers to add on the optional fees they expect to pay so they can see the final, total cost of their ticket.

Lastly, the DOT would require airlines to prominently display on their homepage any changes to their baggage fees, and also list first- and second-bag charges on e-tickets. The fee changes would remain on the homepage for at least three months after taking effect.

Pros and Cons: There’s a lot here that should make consumers happy. Full-fare advertising has been the goal of consumer rights advocates for a long time, and would be a huge benefit to travelers. No more clicking on an attractive price only to see it explode with taxes, fees, fuel surcharges, and who-knows what else. What you see should be what you get. End of story.

Same goes for the fees proposals. Airlines should gather all their fees in one place and make them easy to find. After all, since nearly every carrier charges fees these days, there’s no sense hiding them, is there? The “full-fare” idea, with optional fees added in, is also a good one in theory, and the fee estimator would be more than welcome. I’m a big fan of our sister site Tripadvisor’s fees estimator, which lets you see how easily your total cost can increase.

I do have a couple of quibbles with some of these proposals, however. First of all, what’s the point of allowing airlines to advertise round-trip fares based on each-way prices at all? At the grocery store, you don’t see avocadoes priced at “$1 each half.” No, they’re $2 each (or whatever the price is) for the whole thing. My point is that while “each-way” is certainly more accurate when describing halves of a round-trip price, it’s still deceptive to split a round-trip fare and advertise it based on only one segment.

Moving on to something that’s more concern than quibble, how will the DOT decide what is “traditionally included in the ticket price”? One bag? Two? A meal? My worry is that when people see this second “full fare,” they won’t know exactly what it means, and something that is meant to provide clarity will actually further confuse people. These “full fares” will need to be clearly labeled.

Your Turn:  I’d love to hear what you think about this problem and the DOT’s solutions for it, so leave a comment below and share your thoughts. More importantly, though, tell the DOT what you think at regulationroom.org. Thanks!