Airlines Whine About New Consumer Protections

In formal comments filed with the Department of Transportation (DOT), the International Air Travel Association (IATA) called the agency's proposed consumer protections rules "an unprecedented intervention in the business practices of airlines serving the U.S" that are "inconsistent with both international and domestic law."

The IATA accuses the DOT of imposing laws on foreign carriers operating on foreign soil, and says the "extraterritorial" application of these restrictions by the DOT cannot be justified by the DOT's "stated broad mandate to ensure safe and adequate transportation and/or to address unfair or deceptive practices by the airlines." Basically, the new rules should not apply to non-U.S. carriers.

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But the DOT's proposed rules would only apply to business and operations on U.S. soil. For example, Lufthansa's sales and operations in the U.S. would be subject to the new rules, but its operations in the E.U. would be subject to European policies. Still, this creates issues for international carriers, which would likely end up with separate protocols for their European and U.S. operations. For example, fare advertisements in the U.S. would need to be in compliance with DOT rules, which may end up quite different from advertising policies in the E.U. Operationally, the DOT's tarmac delay rules could cause havoc for European carriers.

Airlines are grumbling about the recent increase in government intervention, and some in the business even called their industry "the most regulated deregulated industry in the country." But grumpy airline executives have no one to blame but themselves. The steady unbundling of basic services in favor of a pay-as-you-go model has left consumers feeling exploited. People resent the sense of paying more for less, and many believe they're getting poorer service as well.

Factor in that most fees are hidden until customers begin the booking process, and purchasing airfare ends up feeling like the world's biggest bait-and-switch scheme. Through it all, most airlines' stance on the issue has been: Tough crap. Fee hikes are not well-publicized, and are often unceremoniously buried in benign-sounding press releases. When people complain, the response is unsympathetic. And the industry has mostly been in lockstep agreement on this: Virtually all airlines charge for checked bags, and fee hikes often happen in unison. Aside from Southwest and, to a somewhat lesser extent, JetBlue, consumers have no alternative.

Having said all that, I don't think it's necessarily appropriate for any parties to this debate—the DOT, airlines, and consumers—to see each other as enemies. This is what makes the airlines' adversarial tone so frustrating. The fact of the matter is that fees, for example, make good sense for the business and the consumer in theory. Flying to Chicago for the weekend and only need two changes of clothes? You should be able to pay a cheaper fare and just bring a carry-on, rather than a higher fare that subsidizes everyone else's checked bags. And if bag fees work for the industry, that's fine with me. After all, I like being able to take that flight to Chicago and certainly can't do it if the airlines go out of business.

But the airlines' approach to fees in particular—a potent cocktail of secrecy and disdain—doomed that venture from the start, at least from a customer relations standpoint. The DOT's other proposals—fare transparency, tarmac delays, bumping compensation—only further illustrate an industry long bereft of any genuine concern for its customers. The fact that a concept such as fare transparency isn't a given speaks volumes as to how wide the gap has grown between "customer" and "service" in this industry.

In short, the airlines had their chance. That the DOT now has to step in to ensure the industry treats its customers fairly reflects on the airlines and the airlines alone.

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