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Consumer Travel Issues: Where We Stand

Whether you’re red or blue, you probably realize that the midterm election is likely to change the outlook for consumer protection over the next few years. And—this is strictly a personal opinion—the outlook is less favorable than in the previous Congress.

The current up-front issue is the fate of the Orwellian “Transparent Airfares Act of 2014,” which would actually make airfares less transparent, not more. It was written—and is being heavily lobbied—by big airlines. Although it is opposed by just about every consumer advocacy group I know, it passed the House without any debate, and the new Senate is likely to view it more favorably than the previous one.

Exactly how bad the outcome will be for consumers depends on how the courts parse a key phrase: “separately disclose any government imposed taxes and fees.” Does “government imposed” modify “taxes and fees” or just “taxes”? Presumably, the airlines really want the “just taxes” reading. That would leave them free to split their real fare into a phony base plus a “carrier imposed fee” to be added later. Some of them do that now, internally: Last week, for example, American Airlines was quoting a round-trip economy fare from New York to London at $264 base fare, $458 in carrier-imposed fees, and $194 in government fees and taxes. What airlines want to do is hype “London round-trip, just $264,” with an asterisk noting “plus taxes and fees,” rather than the true fare of $722, plus actual taxes. Before the Department of Transportation prohibited it, airlines routinely did this with fuel surcharges, and they want to return to misleading consumers this way. This bill undoes current consumer protections, and if courts rule that “government imposed” modifies just taxes, airlines will surely be at it again.

The biggest money issue with airlines is excessive ticket-change fees. Although the Deregulation Act prohibits government oversight of domestic fares, the Department of Transportation retains the authority to require that fees on international tickets be “reasonable.” Clearly, fees as high as $700 can’t pass the laugh test for reasonability, and DOT needs to revisit this issue. As I understand it, the consumer organization FlyersRights is planning some action.

The primary hotel issue involves mandatory fees. Over the last few years, hotels in many popular tourist destinations have taken to carving out a part of the true room rate, labeling it as a fee, featuring the artificially reduced price as the “rate,” and collecting the fee part later. This practice is analogous to what airlines want to do. Hotels give the cut-out portion a plausible name, such as “resort fee,” and they usually provide a laundry list of services it supposedly covers. But the truth is simple: If you have to pay it, it’s part of the price and should be included in the price. The Federal Trade Commission calls the practice “drip pricing,” but other than issuing a letter, has taken no effective action against hotels. In an attempt at an end-around the glacially slow FTC, I submitted a petition to the DOT to require that airlines use full fee-inclusive hotel rates in their air/hotel package pricing, and a few other consumer advocates may be taking action on this avenue. Whether either FTC or DOT will pursue this issue is not at all clear.

Among the other long-simmering issues, two stand out as especially harmful to consumers:

  • Frequent-flyer abuses—inadequate seat allocations, arbitrary cancelling of credit, piling fees on “free” travel, and such—are rife. Although Congress started looking at this problem earlier in the year, the outcome is uncertain.
  • Contracts of adhesion—requiring consumers to accept detrimental contract terms on a “take it or leave it” basis—are widespread throughout the industry. But nobody is actively pushing this issue, which probably stands little chance for the foreseeable future.

All in all, the outlook for the short term is that consumers are likely to lose more than they gain. How long this will be the case remains uncertain.

Ed Perkins on Travel is copyright (c) 2014 Tribune Media Services, Inc.

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