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Travel pricing scams and deceptions (part one)


Let’s say you’re strolling down a busy business street in your community, checking out the ads in the storefront windows as you pass:

  • You first encounter a restaurant, with a big sign in the window proclaiming “Free Bacon.” On close examination, you notice an asterisk, referring you to a footnote in very small print, reading “With the purchase of eggs at $5.95.”
  • Your next encounter is an appliance store, where the poster shouts, “Deluxe 25-cubic-foot side-by-side refrigerator, only $499.” Again you see an asterisk; this time, the footnote says “For the refrigeration compartment, plus $399 for the freezer compartment.”
  • Going on, you pass an auto agency, where the featured deal is “New 2006 Lexus only $14,999.” The footnote, which you now expect, says “per seat based on five-passenger sedan.”
  • Your final stop is at your tailor’s shop to pick up your new blue suit, for which you have already paid in full. When you ask for your suit, the tailor tells you, “My rent went up this week, so I added $20 to the price of the suit. And it’s brown rather than blue.”

Far-fetched? Not in the world of travel, where major suppliers regularly use all four of the ploys. And travelers certainly find those pricing gimmicks to be puzzling, if not outright deceptive. One reader, for example, recently asked, “My operator quoted a firm price for a trip from Phoenix to Peru, but the final invoice tacked on a fuel surcharge of $146. Does the Department of Transportation allow tour operators to add fuel surcharges like that?”

That question mirrors the tailor-shop illustration above. And the answer, sadly, is that the Department of Transportation (DOT) has nothing to say about such charges added to most tour packages—nor, for that matter, to cruises. And the Federal Trade Commission, which theoretically might be interested, is glacially slow to act on any such deceptions, if it ever acts at all.

Where DOT patrols ads…

DOT regulates travel price advertising and pricing practices in two specific areas:

Fare advertising by scheduled airlines. Currently, the DOT requires that published airfares include the federal excise tax on airfares plus any “surcharges” an airline might want to impose. However, it allows them to exclude any per-passenger taxes and fees that are imposed by either the federal government or individual airports—extras that vary depending on the specific schedule you book. DOT also prohibits any post-purchase add-ons or surcharges other than those newly imposed by foreign governments or airports. Given those parameters, had our reader purchased just an air ticket rather than a tour package, the airline couldn’t have added $146 to the price.

That’s how things stand now. But the big airlines are trying to change those DOT rules. They’re looking to end oversight of their advertising, so they can lie more broadly about their prices. Check out my [% 317921 | | recent column %] for more detail.

Pricing and payments for tours that include charter air. The DOT imposes strict limitations on package tours that include a charter air trip. The operator may legally increase the price, even after you’ve paid, but by no more than 10 percent (and none within 10 days of departure). If the operator proposes to increase the price beyond that limit, you are entitled to a full refund, without cancellation penalty. Of course, if you still want to complete the tour, you have to pay. Similarly, if the operator makes any other “major” change in the tour package after you’ve paid, you can demand a full refund. Major changes include different origin or destination airports, different dates, substitute hotels, and such.

The other important protection (not really the focus of this report) is that each tour operator must guarantee availability of enough money to pay for the completion of your trip even if it faces financial problems. This provision is to avoid widespread “stranding” of travelers when a tour operator fails—a problem that used to be more widespread than it is now, but still arises occasionally.

The big “but” here is that these protections apply only to tours that employ charter air travel. If the flight in your tour is on a scheduled airline—even if it’s at a “tour-basing” fare—the rules do not apply. Since fewer and fewer tours use charter flights these days, this protection has become almost trivial.

…And where it doesn’t

Package tours that include air travel on a scheduled airline fall through the regulatory cracks. The rules about featuring the full amount of the fare apply only to separately purchased air tickets, not on tours that include air travel. And the rules that limit tour-package price increases and other major changes apply only to tours that use charter air. Thus, my reader and the thousands of others who buy tour packages based on scheduled air have no DOT protections.

Cruises are another problem area. DOT requirements for charter-based tours don’t extend to cruises. And it’s only because of vigorous action by the Florida Attorney General that cruise lines don’t widely employ price-splitting (per the refrigerator example).

The fine print rules

In the final analysis, how much or how little price finagling and switching a tour operator or cruise line can get away with depends on the fine print. If the contract allows price increases, major itinerary changes, or other unpleasant surprises, you have little recourse but to accept, cancel (usually with a stiff cancellation penalty), or try your luck in court. That’s why it’s so important to read through that stuff, boring and hard to read as it may be, before you pay.

I’ll address some other pricing deceptions and scams in future reports. Meanwhile, make sure you know which situations are covered by protecting rules and which are not. And keep in mind that the industry will probably try to erode even those modest protections whenever it can.

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