Dr. Jekyll, Mr. Hyde and the DOT

Dr. Jekyll, Mr. Hyde and the DOT
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It is not often that new regulations proposed by the Department of Transportation (DOT) make headlines across the nation, and even less often that those proposals garner both vocal backlash and praise from industry stakeholders and consumers alike. But that’s just the case, when it comes to the department’s latest set of proposed rules governing the shopping and booking of air travel.

Known as Passenger Protection III, the more than 170-page document includes everything from prudent new rules to protect consumers from hidden airline fees to unnecessarily burdensome regulations on how travel agents operate and interact with their customers. After reading through the proposal, it appears the DOT has published its very own version of the timeless classic Dr. Jekyll and Mr. Hyde.

Much like Robert Louis Stevenson’s account of two characters living in a single man, the latest rule-making by the department seems to claim two dogmatic identities — Dr. Jekyll, as proposals that seek transparency in airfares and airline ancillary services, and Mr. Hyde’s dangerous rules fraught with unintended consequences for the entire travel industry.

The roots of this latest DOT action stretch back nearly six years to when the major U.S. airlines began charging separately for services that used to be included in the price of a ticket. Through this process of “unbundling,” the availability and pricing for services, such as checked baggage and seat selection, has become limited to individual airline websites, meaning travelers must hop from airline site to airline site to get an accurate picture of the full cost of travel.

Subsequently, travel agents, both brick-and-mortar and online, whose greatest value to consumers is providing them with the ability to comparison shop the plethora of travel options, have been shut out from being able to offer their customers the ability to see and purchase the growing array of ancillary services. Today, it is almost impossible for consumers to comparison shop the all-in cost of travel options across airlines.

So, it was welcome news when, building upon previous passenger protection rules issued in December 2009 and April 2011, the DOT unveiled proposed consumer protections to ensure basic ancillary fee data is transparent through all travel distribution channels.

Although the DOT took important and appropriate steps in its proposal, the department also introduces its Mr. Hyde in the form of a laundry list of onerous new regulations on the travel economy. Among the litany of poorly planned proposals are two that should stand out as particularly burdensome on travel innovators.

First, the department’s proposal includes a provision that would force online travel agencies and other intermediaries to display the airline schedules of all carriers, even if they don’t have contractual agreements with them, in order to be deemed “unbiased.” If adopted, this unnecessarily intrusive rule would mark the first time the DOT, by regulation, directed the display order to be used by ticket agents. This unjustified micromanagement of airfare displays is regulatory overkill and unnecessary in light of the existing DOT requirement that any carrier identity-based screen bias be disclosed. 

Second, the department raises for comment the question of whether large agencies should be required to disclose the fact that they do not display all the carriers that serve a particular market. This proposal makes about as much sense as requiring airlines to state on their website that, “you may find other options or better deals by visiting the websites of online travel agents or by calling a travel agent” or “other airlines also offer flights on this route.”

There has been no evidence that consumers are harmed by the absence of a requirement to disclose that not all carriers are displayed, and this is particularly so where it is the carrier that has chosen not to market its services through a specific online travel agency. The department should let the market govern itself.

Ultimately, the department should heed the call from dozens of consumer advocates and industry groups to move forward promptly in adopting a rule requiring the disclosure and transactability of ancillary fees to all ticket agents with which an airline does business, ensuring consumers have access to the full cost of air travel and a broader array of services.

Embracing the Dr. Jekyll in its notice of proposed rule-making, the DOT can take important steps in protecting the traveling public. On the question of implementing new and onerous regulations on ticket agents, the DOT should stand down, and change the ending to its version of Dr. Jekyll and Mr. Hyde by letting the marketplace grow and thrive.

Shur is president of the Travel Technology Association.