The U.S. Department of Transportation decided to require airlines and travel agencies to more prominently display ancillary fees, but deferred action on a hot-button proposal to force U.S. and foreign carriers to provide information about ancillary fees in global distribution systems.
The department also decided to require airlines to reimburse passengers' bag fees when their luggage is lost, increased compensation to passengers when they are involuntarily bumped from flights and expanded curbs on tarmac delays.
The global distribution system companies, including Sabre, Amadeus and Travelport, as well as a broad swath of travel management companies and corporations have been pressing the DOT to require airlines to distribute their ancillary fees through the GDSs, but the DOT balked for now and instead will issue a proposed rule later in 2011 which would require ancillary fee displays in every point of sale.
Proponents and opponents will be able to comment at that time about the proposed rule, pending a DOT decision.
Here's the DOT's thinking on its delaying of a decision on ancillary fees' GDS distribution.
We cannot at this time agree that it is in the public interest to mandate that step, since we lack additional information about costs, benefits and consequences of requiring U.S. and foreign carriers to provide ancillary fee information to GDSs ... " the DOT wrote. "The Department wants to ensure that any action it takes does not have unintended consequences, particularly given the sensitive nature of the market and the negotiations currently taking place between carriers and GDSs.
The DOT did take several steps, which it says "partially address the problem of hidden and deceptive fees..."
Airlines and foreign carriers will be required to list all of their fees for optional services on their websites; airlines and travel agents must disclose on the first fare quote screen that additional fees may apply and point to where it can be found; and airlines and travel agents must disclose bag fee information on e-ticket confirmations.
So, a resolution of the pitched battle concerning whether airlines can retain ancillary fee information in their own channels or will be required to distribute optional services through the GDSs has been delayed pending another round of DOT rulemaking later this year.
And, perhaps airline-GDS negotiations will sway the outcome.
The Business Travel Coalition, one of the groups pressing the DOT to mandate airline ancillary services' distribution through the GDSs, hailed the DOT notice of proposed rulemaking, saying "the agency is heading in the right direction regarding full disclosure of airline fees."
Meanwhile, American Airlines stated it was pleased the DOT "declined to mandate the way we deal with Global Distribution Systems (GDSs)."
The airline, which is pursuing a direct-connect strategy that could bypass GDSs in some instances, stated that "mandating which sales channels we must use or implementing rules that would prevent us from introducing new technology would actually restrict our ability to provide the best possible options to the public." American Airlines added:
We are confident that additoinal study will reinforce the Department's decision not to intervene in the commercial relationships between airlines and GDS companies. We remain committed to full transparency in dealing with consumers and finding ways to provide a robust set of options geared to their needs and preferences.
The Air Transport Association, reacting to the DOT announcement, stated: "The airline industry supports increased communication and full transparency, ensuring that our customers always know exactly what they are getting every step of the way; and market forces -- not additional regulations -- are already providing customer benefits."
The ATA downplays the transparency issue, however.
"Some airlines have opted to offer customers the option to pay for products and services that they want and, in doing so, have continued to be full transparent, ensuring that customers know exactly what they are buying and paying for before the purchase transaction," the ATA stated. "Airlines will continue to work to present a clear differentiation between the fare charged by the airlines and the government taxes and fees, which can account for roughly 20% of the ticket price."
And, the American Society of Travel Agents clearly was not pleased about the DOT's decision to delay a decision on airline ancillary fee distribution in the GDSs.
ASTA stated that it and other proponents of GDS distribution "made clear that the issue of retailer access to optional fee information was the most impactful matter at stake in the proceeding. ASTA will continue to work with the Department to assure that prompt action follows to bring this issue to closure."
The travel agency trade association also said it will be evaluating the new rule requiring e-ticket confirmations to contain links about baggage fee information. ASTA stated it may have concerns about the rule.
The Global Business Travel Association urged the DOT "to move quickly and require airlines to provide ancillary fee and fare information on any platform selling airline inventory, not just airline websites -- without dictating specifics on how the fee data be transmitted or displayed."