Transport Airlines

New Bill Would Unbundle Airfare Costs for Advertising Purposes

@SamShankman

Mar 07, 2014 8:30 am

Skift Take

Average American flyers care more about what they’ll actually pay for air travel than where every dollar goes, making the current ad regulations more consumer-friendly and fares easier to search.

— Samantha Shankman

Free Report: The Future of Personalized Marketing in Travel

Transportation & Infrastructure Committee

House Transportation Committee uses this image to show how much the average American passengers is paying in government fees and taxes for a standard $300 air fare. Transportation & Infrastructure Committee


A new bill aims to reverse the Department of Transportation’s 2012 full-fare advertising rules and make it so that airlines and booking websites must display fares separated by base fare, government-imposed taxes, and mandatory fees in all fare ads.

The Transparent Airfares Act of 2014, introduced in the House yesterday,
would mandate airfare ads state three separate numbers: the base airfare, government-imposed fees, and the total cost of travel.

House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) says the current rules make it difficult for Americans to keep track of government fee increases. Rep. Shuster’s two largest campaign contributors are Delta Airlines and the airline industry group Airlines for America.

“While the DOT had good intentions, the new rule effectively reduced transparency,” senior Committee Member Peter DeFazio (D-OR) said in a statement.  “Consumers haven’t been getting the whole picture of what an airline ticket pays for.”

Prior to the 2012 DOT rule, airlines would routinely fail to mention mandatory fees in taxes in advertising, obscuring the true cost of flights though a series of small print disclaimers or a hidden asterix. The backers of the proposed new rule have stated their intent to highlight the cost of taxes rather than make clear a true cost to consumers.

The bill estimates that Americans are currently paying $64, or 21 percent, of the cost of a typical $300 domestic airfare towards government taxes and fees.

Industry expert and founder of Airfarewatchdog.com George Hobica says that although it’s unlikely that the industry will return to the old system, it’s not surprising that airlines wish it would.

“I’m sure the airlines would love to have in their advertisements two lines of costs — fare plus government imposed taxes and fees,” explains Hobica. “It will just make them look better”

U.S. airlines collected a record $4.7 billion in extra fees in the first nine months of 2013. Revenue from fees is taxed at a much lower level than it was prior to trend of airlines unbundling fees.

Critics of the new bill argue that the current system makes it easier for passengers to determine the full price that they will pay for air travel, which is especially important given the many searching and booking options available online.

The proposed Transparent Airfares Act of 2014 is outlined below:

Download (PDF, 35KB)

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