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Since January, airlines have been forced to display the total price of airfares up-front, including all government taxes and fees, and they had to be dragged into doing it — sometimes kicking and screaming.
Despite all the free-market rhetoric about the deregulation of the airline industry and global distribution systems, it is interesting to note that it took the DOT’s new price advertising rule to force the OTAs and airlines to do a very simple, consumer-friendly thing: tell us what the price of the ticket is up-front.
The irony? Some online travel agencies are now using the DOT’s rule as a marketing ploy. Despite it now being a DOT requirement, Travelocity has wasted no time in promoting the fact that “Travelocity flight prices now include all taxes and fees.”
That boast comes despite the fact that the DOT in late July fined Travelocity up to $180,000 for violating the department’s full-fare advertising rule by neglecting to include up-front fuel surcharges on many international flights when consumers were using Travelocity’s flexible dates search.
A game of numbers
Of course, the DOT-mandated total price still doesn’t include fees for checked bags and meals, for example, but it is a step in the right direction.
Airfares, of course, are a hyper-competitive enterprise: Just look at how many times airlines have tried to raise fares this year, only to roll them back when their rivals sat on their hands.
And the airlines and OTAs loved to hide their total prices until later in the booking process because the base fares sans fees made them appear to be more competitive.
The Orbitz hotel lesson
There is a parallel in the hotel sector.
In 2009, Orbitz became the first OTA to put the total price of the hotel, including taxes and fees, on the first screen.
But, it never became a way to compare apples with apples because Expedia, Hotels.com, Travelocity, Priceline and CheapoAir, to name a few, all declined to follow suit.
Thus, Orbitz’s admirable pro-consumer initiative put its hotel business at a competitive disadvantage, and after a couple of years of trying it, Orbitz sadly and quietly abandoned the effort in June 2011.
There’s no DOT regulating hotel advertising so mostly the free market reins, and consumers are the losers because we have to keep on guessing what the total hotel rate will be, and how it compares to pricing on other OTA sites and hotel websites.
And, to those who might say that hotels’ rate-parity rules between hotel websites and OTA websites make total price a moot issue, then look around again.