Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek.
Every time I hear that something’s been done for the benefit of consumers, I leap toward my crystal chandeliers.
In mid-air, I stop to think who’s saying it.
This is especially true when it comes to airlines.
I’ve become a touch sensitive to their altruism.
So when I heard that there’s new legislation being voted on by the House of Representatives next Tuesday — supposedly consumer-friendly legislation — I thought I’d take a look.
We’re talking about the FAA Reauthorization Bill 2018.
A caustic eye might observe that part of it attempts to reauthorize airlines to hide the true cost of fares.
You see, the bill has a couple of airline-backed amendments attached to it.
One seeks to do away with the Full-Fare Advertising Rule. This forces airlines to present the full cost of a ticket, with taxes and fees included, at the very beginning of booking.
It may not take 16 economists huddled over a bottle of Scotch to discern that, if such a thing passes, airlines might start offering what seem like ludicrously low fares.
This is because customers will only discover later that there are many taxes and fees to be added, never mind the baggage fees, seat fees and overhead bin fees — oh, yes, United Airlines effectively has them — that might be piled on top too.
How is this going to make things better for consumers?
You might imagine passengers could find this annoying.
But there’s more.
More that they might find annoying, that is.
There’s another amendment that seeks to change the rules for “ticket agents.” It defines “ticket agents” like this:
The term ‘ticket agent’ includes a person who acts as an intermediary involved in the sale of air transportation directly or indirectly to consumers, including by operating an electronic airline information system, if the person (i) holds the person out as a source of information about, or reservations for, the air transportation industry; and (ii) receives compensation in any way related to the sale of air transportation.
So we’re talking about travel agents and comparison sites, the ones that try to show you all the fares on offer for the route you want to fly.
You know, the likes of Kayak, Hipmunk and Google Flights.
This amendment demands that any of these entities that make more than $100 million in revenue must provide exactly the same information as airlines do. Even if — as is often likely — they don’t have that information because the airlines don’t release it to them. Say, last-minute equipment substitutions.
So, for example, these sites would presumably have to be able to issue refunds, even though they haven’t actually sold the tickets. Many merely send you to the appropriate place where the (hopefully) cheapest ticket is available.
Wait, how is this going to make things better for consumers?
The ultimate goal, a dry mind might conclude, is to make things far more difficult for these sites and make passengers have to work much harder to find the cheapest fare.
A possible result might be that consumers would just give up, go to the sites of the airlines they know, and get it over with. Even as they discover at the end of the booking process that there’s another whole lot of dollars to be paid.
After all, it’s already time-consuming enough to book travel.
I asked the big 4 airlines — United, American, Southwest and Delta — for their comment.
United and Delta didn’t immediately respond.
American referred me to the airline lobbying group, the un-ironically titled Airlines for America. Its spokesman gave me a pulsating answer:
Current government advertising rules fall woefully short of delivering the transparency our customers expect and deserve. Holding Washington accountable for the onslaught of government taxes and fees buried in the price of an airline ticket — so consumers always know exactly what they are paying for — is a win for enhancing government transparency.
Some might find this a fine sleight of mouth. Airlines can currently break out the price, as long as they show the total price first and biggest.
And as for the attempt to make travel agents and comparison sites perform new tasks, Airlines for America told me:
We believe that no matter where consumers purchase their ticket, they should be protected by a consistent standard of transparency and customer service — and that includes online travel agents. These third-parties earn substantial profits selling airline tickets and shouldn’t be exempt from consumer protection standards that customers experience on airline websites.
What about Southwest? Its spokeswoman told me:
Either require every product and service to include taxes in the advertised price of a product or service, or require airfares to be advertised without the taxes included. We believe all products and services should be treated the same.
Southwest doesn’t let its fares be displayed by comparison sites. Some might say this is to preserve the impression that it’s the cheapest, when sometimes it isn’t.
Can someone please tell me how this is going to benefit consumers?
I asked the Air Travel Fairness Coalition, which represents travel search companies, for its view. Its Executive Director, Kurt Alan Ebenhoch told me:
This is really about reducing competition. It will affect consumers two ways. It will make it more time-consuming to figure out the best airline schedules and airfares, and it will increase fares as the competitive pressure of side-by-side comparisons vanishes. Carriers will not be as motivated to match prices, which will mean less passengers flying at lower fares.
You can understand, perhaps, the fears about reduced competition.
The four big airlines own 81 percent of all the seats on U.S. flights. Imagine if Amazon had that sort of market share.
Kevin Mitchell, chairman of advocacy group the Business Travel Coalition — which claims to represent corporate travelers — issued a statement, that read in part:
The language makes it unclear how the $100 million in annual revenues is calculated as some online sites, travel management company portals and other technology companies are businesses within larger travel-related enterprises and serve as ticket agents to large U.S. corporations, universities and federal and state agencies.
He foresees a darker future:
It is not hyperbole to say it would mean the beginning of the end of access for consumers to independent comparison-shopping for air travel. What’s more, without independent airfare comparison sites, there will be virtually no way possible to keep airlines honest on their own websites.
He added that there may be one big target in this legislation:
Perhaps killing Google Flights in the cradle, before it’s depended upon by millions of consumers, is an objective that is motivating the airlines.
Google didn’t immediately respond to a request for comment.
The American Society of Travel Agents made perhaps the pithiest observation, in a letter its Executive Vice President of Advocacy, Eben Peck, sent to committee chairmen and ranking members of Congress:
The rationale for these provisions is unclear to us, given that the number of customer service complaints filed with DOT [Department of Transportation] against airlines dwarfs the number filed against travel agents — 1,397 to 40 according to the DOT’s March 2018 air travel consumer report.2.
So, how does any of this benefit consumers? Perhaps you could tell me.