Following months of analysis and consultation with its members and industry allies, the American Society of Travel Agents (ASTA) has filed formal comments to the U.S. Department of Transportation’s (DOT) proposed consumer protection rules.
The proposed rules, issued on May 21, would require airlines to provide agents with real-time information about core ancillary services and fees (but not that agents be allowed to sell these services to consumers). However, the proposed rules would also impose detailed regulations on the operations of travel agencies despite no meaningful record of consumer mistreatment or dissatisfaction.
“ASTA urges the DOT to lay aside secondary issues in the rule making by taking this opportunity to strike a decisive blow for consumers by requiring full transparency and ‘transactability’ in airline ancillary fees,” said ASTA executive vice-president of Legal and Industry Affairs Paul Ruden. “The roughly 50% of consumers who use a travel agent should be as informed and empowered as those who buy directly from airlines.”
Among the highlights of ASTA’s filing:
- The DOT’s Proposed Solution to the Ancillary Fee Problem is Inadequate. DOT proposed requiring the airlines to disclose fee information for basic ancillary services to all ticket agents to which a carrier provides its fare information, but not that agents be allowed to sell those services (i.e. “transparency without transactability”). In its filing, ASTA argued against this “halfway” measure, pointing to the lack of “significant market improvements regarding transparency and de minimis advances regarding transactability” since DOT began studying this issue in 2010.
“The only realistic way that the government can assure that the airlines will open the door to independent distribution of the array of ancillary services and fees they have developed,” ASTA argues, “is to order them to do so… A directive to this effect from DOT can reasonably be expected to have immediate and significantly positive effects on the ability of consumers to see, understand and purchase ancillary services at the same time and in the same transaction through which they buy the airfare.”
ASTA also argues strenuously that the only realistic way to ensure that consumers get full access to ancillary fees is to mandate that they be shared with the Global Distribution Systems (GDSs) upon which so many travel agencies rely.
- Imposition of Customer Service Standards on Travel Agents is Not Justified. DOT is proposing to require “large travel agents” – those with annual revenue of $100 million or more – to adopt minimum customer service standards, such as responding to customer complaints on specific deadlines and providing an option to hold a reservation at the quoted fare for 24 hours. ASTA points out that “ironically, while the department has decided… not to use its full powers to control airline behaviour that it finds is… damaging consumers, it nonetheless proposes to impose detailed regulations on the operations of travel agencies that face extensive competition in virtually everything they do and as to whom there is no meaningful record of consumer mistreatment or dissatisfaction.”
Additional regulation of travel agencies, large or small, ASTA argues, is unnecessary given that “unlike the airlines that often have few competitors in a given city-pair market… travel agents operate in market conditions that are likely to punish such conduct well before the government can do so. And there is no record of consumer harm perpetrated by travel agents.”
- Current Law Does Not Empower DOT to Regulate Prices Charged by Travel Agents. Part of the DOT’s proposal appears intended to prevent travel agents from charging consumers for some of the services they render – in this case, for the disclosure of ancillary fee information: “Ticket agents…[with] an existing contractual agreement with an air carrier or foreign air carrier for the distribution of that carrier’s fare and schedule information shall not charge separate or additional fees for the distribution of the [DOT-mandated] ancillary service fee information.”
ASTA argues that “there is… no basis for the Department to attempt to regulate agency charges that are somehow judged to be related to ancillary fees. If, on the other hand, it was not the intention of the proposed rule to regulate such activity, DOT should explicitly clarify that the proposed rule does not apply to travel agents.”
- New Definition of “Ticket Agent” Needs More Clarity. DOT proposes to codify its broader definition of “ticket agent” to include online aggregators, such as Kayak and Google that offer flight and fare searches without issuing tickets. ASTA calls the inclusion of meta-search firms under the definition of ticket agents “straightforward,” given that failure to do so could result in two or more sets of prices being disclosed to consumers in their initial search results. However, ASTA notes that “the air travel distribution industry has evolved in multiple directions in the past decade… for example, a large number of so-called ‘host’ agencies… provide various support and technology services to travel agencies, but may not have consumer-facing operations.” Arguing that “the regulations should not leave firms to guess whether they are ‘ticket agents,’ ASTA submits that the definition… should make clear that firms such as host agencies, consortia, co-operatives and franchising organizations, all of which provide support services for travel agencies, are not ‘ticket agents.’”
- Any Rule on Disclosure of Marketed Carriers Should Be Narrowly Drawn. In May, DOT raised the possibility of imposing a regulation that compels disclosure of which carriers services may, or may not, appear in results produced from online searches. While “it is certainly possible that some inexperienced travellers may believe that every non-carrier web site draws information about every possible air carrier that serves the market being searched,” ASTA notes, “…there is no actual data about this empirically testable question.” ASTA argues that, “Given present circumstances, a rule on this subject is not justified, but if DOT adopts one, the mandated disclosure should be generalized, such as ‘some carriers’ services may not appear in search results on this web site’… [Further] if a rule on this subject is applied to travel agencies, a companion mandate should apply to each airline’s web site to the effect that by consulting a travel agency the consumer may benefit from other options than those found on the carrier’s web site.”
DOT will review all of the comments filed as it crafts the final rule, expected to be issued in early- to mid-2015.