The Business Travel Coalition (BTC) appealed to the Senate Commerce Committee to view the consumer as the “North Star” when deliberating airline industry legislation. This week that Senate committee is expected to introduce a Federal Aviation Administration (FAA) reauthorization bill that offers a profound opportunity to put consumer interests first.
“Consumers are incensed about special-interest access to power in Washington where ordinary citizens’ interests are increasingly trampled upon. One only has to look at U.S. Representative Curbelo’s amendment, accepted by the U.S. House Transportation Committee, that would injure consumers by – of all Orwellian machinations – reversing a critical U.S. Department of Transportation (DOT) price-transparency rule in the name of “greater transparency,” stated BTC founder Kevin Mitchell. “Commercial aviation policy-making is a prism through which voter disillusionment can be readily discerned,” added Mitchell.
DOT has in recent years introduced consumer protections vis-à-vis unfair and deceptive airline practices. However, passengers do not enjoy the number and quality of consumer protections afforded consumers in other industries. Of similar concern, legally, airlines cannot be held to full account for consumer injuries anywhere near the degree to which suppliers in most other industries are held.
Section 49 of United States Code 41712 confers enforcement responsibility to DOT for “unfair or deceptive practices or unfair methods of competition” in commercial aviation, which is the same statutory language found in Section 5 of the Federal Trade Commission Act. The FTC has no authority over the airline industry. However, the FTC and federal courts, including the Supreme Court, have developed policy in this area for decades.
With respect to challenging unfairness, current U.S. policy dictates that the alleged practice must cause consumer injury; be a violation of public policy; and be unethical or unscrupulous. Regarding deception there must be a representation, omission or practice that is likely to mislead a consumer acting reasonably; and that a violation must be of material consequence to consumers.
Below are 10 examples (among numerous others) of probable violations of 49 U.S.C. 41712 often occurring in the marketplace that result in injury to consumers. The Senate Commerce Committee could easily remedy such consumer harm and champion consumers’ interests by adding just 140 words – which BTC has developed – to a new Subsection (f) to 49 U.S.C. Section 41712.
Examples of unfair or deceptive practices or unfair methods of competition
When an airline:
- Fails to disclose the all-in price of travel before a consumer is locked into the purchase, e.g., a failure to tell a consumer that there is a baggage or seat assignment fee;
- Flouts the express admonitions of DOT by renaming its fuel surcharge as a “carrier imposed charge” circumventing DOT’s “Additional Guidance on Airfare/Air Tour Price Advertisements” of February 21, 2012 that requires airlines to tie fuel surcharges to actual cost;
- Imposes a $400 fuel surcharge or carrier-imposed charge, when a consumer redeems miles for a trip even though the price of oil has fallen 70 percent since June of 2014, and even though DOT considers airline loyalty points as a discount for future travel in return for a consumer’s repeat business;
- Fails to make available frequent flier seats sufficient to meet demand;
- Advertises rock-bottom airfares but provides insufficient inventory to meet any reasonable definition of demand;
- Charges $200 – 6 to 7 times the cost of handling a ticket change – when the cost to airlines for customer contact with a call center to change a reservation ranges from $25 to $35 dollars;
- Mishandles the carriage of a pet leading to injury or death;
- Fails to deliver a service at a level that a consumer would reasonably expect such as (a) when an airline damages or loses a customer’s baggage and the airline fails to make a refund or there is an excessive delay of the refund, (b) when a customer cancels a flight and the airline fails to make a refund or there is an excessive delay of the refund and (c) when an airline pursues a practice of a high percentage of over-sales and involuntary bumpings;
- Fails, prior to a consumer’s purchase, to disclose that the flight being booked is on the DOT’s list of chronically late flights and is thus a highly defective product; and
- Refuses at small to medium-size airports to allow competitors access to leased gates on customary terms, maintaining its dominant market position by blocking new entrant competition.
In recent years, the U.S. has gone from 10 airlines controlling some 80 percent of domestic seat capacity to just 4 airlines. A financially viable air transportation system is critically important to the social and economic goals of the United States. However, competitive concentration has led to airline policies and practices that are increasingly in violation of 49 U.S.C. 41712 and, as such, undermine the interests of consumers.
The U.S. Senate Commerce Committee, and Congress more fully, have an opportunity and inviolable obligation to remedy this growing national problem of consumer harm in the marketplace for commercial aviation services.
