What Does DOT’s Withdrawal of NPRM on Ancillary Fees Mean to Travel Agents?

On Dec. 5, 2017, the Department of Transportation (DOT) withdrew its proposed rulemakings on two subjects of great importance to travel agents and consumers: The full explanation is found on the DOT website.

There is not much to read because the driving force behind the withdrawals was the President’s program to reduce federal regulation of businesses, regardless of the consequences. The decision on its face has nothing to do with the actual merits of the proposed rules.

In DOT’s own words, the proposed rules would:

Require air carriers, foreign air carriers, and ticket agents to clearly disclose to consumers at all points of sale customer-specific fee information, or itinerary-specific information if a customer elects not to provide customer-specific information, for a first checked bag, a second checked bag, and one carry-on bag wherever fare and schedule information is provided to consumers. The SNPRM further proposed to require airlines to provide useable, current, and accurate (but not transactable) baggage fee information to all ticket agents that receive and distribute the airline’s fare and schedule information, including Global Distribution Systems and metasearch entities.

The second withdrawn rulemaking proposed:

To collect detailed information about ancillary fees paid by airline consumers to determine the total amount of fees carriers collect through the a la carte pricing approach for optional services related to air transportation.

The proposals as originally presented were far from perfect, as ASTA made clear in its 100-page comments (disclosure: I wrote those comments). Nevertheless, the essential parts of the proposed rules would have compelled the airlines to disclose to consumers and to travel agents customer- or itinerary-specific details about the most important ancillary fees that account for many billions in airline revenues.

This article is not the place to re-argue why the withdrawal by DOT, affecting tens of millions of consumers, was a terrible idea. A group of attorneys general from 16 states are, in fact, making the argument that DOT should reverse its decision to stop the rulemaking. Their position has no chance of adoption by DOT. One observer has speculated that DOT may overturn the existing regulations on full-fare advertising and the 24-hour refund rule in response to airline arguments.

The question now is: what effect does the continued absence of the disclosures have on travel agents as they go about the business of advising consumers about air fares and services?

Going forward, travel agencies will still have the obligation to use their skills and expertise to inform consumers as fully as possible about the choices they must make, and the related costs, when booking air travel. Consumers will continue to expect their travel counselors to know the facts and to accurately inform them. This has never been easy and now it will be more difficult than it needs to be. The market will be even more complex than before as a result of the spread of new fare types and levels through the IATA New Distribution Capability. (See the report on BA’s new “price points” plans.) 

There is no panacea in this situation. The government has abandoned consumers in favor of letting the airlines display ancillary fees when and how they choose. The airlines have made clear they are not going to follow the rules that DOT was considering, so it is anyone’s guess how this will play out.

Agents will want to be cautious about providing definitive information on ancillary fees to clients, likely by including a caution that the fees are subject to change at any time without notice from the airlines and that new fees may be added without notice. Agents quoting fares and ancillary charges should make clear they are basing their advice on the best available information but that there is, in effect, an asterisk on the ancillary fee information and, in the near future, perhaps on the fares themselves. Agents will probably hear “I found a better fare at XYZ” a lot more as NDC variations spread through the various systems they use.

“Do the best you can” is not very comforting to a professional travel agent trying to do her job, but that is the situation in which DOT has left agents.