Commentary

Extra! Extra! Advertised Prices May Reflect Actual Cost

In a development that could, if it catches on, enable people to make sense of their phone and cable bills, among other things, the U.S. Dept. of Transportation will announce today that it is "Order[ing] Airlines to State Fees More Clearly," as Susan Stellin reports in The New York Times.

The rules, which take effect in August, require that the carriers "prominently disclose all potential fees on their Web sites, including surcharges for baggage, meals, canceling or changing reservations and seat assignments." We shall delve into some additional provisions of the forthcoming announcement below.

The new regs are clearly a reaction to the impact of Fox News, which reported last week that "the biggest concern for travelers is not the comfort of their plane rides or even the notorious TSA pat down. Consumers [58% to be precise] want to know how much they are really paying for their travel."

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Based on a survey from the Consumer Travel Alliance, Kate Rogers reports that the second major concern among consumers is requiring airlines to improve services to passengers when flights are delayed for long periods (27%).

Well, as USA Today's Alan Levin points out, Transportation Secretary Raymond Hood and staff hit all the main points and more.

"Airline passengers have a right to be treated fairly," he says in a statement in advance of his announcement. "...The additional passenger protections we're announcing today will help make sure air travelers are treated with the respect they deserve."

Actually, Bloomberg News' headline and lead make it sound like buying an airline ticket might be a better gamble than shelling out a buck for a scratch-off lottery ticket: "U.S. Airline Passengers May Collect $1,300 for Getting Bumped From Flights." That's up from a max of $800 -- a 63% increase, John Hughes reports. And what are your odds, you ask? "The rate of involuntarily bumping was 1.09 per 10,000 passengers last year, down from 1.23 in the same period of 2009," according to the Transportation Department.

Reuters, meanwhile, goes for the lost-luggage angle: "U.S. Will Require Refund If Airlines Lose Bags." LaHood says it was necessary to twist some corporate arms to get passengers their due. "The airline is not required to reimburse you for your baggage fee believe it or not," he says. "People get so upset and mad that their bag didn't make it and then they find out that they're not even going to be reimbursed? It's ridiculous."

And NPR? Well, they think the story here, besides reimbursement of the baggage fee, is that time should be money, even when you're traveling internationally. "Airline Rules Address Tarmac Delays, Fee Refunds," is NPR's headline.

The Transportation Department last April barred airlines from delaying domestic flights on the ground for longer than three hours without allowing passengers the chance to return to the gate. Those that fail to comply face stiff fines. Now international flights on U.S. or foreign carriers can only keep you on the ground for four hours, with exceptions only for security or air traffic delays.

The industry is not ecstatic about the new rules. Reports the Times' Stellin: "The Air Transport Association, the airlines' trade group, objected, for instance, to the full-fare advertising requirement, calling the proposal 'likely illegal' and pointing out that other businesses like hotels or telecommunications companies were not forced to include government taxes in their advertised prices."

Airlines are facing some touch marketing challenges over ticket prices already, without having to be upfront about what their fares actually cost. "The only thing rising faster than the price of a barrel of oil is airline ticket prices, at least that's what the management of the U.S. airlines hope," Bob Weiss, CBS Boston travel contributor, writes.  He was reporting on US Airways hiking every ticket price by $10 earlier this month when the price of oil hit $110 a barrel.

Fuel accounts for about 33% of airlines' operating expenses, Weiss says, warning that low-cost and discount carriers that don't have the cushion of business and first class travelers would be hit the hardest by rising oil prices.

In closing, let's double back to the new transparency of airline tickets and the possible impact on sticker prices and the like in other sectors. For example, might it someday come to pass that the Manufacturers Suggested Retail Price (MSRP) on new automobiles might be something more than a figure that you know you shouldn't pay?  A man who grew weary of haggling and hondling not many years after Congress passed the Automobile Information Disclosure Act of 1958 can dream, can't he?

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