United States: ‘Transparent Airfares Act’ Spells DISASTER for Travel Consumers!

Airlines and Aviation

The proposed ‘Transparent Airfares Act’ is anything but. If it passes, travellers in the United States will be subject to the same kinds of deceptive marketing practices that are the norm in many other parts of the world.

The proposed ‘Transparent Airfares Act’ is anything but transparent. If passed by the US Congress, it would be a disaster for consumers in the United States.

Under the proposed legislation, airlines would be able to advertise air fares that were misleadingly low and then hit travellers with nasty surprises at check-out – the way airlines in many other parts of the world do.

I speak from personal experience!

About 18 months ago, I was searching for the cheapest flight from Hong Kong to Bangkok, Thailand. I did a quick search on an on-line travel website and determined that the lowest priced round trip ticket would cost me HK$1,400 on Royal Jordanian Airlines.

So I decided to book.

When reached checkout, however, the amount – with tax, fees, and fuel surcharge – was HK$2,200. Say what?

I got distracted by a phone calld and didn’t book the ticket. I had to do something …

By the time I got back to my computer a few hours later, I had decided that I REALLY wanted to return on Monday rather than Sunday – even if it cost me more money. And Royal Jordanian didn’t operate a flight on Monday.

I did another search. The cheapest ticket on Monday was on Emirates Airline, and it cost HK$1,800.

“OMG!” I thought.

“WOW! This flight is REALLY getting to be pricey!’

I decided to book.

Needless to say, I expected that any fees and the fuel fuel surcharge would be equal to or proportionately higher than what I had already been quoted. I braced myself for sticker shock when I clicked BUY.

Pleasant Surprise!

When I reached checkout, however, the total amount was actually LOWER than the total amount that I had been quoted for the lower priced ticket! I was totally confused.

Eventually I discovered that the airline with the lower priced ‘base’ ticket charged a MUCH, MUCH, MUCH higher fuel surcharge (HK$800) than the airline with the higher priced ‘base’ ticket (HK$300)!

That’s considerably more than DOUBLE the amount! That is when I decided to investigate further …

Fuel surcharges are set by airlines, and some airlines use them to deceive consumers into thinking that ticket prices are lower than they really are.

Transparent Airfares Act

Here is a summary of the so-called Transparent Airfares Act of 2014 (’H.R.4156 — 113th Congress (2013-2014), which was introduced on 6 March 2014 by Representative Bill Shuster (Republican, Pennsylvania), who is a member of the House Transportation and Infrastructure Committee.

The bill has already passed the House with BIPARTISAN support! Representative Peter DeFazio (Democrat, Oregon) also supports the bill. It is now in the Senate. Will it pass?

“Transparent Airfares Act of 2014 – Declares that it shall not be an unfair or deceptive practice for an air carrier or other covered entity to state the base airfare in an advertisement or solicitation for passenger air transportation if it clearly and separately discloses: (1) the government-imposed taxes and fees for the air transportation, and (2) its total cost.

Defines ‘base airfare’ to mean the cost of passenger air transportation, excluding government-imposed taxes and fees.

Defines ‘covered entity’ as an air carrier, including an indirect air carrier, foreign carrier, ticket agent, or other person offering to sell tickets for passenger air transportation or a tour or tour component that must be purchased with air transportation.”

Devil’s Advocate

Representative Shuster argues that nearly all other consumer products are advertised at a ‘base price’ with taxes added on at the point of purchase. You know … standard sales tax …

Representative Shuster seems to imply that airlines have been treated unfairly because they have to include taxes (and fees) in the advertised price – when almost nobody else has to.  (Parentheses mine!)

“As a result, the fact that Americans are paying higher and higher government imposed taxes and fees to travel by air is being hidden from them,” Representative Shuster continues.

“This common sense bill will allow consumers to see the full breakdown of their ticket costs, so they know how much they’re paying for the service, and how much they’re paying in government imposed taxes and fees.”

So who sets those fuel surcharge fees, Representateive Shuster? Fuel surcharges are set by AIRLINES and NOT by GOVERNMENTS! 

Bull Shit!

If you are a regular reader of this blog, you will know that I do NOT usually use 4 letter words. In fact, I have NEVER done so before.

But THIS is what I have to say about Representative Shuster’s defence of this piece of legislation: “Bull Shit!!”

MOST consumer products in the United States are subject to a sales tax, which is based on a percentage of the price of the product.

And even if there ARE other taxes or fees, they are usually set by the government (let’s say a departure tax or a hotel tax). They are standardised across brands. The brands themselves don’t get to set them!

What makes airlines different – and why consumers need protection when booking airline tickets – is that airlines can arbitrarily impose fees, such as fuel surcharges, which they set themselves, effectively and DELIBERATELY misleading consumers!

And some airlines DO do this in parts of the world where consumer rights are taken less seriously …

1984 All Over Again!

The reaction has been fast and furious. Consumer rights activists – and newspapers – have been quick to respond.

“I can’t think of any other bill over the last 20 years that’s as Orwellian as this,” says Kevin Mitchell, chairman of the Business Travel Coalition, who is quoted in the Los Angeles Times.

“It should have been called the Airfare Opacity Act.”

Writing in The Washington Post, Christopher Elliott says: “The Transparent Airfares Act would effectively void a Department of Transportation regulation called the full-fare advertising rule, which is supported by consumer groups and airline passengers and has been upheld by the courts. That rule requires airlines to quote a price that includes all mandatory taxes and fees.”

And WHAT, pray tell, is wrong with THAT? He goes on …

“As soon as the bill is passed, airlines will be able to advertise an initial price that’s between 15% and 20% lower than the price you’ll pay. Only at the end of the booking process, when you get ready to pay, would the full price, including taxes, be revealed. Privately, airlines have been pitching this to Congress as an economic stimulus, arguing that passengers are likelier to book fares they believe to be cheaper, say critics.”

If You Are Lucky!!!

I would be SERIOUSLY surprised if airlines tried to rook you out of only 15% or 20%! Call me cynical, but I think the figures would be much, much higher – making the actual cost of travel much, much more expensive.

Surely you have heard of the $1 ticket …

The Editorial Board of The New York Times weighed in with this argument:

“The cynically named Transparent Airfares Act of 2014 can only hurt consumers. The law would undo regulations the Department of Transportation implemented in 2012 that require airlines to disclose in their advertising the total price of tickets, including federal taxes and fees that help pay for air traffic control, airport security and other parts of the national air travel system.”

Under current rules, airlines in the United States are already allowed to break out the total fare for consumers into its component parts.

What airlines are NOT allowed to do is engage in the unscrupulous practice of misleading consumers with a low base price and then slapping them with hefty fees at checkout.

Consumer Feeback

So how do American consumers feel? According to a survey of 934 US travellers, fully 58% of them wanted ‘to see all the total cost in one place’.

Another 40% wanted ‘to see a breakdown of all costs listed separately’.

Fewer than 2% wanted ‘to see the fares without taxes’.

“This indicates that travellers want a simple way to shop for air fares and to make sure they are comparing apples to apples when doing so,” says John McCarthy, president, GO Airport Express.

And these are mosty people that have probably never had personal exerience with  unscrupulous airlines trying to rip them off in ways that they had probably never even imagined …

When push comes to shove, I think MOST consumers simply want to know one thing when they shop for the cheapest airline ticket between 2 cities: how much will it cost me?

If I’m searching for the cheapest ticket to Bangkok, I really could NOT care less as to how much of the price is for the ticket, how much of the price is for the departure fee, how much of the price is for the sales tax, and how much of the price is for the fuel surcharge.

All I want to know is this: “How much money is going to appear in my VISA card statement at the end of the month?” 

Political Contributions

And check this out! According to The Los Angeles Times, there might be a reason why this bill has received so much support in Congress!

MapLight, which compiles data on political contributions, reports that Representative Shuster, who introduced this bill, received fully US$179,100 from the air transport industry between 1 January 2012, and 31 December 2013, the newspaper reports.

“No other House member enjoyed as much generosity from the industry during this period,” the newspaper reports.

All I can say is, “WOW!”

Offer ME that kind of money, and I MIGHTt just start singing the praises of this legislation, as well! But since they haven’t … Well …

Only kidding …
 I DO have my standards to maintain …

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