How Much Is It? U.S. DOT Plans New Rules On Airline Pricing
Open Jaw

It seems a simple question: How much will your next flight cost? But the answer is not so simple, says industry watcher Joe Brancatelli, because airlines don’t really want you to know.

In an article on Portfolio.com, Brancatelli says the U.S. Department of Transportation has decided it is time to call the nation’s airlines on their latest pricing trick, a fare game that goes by a number of names, including unbundling, ancillary revenue, a la carte pricing, pizza pricing, opt in/opt out, and even the Dell strategy.

Brancatelli says the goal is always the same: sucker in potential flyers with a low-ball advertised price, then force them to jump through hoops of extras, surcharges, government-mandated taxes, and airline-imposed mandatory fees. That’s how the advertised $99 fare somehow becomes a $400 flight without giving consumers an easy opportunity to compare whether another airline promoting the same $99 fare would charge less.

As Brancatelli puts it, in today’s air travel market “fares are merely a suggestion and the price you actually pay requires a degree in metaphysics and the intervention of a government regulator.”

How does the DOT propose to bring order back to airline pricing? Brancatelli says it will begin with several commonsense new regulations: airlines would no longer be allowed to advertise (or display on its website) “one-way” fares if the stated price could only be purchased as part of a roundtrip itinerary. Airlines would also be required to show all mandatory up-charges as part of the “full fare.”

To combat fare unbundling, the agency is considering “requiring that two prices be provided in certain airfare advertising – the full fare, including all mandatory charges, as well as the full fare plus the cost of baggage charges that traditionally have been included in the price of a ticket.”

The proposed regulations for the advertisement and display of a bundled price for all mandatory charges will become official before the end of the year. But the DOT’s musings on the need for a “second price” that includes the cost of things travellers once assumed would be included in the fare is sure to be controversial. One expert familiar with the plans says he agrees with the idea, but assures that “airlines are going to scream bloody murder when they realize what the DOT is suggesting.”

 

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