Are we facing dynamic airline fees? Regulators examining new DOT rulemaking raise questions


Yesterday, representatives of the Consumer Travel Alliance, Consumers Union, National Consumers League and Consumer Federation of America met with the White House Office of Management and Budget (OMB) to discuss the new DOT rulemaking that when released in the next 60-or-so days will create a new set of regulations that will change the passenger-rights landscape more than any government act since deregulation.

One of the subjects that came up during discussions was dynamic airline fees. These are fees that change based on different factors — reservation costs that rise as the number of available seats on aircraft decrease, extra legroom charges that increase with the distance of the flight, reservation costs that change depending on the time of day that a flight is scheduled and baggage fees that change depending on the time that a bag is “checked-in” for a flight.

The group of four consumer advocates met together with four representatives from OIRA (Office of Information and Regulatory Affairs and a part of the OMB) and two members of the the Department of Transportation’s (DOT) enforcement office to discuss the DOT’s proposed rulemaking, “Enhancing Airline Passenger Protections” (DOT-OST-2010-0140).

This massive new rulemaking covers everything from completely new regulations about disclosure of airline fees and inclusion of customer service plans into airline contracts of carriage to revamps of existing federal regulations dealing with overbooking, ticket pricing in advertising, clarification or customer service plans, response to customer-service issues, post-purchase fare increases and notifications of flight changes.

The discussions and questions were widespread and focused for the most part on the two totally new areas of regulation — transparency of airline fees and enhanced legal rights of passengers. The consumer representatives made it clear that they were only interested in consumer issues when it came to fee transparency. They acknowledged that there was plenty of infighting between the airlines and their distribution system. However, they emphasized, consumers only want to know how much the total cost to fly, including airfares and airline fees, will be and be able to compare these costs across airlines.

“Tell us the price, the total price — airfare and ancillary fees, and let us compare it across airlines,” was repeated by consumer representatives during the discussions. “There is no reason for withholding airline fee information and pricing from consumers except to mislead consumers,” they also noted.

Interestingly, Cass Sunstein the director of OIRA, authored a book, Nudge: Improving Decisions About Health, Wealth, and Happiness, that speaks directly to the issue that consumers can only make informed decisions based on having a transparent “choice architecture.” Though he did not make an appearance at the meeting, his published ideas fit hand-in-glove with the consumers’ arguments.

The question of the extension of legal rights for airline passengers was discussed. The DOT regulators agreed with the consumer advocates that airline passengers basically have the rights of medieval serfs. Federal preemption precludes state courts from hearing cases, and the Supreme Court has ruled that anything not included within the Contract of Carrriage has no legal standing. DOT is left as the sole intermediary.

With this proposed rulemaking that will mandate that airlines include customer service plans in their contracts of carriage, passengers will finally have some limited legal rights when it comes to customer service.

Finally, the consumer groups applauded DOT for their other initiatives within the rulemaking dealing with the extension of tarmac-delay rules to smaller airports and foreign carriers, clarification of customer service plans, response to consumer problems, dealing with overbooking and bumping, full-fare advertising, post-purchase price increases, norification of flight changes and cancellations and choice of legal forums.

At this point, no one outside of the DOT and OIRA really knows the final wording of the coming regulations, but after spending more than a year working on these issues, Washington’s most-important consumer groups were making their final presentations to the rulemaking chain. If the final rule isn’t what consumers want, it won’t be for lack of effort.

Photo: New Executive Office Building, DC, from

  • Andy

    See Kalick v Northwest (Delta) Airlines…soon to be filed again in NJ state court