Do passengers need a fare breakdown?


And this time we’re talking about the parts of the fare the airline collects versus those the government keeps. Spirit Air sued the DoT when the recent rules requiring “full-fare” advertising were launched, claiming that they reduced transparency as the “government regulations require [Spirit] to HIDE taxes in your fares.” Of course, there is nothing preventing the airlines from sharing that extra data if they want to. In fact Spirit still does, though most other carriers do not. Why? Probably because most customers do not care who they’re paying; they simply want to accurately know how much they’ll have to pay.

Spirit already shows all the data and they aren't breaking any rules. So why change the rules to permit that which is already allowed??
Spirit already shows all the data and they aren’t breaking any rules. So why change the rules to permit that which is already allowed??

But that isn’t going to stop the US Congress from doing something about the situation. A small group of congressmen have introduced the “Transparent Airfares Act of 2014” in the US House of Representatives. The bill will alter 49 U.S. Code § 41712, the section covering “Unfair and deceptive practices and unfair methods of competition.” This is the section the DoT has used in recent years to enforce things like the 3-hour tarmac rule, prohibiting fare changes after tickets are issued and requiring full fare disclosure to customers. The proposed language would be added to the existing text (which, interestingly enough, doesn’t actually say that the airlines must disclose the full price up front):

(d) FULL FARE ADVERTISING.—

(1) IN GENERAL.—It shall not be an unfair or deceptive practice under subsection (a) for a covered entity to state in an advertisement or solicitation for passenger air transportation the base airfare for the air transportation if the covered entity clearly and separately discloses—

(A) the government imposed taxes and fees associated with the air transportation; and

(B) the total cost of the air transportation.

There is more to the rule, including allowing the airlines or travel agencies to show the details online behind a link or a pop-up. But that’s not the meat of the issue. There’s also a part where the proposed text explicitly states, “Nothing in the amendment made by subsection (a) may be construed to affect any obligation of a person that sells air transportation to disclose the total cost of the air transportation, including government imposed taxes and fees, prior to purchase of the air transportation.” In other words, the full fare disclosure is still required.

So, what’s the point of this rule??

Seriously, I have no idea what they’re getting after here, but they do not appear to be requiring that the fare details be broken out and displayed that way. They’re saying it is permissible, not that it is required. And it is already permissible today. And d.1.B requires that the total cost be disclosed so it isn’t even like someone could show the partial numbers and depend on a consumer being bad at math and adding them together wrong to hide the fares.

Of course, the airlines are all in favor of this. Because, as we all know, hiding data from your customers and trying to confuse them during the purchase process is smart business.

There are some areas where perhaps the DoT rules could stand to be toned down a bit, places where a happy medium can exist between what the customers deserve and what the airlines should be allowed to do. But this is a proposed law which doesn’t change what is actually permitted today. In fact, Spirit Airlines continues to show the fares this way and they have not been punished by the DoT. So why waste everyone’s time??

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, and LinkedIn.

13 Comments

  1. The reason for the proposed rule is that it would apply to advertising (web, print, etc.), not just fares shown when searching in a booking engine.

    It used to be the case that airlines could advertise $69 fares to Florida in big type, typically with an asterisk, and then the smaller type at the bottom would detail that this was exclusive of taxes (which for a domestic flight would add $20-30, obviously a lot more for international flights). However, a few years ago the DOT changed their regulations to require airlines to put the total cost, and not just the fare, in the big type, so what used to be advertised as $69* now has to be advertised in big type as $89.

    The main argument from the airlines (and the members of congress that they influence) is that, at least in the US, any sort of sales or purchase tax on any other product is always calculated after the fact. When you buy something at the store, the price on the sticker doesn’t include sales tax; when you buy a house, the price on the contract doesn’t include transfer taxes. Therefore, why should airlines be singled out in this way?

    Personally, I’d rather move to a European model, where taxes are generally embedded into the displayed price, but given what we have in the US, it wouldn’t be an entirely unreasonable argument but for the fact that aviation taxes are so high compared to other taxes, and it is quite a shock for most people when they find out what the “real” cost of that $69 fare really is.

    1. I’d rather everything be all-in prices. I’m OK with that. And it is still not clear how this rule would affect print advertising. Airlines would still be required to display the all-in price; this just lets them show that it is split between fare and taxes. And that’s something they can do today.

      1. It’s clear that you like the current system (and so do I). But the proposed bill would allow airlines to go back to the old way of advertising, where just the base fare needs to be in the big type and the extra taxes and fees can be in smaller type or listed via a “click-through” link. Currently, airlines *have* to show the full-in price, and have the option of showing the breakdown. Under the bill, airlines have the option of showing the base fare first, at which point the airline is then obligated to have small type or a click-through showing the extra taxes and fees. All it does is overturn the DOT regulations put through in 2012.

        In other words, the new law would allow Spirit (or any other carrier) to go back to advertising $9 fares again (with fine print or a click-through saying that it is actually $12 more thanks to taxes), rather than the current DOT regulations of having to advertise $21 fares (with the option of providing fine print or a click-through informing the customer that $12 of this is taxes).

        In other words, it’s all about what step of the process the disclosure has to take place–whether the airline would be able to capture your attention with a $9 fare offer (the new bill) or a $21 fare offer (the current regulations).

        1. I don’t see that in the text of the bill. It clearly says that the all-in price must be included. Or are you suggesting that D.1.B is actually just the base fare + international surcharge and not the all-in price? “Total cost of air transportation” sounds to me like everything, not just the base fare.

          1. You have to read the earlier text, since (d)(1)(a) and (d)(1)(b) are qualifiers to the main thrust of the bill– the last part of (d)(1) says that it is not a deceptive practice to show just the base airfare, as long as the carrier “clearly and separately discloses” the taxes and fees.

            The current DOT regulations treat this exact scenario as a deceptive business practice–the taxes and fees can be broken out, as you point out, but the sum total has to be most prominent, not just the base fare. Yes, it’s a subtle distinction, but an important one–it only changes the dollar figure that has to be “most prominent” in an advertisement. This is most critical for web advertisements, because it impacts what number can be shown first, before the customer “clicks through.”

          2. OK…I can see what you’re saying there. I guess we’ll see what comes of this in the end.

            The part where airlines are still trying to obscure data more than share it certainly doesn’t leave me all that impressed.

  2. i’m all in favor of full disclosure up front … airfare advertising is so meaningless talking about “$100 fare to UK” when there’s another $500 in fuel surcharge and $300 in tax

    1. To be fair, even under the old DOT rule, airlines could only put actual government taxes and fees into the fine print; fuel surcharges have always had to be included in the “big type” advertised fare (which is one of the reasons US carriers never bothered to move to the fuel surcharge model of airfare pricing).

      But yes, travel to the UK becomes particularly expensive with regards to taxes and fees, thanks to their enormous air passenger duty; a one-way business class ticket I bought from London to Boston last week shows $223 going to the UK for the air passenger duty, $21 for the LGW passenger service charge, a $17.50 US arrival tax, a $5 APHIS (US agriculture inspection) user fee, a $7 CBP user fee, and a $10 fee I cannot identify (code XP). That’s a total of $313 of taxes and fees on a one-way ticket, for an effective tax rate in the neighborhood of 20% (and this rate would likely be a lot higher on an economy ticket, even though the UK APD is lower for economy class).

      1. which is one of the reasons US carriers never bothered to move to the fuel surcharge model of airfare pricing

        That’s totally incorrect. US carriers levy huge fuel surcharges.

        1. Yes, you are correct–I should have said that US carriers were late adopters of fuel surcharges compared to their European counterparts. But the main point still holds, in that this is transparent to the end passenger, because US carriers have never been able to list fuel surcharges separately from the base fare, even within the booking engine display. Fuel surcharges are simply a technological solution to a back-end issue (e.g., they exist to make it easier to adjust pricing since they can change a single fuel surcharge rather than every fare as filed with ATPCO).

          For example, look up the same trip on Delta.com and KLM.com, and if you click through the taxes and fees breakdown, KLM lists the fuel surcharge separately from the fare, while Delta includes the fuel surcharge as part of the fare.

          1. Delta absolutely separates out the “Carrier-imposed International Surcharge” as a separate line item from the actual fare. The main page shows the all-in fare but clicking on the details shows the surcharge separate from the base fare and also separate from the real taxes/fees.

          2. You’re right–I must have been originally searching a route without a surcharge. Mea culpa.

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