One reason is that airlines occupy a unique space in American commerce. They can’t be sued in state courts because of federal rulings, so the DOT is the only bulwark against any unfair or deceptive business practice. And that’s exactly what concealing fees behind multiple screens is, maintains the federal government.
Another reason airlines are bound to face further regulation is because of the money at stake. Any disclosure requirements that give passengers an edge in their fare searches, allowing easy price comparisons among airlines, probably wouldn’t benefit the companies financially.
“Ancillary fees have become crucial to the bottom line of airlines,” says Jeff Straebler, an analyst with RBS Global Banking & Markets. A recent study by IdeaWorks concluded that the worldwide airline industry earned $21 billion in extra fees last year. For some airlines, these fees meant the difference between a profit and a loss, and for at least one, US Airways, they accounted for the entire profit.
Bottom line, “when new rules are imposed on the airline industry, it shrinks their profit margins,” says Seth Rabinowitz, a management consultant who has worked with several airlines.
All of which raises the question of whether the current fee-disclosure requirements are any good. They’re certainly better than what we had in May, when the rule was finalized. Back then, you had to click through three screens to find out that some fees “may” apply — not exactly hidden, but not clearly disclosed, either.
Airlines can tolerate a requirement to link to a list of fees, but quoting a fare that includes all the required taxes and often-purchased but optional fees is unthinkable, from their perspective. And you don’t have to be an airline analyst to know that they’ll try to find a way around any rule that requires them to do that.
In a perfect world, travelers would have plenty of choices and the market would reward the airline with the best disclosure. But in an industry dominated by only a few large carriers, there’s no true competition. And without stricter government regulation, many airlines seem content to answer your airfare query with a half-truth.
Elliott is National Geographic Traveler magazine’s reader advocate. E-mail him at .