What federal agencies did for travelers in 2013

December 5, 2013

Ask travelers what the federal government did for them this year, and you’ll probably get a shrug, at best — or a rant about sequestration, national park closings and the Transportation Security Administration, at worst.

But there’s actually a specific answer: Federal agencies did a lot more than you might think. And, in at least one prominent case, a lot less.

When it comes to consumer protections, two agencies carried much of the water in 2013: the Department of Transportation (DOT), which oversees airlines and motorcoach safety in the United States, and the Federal Trade Commission (FTC), which has a broad jurisdiction ranging from time-share sales to hotels. This year, the U.S. Department of Justice also played a central role in protecting travelers with a halfhearted attempt to block the creation of the nation’s largest airline.

The DOT’s office of Aviation Consumer Protection has so far issued a record $6.9 million in fines for 2013, up from $4.1 million in 2012. Its fines have grown at an almost exponential pace in recent years. Consider that as recently as 2008, the agency wrote only $1.1 million worth of tickets to the airline industry.

“Travelers have rights,” says Transportation Secretary Anthony Foxx. “And we will continue to hold the industry accountable.”

The DOT’s crime blotter, which you can find online at www.dot.gov/airconsumer/enforcement-orders, makes for fascinating reading. There’s American Airlines, fined $20,000 in November for advertising a kids-fly-free package that was not, in fact, free. There’s United Airlines, hit with a $1.1 million penalty in October for allowing 13 flights to remain on the tarmac for more than three hours without offering passengers an opportunity to get off the planes. And there’s a $750,000 fine against Delta Air Lines this summer for allegedly failing to inform its passengers of their rights to compensation after they were denied boarding.

The agency also put ticket agents in its cross hairs in 2013, penalizing companies for a variety of infractions, including failure to reveal a full fare (Legendary Journeys) to omitting the details of a codesharing flight (AAA Mid-Atlantic).

Even with the impressive increase in fines, the enforcement actions seem relatively small compared with the size of some of the penalties, which can run into the millions of dollars, that the Federal Aviation Administration imposed against airlines. And a careful reading of the DOT settlement agreements reveals that half the fine is often forgiven, as long as there are no future violations. (So far in 2013, the agency has forgiven $2 million in fines.) To some air travelers, that seems like a slap on the wrist.

But the DOT says that the numbers don’t tell the whole story. The fines aren’t meant to be punitive so much as preventive — which is to say that they’re intended to correct a customer service problem across the industry. By that measure, most of the DOT enforcements work.

The FTC, which in late 2012 warned 22 hotel operators to improve the way they disclose mandatory hotel “resort” fees, continued to push the issue in 2013. The agency’s warning letters strongly encouraged the companies to review their Web sites and ensure that their ads don’t misrepresent the total price of a hotel room, but stopped short of calling resort fees unfair and deceptive. “Nearly all” the hotels complied, according to the FTC.

“We continue to work with the travel industry to improve upfront disclosures about mandatory hotel resort fees,” says Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “We think companies are getting the message that helping consumers avoid surprise charges is necessary, as consumers have a right to know the true cost of their hotel stay.”

For consumers, the FTC’s actions on resort fees proved to be a mixed blessing. On the one hand, the agency has almost certainly made these junk fees easier to find; on the other, they haven’t yet eliminated them, which is what travelers seem to want. Perhaps 2014 will be the year the resort fee finally dies? Here’s hoping.

The agency’s biggest win for travelers in 2013 came in June, when it announced 191 federal and state actions to prevent fraudulent operations from peddling time-share property resale services and travel prizes. Fraudulent time-share resellers, a persistent problem in the travel industry, persuade consumers to pay upfront fees while claiming that they have buyers who are ready to pay top dollar for the properties. They don’t.

The FTC also pursued companies that offer discounted or “free” vacation packages supposedly worth thousands of dollars to lure unsuspecting consumers into high-pressure time-share sales presentations. All told, the FTC stopped operations that drained $14 million from consumers’ wallets, according to the agency.

The Justice Department, which normally doesn’t make news for consumer-protection efforts in the travel industry, may have been the biggest story of the year, at least for airline passengers. In a surprise move, the DOJ this summer filed a lawsuit to block the proposed merger between US Airways and American Airlines, citing competitive concerns. And adding to the drama, the DOJ signaled that a settlement was out of the question, instead saying that it would ask the court for a “full stop” to the merger.

But in a decidedly undramatic ending, the agency succeeded in making almost no one happy. A settlement agreement required the new American Airlines to shed an unprecedented number of landing slots and gates at key airports, including Washington and New York. The concessions were humiliating for American’s new management team, which had made an unconvincing argument that its dominance would benefit consumers and make the industry more competitive. But the settlement also failed to impress consumers, virtually none of whom were clamoring to see this merger and who hoped that a “full stop” actually meant a full stop.

In allowing American and US Airways to merge, the DOJ may have inadvertently done air travelers a little favor. The agency green-lighted the combination of two airlines that have well-deserved reputations for charging high fees and generating more than their share of service complaints. Now, there will be one less airline to avoid.

E-mail Christopher Elliott at chris@elliott.org.

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