The Department of Transportation has set new standards for how it would determine whether airlines are being unfair or deceiving passengers, giving a boost to the industry in the Trump administration’s final weeks by issuing rules that consumer groups say will make it harder to rein in bad behavior and craft new protections.
The department said it was taking the step, which it says in some cases merely writes existing practices into the federal government’s formal rule book, in the interest of transparency and consistency.
“The rule will benefit the public and regulated entities,” it said in a statement.
The rules, finalized Friday, are technical but opponents say their bureaucratic language masks how one of their provisions, in particular, will dramatically slow the Transportation Department’s efforts to outlaw “unfair or deceptive practices.” The changes will allow airlines and other industry players to seek formal hearings to hash out factual issues before a practice is banned or new protections are put in place.
The change was sought by the airline industry, which complained in the early days of the Trump administration that recently imposed consumer protection rules made it more difficult to do business and had asked the government to ease up. Under the Obama administration, the Transportation Department required airlines to disclose the full cost of tickets, including taxes and fees; give passengers 24 hours to cancel a ticket after booking; and took other steps designed to protect consumers from delayed or oversold flights.
Airlines for America, which represents the major carriers and supported the new rules, thanked federal officials for taking action.
“This reform is a critical step forward in ensuring a data-driven regulatory process, which will produce widespread and lasting benefits for air travelers, airlines and the economy,” said Katherine Estep, an Airlines for America spokeswoman.
But John Breyault, a vice president at the National Consumers League, said the timing of the new rule was suspicious. Issuing it the day after Thanksgiving, he said, was a “huge signal that they wanted to rush this through with as little notice as possible because they do realize that it’s a gift to the airlines.”
Outgoing presidential administrations typically seek to finish a flurry of rulemaking activity in their final weeks as they seek to lock in their preferred policies.
The airline rules, first proposed in February, do three things: set new procedures for banning unfair or deceptive practices, define the meanings of “unfair” and “deceptive” and set out how the department would enforce its rules.
The rules are an outgrowth of an effort across the Trump administration to ease the burden of federal regulations on businesses. In 2017, the Transportation Department invited companies and trade groups to submit ideas for rules they would like to see changed or repealed.
In response, Airlines for America, which represents the major U.S. carriers, filed a two-part document that was more than 200 pages. The group complained that airlines had been subjected to dozens of new rules by the Obama administration, many of them relying on the department’s power to ban unfair or deceptive practices.
“Under the Obama administration, DOT adopted an aggressively activist attitude toward the airline industry,” the group wrote in its submission.
Airlines for America proposed that the department adopt the standards used by the Federal Trade Commission so airlines are not treated differently than other kinds of businesses. In the rules issued Friday, the department largely agreed to go along with the industry’s preferred approach, although it declined to adopt a proposal that regulators would have to conclude in an enforcement case that an airline intended to be unfair or deceptive.
As the department weighed what to do this spring, the FTC’s two Democratic commissioners warned of the consequences of mirroring that agency’s standards. Commissioner Rebecca Kelly Slaughter wrote that a new process for airlines could dramatically slow efforts to issue new rules like the one requiring that the full cost of tickets be advertised.
“It seems possible that the proposal would still be sitting before a hearing officer on its fifth round of formal hearings as stakeholders battled over a factual determination such as precisely how much time an average consumer would have to spend clicking back and forth to ascertain comparisons of true final prices in online ticket sales on different platforms,” she wrote.
The department acknowledged that some 180 consumers who filed comments on the proposal were “almost uniformly opposed.”
“Many consumers noted with disapproval that the [rulemaking] was initiated at the request of airlines, which in their view engage in practices that are anti-consumer,” the department wrote.
The incoming Biden administration could seek to undo the rules, but that would likely involve months of work. The Biden transition team did not respond to a request for comment, but Breyault said his organization has had positive conversations with the president-elect’s team about consumer protection issues.
The airline rule comes after a summer in which the Transportation Department received record numbers of complaints about airlines, driven largely by carriers canceling flights as they scaled back operations because of the coronavirus pandemic. The department said last week it was delaying publishing the most recent data on those complaints because it needed more time to review and process them.
Estep, the spokeswoman for Airlines for America, said the impact of the pandemic on the industry, which is burning through $180 million in cash each day, underscored the need for a clear approach to consumer protection.
“As the industry adapts to this new environment, it is more important now than ever to ensure greater transparency to provide airlines better information, in turn allowing carriers to offer greater choice to consumers,” she said.