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Here’s What the DoT Is Actually Proposing When It’s Asking Airlines to Be More Transparent about Ancillary Fees

This week the Department of Transportation proposed new rules for airlines and how they display ancillary fees to the public (You can read the full proposal here…the DoT is currently awaiting comments from airlines about the proposal). They are basically recommending 2 changes to current rules about how airfares are displayed:

- When displaying airfares, airlines would have to show fees for first checked bag, second checked bag, carry-on bags, and seat assignments. I’ve seen articles suggesting that they would have to display other fees, but they would not – those are the only fees covered in this proposal.

- They are proposing that GDSs (Global Distribution Systems, which power airfare searches for travel agencies, both online and offline) AS WELL AS airfare comparison sites such as Kayak would also have to display the fees. (The DoT has actually made 2 proposals, one that says GDSs do not have to display this information, and one that says they do). The big news here is that so-called metasearch companies like Kayak would be included in these rules.

There are open questions in the proposal, I think the largest being whether the display would have to call out whether Elite frequent flyer members or credit card holders receive discounts on those fees. I suspect that in the end those will not need to be called out.

This basically means that airlines and travel agencies would need to create a so-called Schumer Box for airfare (the credit card fee disclosures you see on credit card applications has been dubbed the Schumer Box, as Senator Chuck Schumer championed full disclosure of credit card fees). The airlines aren’t happy about this, but I’d guess we’ll see some version of this in the next 18 months. Pricing strategies have changed for airlines, with fees making up more than one-third of Spirit Airlines’ revenue. Airfares no longer reflect the cost of the trip – I think airlines have done an OK job of making that clear, but this will unify how this information is displayed to consumers. Airlines can complain about it, but it’s a good thing.

Here’s my stab at what it would look like, for what it’s worth.

farebox

That would just live under the fare display…Not perfect, but it’d be much better than the confusion we have now.

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