30 Jul, 2014

U.S. Transparent Airfares Act: Is it, or isn’t it?

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Is the U.S. Transparent Airfares Act really “transparent”? Depends on which side you are on.

On July 28, the U.S. House of Representatives passed the Act. It now goes to the Senate. The same day, Airlines for America (A4A), issued a statement lauding the House. The following day, the American Society of Travel Agents also issued a statement expressing its disappointment over the passage of what it called an “anti-consumer” legislation. Meanwhile, the Business Travel Coalition has also denounced the Act, saying, “….there is always more than meets the eye when it comes to special interests and Congress and their grand bargains and schemes for corporate and personal political gain at the expense of everyday consumers.”

Travel Impact Newswire is reproducing all three statements below. Make up your own mind:

A4A Applauds House Action to Increase Airfare Transparency – Calls passage of the bill a critical step toward delivering transparency customers need and deserve

WASHINGTON, July 28, 2014 – Airlines for America (A4A), the industry trade organization for the leading U.S. airlines, today applauded House passage of the Transparent Airfares Act.

“Today’s vote is welcome news for airline customers who deserve to know how much of their advertised ticket price is due to rapidly increasing federal taxes,” said A4A President and CEO Nicholas E. Calio. “We applaud the leadership of Chairman Bill Shuster (R-PA), Ranking Member Nick Rahall (D-WV) and Reps. Peter DeFazio (D-OR), Frank LoBiondo (R-NJ), Rick Larsen (D-WA) and Tom Graves (R-GA) in making airfare more transparent by enabling travelers to clearly see how much of their advertised ticket price is in reality going to Washington in federal taxes.”

Calio noted that commercial aviation and its customers pay up to 17 different aviation taxes and fees, totaling more than $19 billion in FY 2013. Following last week’s more than doubling of the Transportation Security Administration (TSA) Passenger Security Fee, nearly $63, or 21 percent, of a typical $300 domestic round-trip ticket is actually federal taxes and fees in disguise. Under current law, many consumers shop for travel, unaware how the higher TSA fee or the other federally imposed taxes are impacting their advertised airfare prices.

Current law, which requires airlines to include taxes in the base advertised price, makes airfares appear artificially higher and less competitive when compared with other modes of travel, Calio said, which ultimately depresses demand and impacts jobs and the economy. The Transparent Airfares Act would ensure that airline customers know exactly how much of their ticket price is attributable to federal taxes and fees, and still know the full price of air travel before they purchase a ticket. In this respect, the legislation would simply allow airlines to do what virtually every American industry does – advertise the pre-tax price of their products.

“Passage of the Transparent Airfares Act is an important step in delivering the transparency customers need and deserve, while holding Washington accountable for arbitrary tax hikes that unnecessarily drive up the cost of travel,” Calio said.

ASTA Statement on House Passage of Anti-Consumer Airline Bill

Alexandria, VA, Tuesday, July 29, 2014 – American Society of Travel Agents (ASTA) President and CEO Zane Kerby issues this statement in response to the House of Representatives’ recent passage of the so-called Transparent Airfares Act of 2014 (H.R. 4156):

“ASTA is disappointed by House passage of this anti-consumer legislation that will make airfares less transparent, not more. But we are undeterred in our resolve to resist H.R. 4156, and with the support of our members, turn now to the Senate to make our case and prevent this bill from going further.

“The bill seeks to overturn the U.S. Department of Transportation’s (DOT) full-fare advertising rule, put in place to make the total cost of a ticket more transparent by requiring airlines to prominently state the full and final price to be paid by the consumer. Here’s what the airlines don’t want consumers and lawmakers to understand—DOT already made this process transparent by allowing the airlines to list all the government fees and taxes in their advertising, as long as the full and final price is most prominently displayed.

“The airlines challenged the rule in the Court of Appeals and lost, then tried the United States Supreme Court, which refused to hear the case. In upholding the rule, the Appeals Court said, ‘Based on common sense and over three decades of experience and complaints, DOT concluded that it was deceitful and misleading when the most prominent price listed by an airline is anything other than the total, final price of air travel.’

“On behalf of the traveling public, ASTA will now redouble efforts in the Senate to fight this deceptive legislation through continued mobilization of our members, nearly 700 of whom have already written or called their legislators in opposition, and by working with our allies in this fight, including Open Allies for Airfare Transparency, the Travel Technology Association, the Business Travel Coalition and consumer groups such as Travelers United. Consumers should be given nothing less than the right to see and compare the full cost of a fare before they are deep into the ticketing process.”

The Manipulative, Dark Strategy Behind H.R. 4156 – Business Travel Coalition Industry Analysis

July 15, 2014 – On April 9, 2014, in a scene right out of NetFlix’s House of Cards, the Orwellian-titled and airline industry authored Transparent Airfares Act of 2014 (H.R. 4156) was passed out of Committee after just 9 minutes of discussion and without any hearings, debate or opportunity for consumer or travel industry stakeholders to inform Congress of their views of the anti-consumer consequences of this bill. H.R. 4156 is in fact profoundly anti-consumer. It would allow airlines to return to their old and deceptive practice of advertising low come-on airfares from which they had stripped out the federal transportation taxes and fees that travelers simply must pay – an abusive tactic the U.S. DOT felt compelled to stop in 2011 in order to protect consumers from being misled.

After steamrollering the bill through Committee, and endeavoring to escape the full light of day and appropriate deliberation, airlines now seek to subvert the suspension calendar procedure. This is not the type of unobjectionable proposal — like the naming of a federal building – that procedure is designed for, but rather, it is harmful and controversial special-interest legislation. There is not one consumer or business travel group that supports this bill.

However, as with Kevin Spacey’s character Frank Underwood, there is always more than meets the eye when it comes to special interests and Congress and their grand bargains and schemes for corporate and personal political gain at the expense of everyday consumers. The fact is H.R. 4156 is not just about undermining a U.S. DOT consumer protection rule. That bill would appear to be merely a first step in a new, audacious and longer-term airline strategy to game-the-system and choke off competition for their own benefit.

Now that the U.S. airline industry has reduced to 3 mega network carriers, heavily invested in global joint ventures and immunized alliances, the most pernicious effects of such radical consolidation may not be limited to the already problematic loss of service to mid-size communities, higher airfares and fees or less concern for customers.

Airlines would appear emboldened to reduce transparency, undermine DOT’s consumer-protection and Open Skies authorities and erect a virtual fence around the U.S. to frustrate new entry by foreign carriers, keeping an airtight lid on capacity. This represents a post-consolidation epic battle pitting the forces of commercial protectionism against the proponents of open and free markets.

Indeed, airlines’ enhanced monopoly and monopsony power can be leveraged not only in the traditional sense and practice against consumers, suppliers and other market participants, but rather, against their regulator, the U.S. DOT.

Examples of such efforts include:

• drafting H.R. 4156 to reduce fare transparence and undermine DOT’s consumer protection authority;

• blocking Norwegian Air International’s application to serve U.S. cities by seeking to intimidate DOT and going to Congress to block foreign carrier new entry;

• frustrating new services Middle Eastern carriers want to offer by restricting open and efficient access to U.S. markets;

• defunding the Export – Import Bank of the United States to keep modern Boeing planes out of the hands of foreign carriers that would introduce new, price-competitive services to the U.S.; and

• preventing an increase in Passenger Facility Charges that would support airlines’ agenda but continue to widen the gap between often antiquated and inadequate U.S. airports and world-class foreign ones.

There is little doubt that if airlines succeed in these efforts, their sights will be then trained on overturning DOT’s 3-hour tarmac delay rule and additional past and proposed consumer protections that DOT has or will likely implement in the marketplace. Next up on the airline target list could be all manner of other government policies airlines view as not in their interests but which are vitally important to consumers and all other participants in the travel supply chain.

At a time of such massive consolidation of the U.S. airline industry, we need a stronger DOT to guard against airline abuses, not a weaker one. We need Congress to work for AND not against competition, the consumer and the modernization and return of U.S. airports to competitive world-class status. Over the long term, open and free markets increase competition, create efficiencies, encourage innovation, expand markets, increase sales and satisfy customers. These are the right public-policy outcomes.

The fictitious Frank Underwood is able to advance his agenda on Capital Hill through lies and manipulation because his opponents cannot perceive his ambitions and strategy and endeavor to resist his entreaties tactically. This is the real strategic and historic risk with H.R. 4156. It must be stopped, as it represents a serious threat and all that consumers detest about Washington and the influence of special interests. However, consumer-minded Members of Congress must awaken to the larger and darker airline strategy to undermine consumer protections, competition policy and the vibrancy of a marketplace vital to America’s economic and social interests.

Note: At http://btc.travel find relevant foundational documents, analyses and industry statements representing all views on H.R. 4156 as well as press editorials and stories.