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Fri May 30, 2014
DOT Seeks Transparency In Airfares
This summer, millions of vacationers will buy plane tickets. But will they be able to fairly compare fares?
Critics say airlines have made it impossible to figure out the true cost by obscuring fees and taxes. Now, the Department of Transportation is proposing a rule that would effectively change the way a "ticket" is defined, and require all ticket agents and airlines to display that ticket price to provide a basis for comparison.
However, the airlines are howling.
NPR's senior business editor Marilyn Geewax joins Here & Now’s Jeremy Hobson to discuss the proposed changes, why this issue has become so political, and the effect it will have on your summer travel plans.
JEREMY HOBSON, HOST:
It's HERE AND NOW. The transportation department has fined Southwest Airlines $200,000 for advertising a $59 fare that didn't exist. But even if it did exist on Southwest or any other airline, the fare might not be anywhere close to $59 by the time all the taxes and fees or accounted for.
And the Department of Transportation is considering new rules to protect consumers from those misleading fares. And joining us to explain is Marilyn Geewax. She's senior business editor here at NPR. And she's with me in the studio.
MARILYN GEEWAX, BYLINE: Hi, Jeremy.
HOBSON: So first tell us about the Southwest fine.
GEEWAX: Well, last year Southwest advertised a fare where you can get from Atlanta to LA for $59, which sounded great...
GEEWAX: ...Except that it didn't actually exist. They offered no seats at that price. And so the DOT has been trying to really enforce its advertising rules. And they want you to, you know, actually have fares available if you're advertising them.
But now they want to take it a little bit further. DOT is looking at a proposal for rules that will define what is a ticket, which that sounds a little bit more like a French philosophy question.
GEEWAX: But really it's a rule-making issue.
HOBSON: And this is because of fares where you see a fare that's, like, $129 but in fact, once you add in the taxes and fees and pay for checked bags...
HOBSON: ...And all that, it ends up being much more than that.
GEEWAX: Really what happened was six years ago in the summer of 2008, gas prices were going up, jet fuel was up. So the industry needed to find a way to cope with all of these hire costs. And what they found was that they could charge extra fees for bags. And that was the summer that began the baggage fees.
Well, it's gone kind of crazy since then - fees for everything. Two more inches of leg room, there's another fee. A seat assignment, there's a fee. All these fees have really piled up and it's good for the industry. They had struggled. Of course, many of them filed for bankruptcy.
But when they started adding on these fees, what it's ended up is that's really where the profit these days. It's kind of like when you go in a restaurant. The restaurant will serve you the meal, and that's where they break even. But what they're looking for is for you to get a drink and a coffee and a dessert...
GEEWAX: ...'Cause that's where the profit is. And that's what's happened with the airlines.
HOBSON: So what's the Department of Transportation trying to do?
GEEWAX: Well, they want you to start to include all of those extra things into one price so that people can comparison shop. You know, it's tough when you go online and you think that a fare is really, really low and then you only later find out that you also have to tack on for the first bag. And it's a different fee for the second bag.
GEEWAX: And then there's the - now several airlines have started to add carry-on fees, which many people are not expecting. So you get to the thing and it's a lot. So the Department of Transportation wants you to be aware of what those are. They're trying to look at a standard ticket that is definable. That is, that you get not only the seat but an assignment. You can bring a carry-on. You can check a bag. They want standardization.
Now, there's some members of Congress who are standing up for the airlines saying that would hurt their business model. And they're trying to come up with legislation to overrule this.
HOBSON: Well, we'll have to see what happens with it. We'll keep following it. Marilyn Geewax, NPR senior business editor. Thanks so much as always.
GEEWAX: Oh, you're welcome. Transcript provided by NPR, Copyright NPR.