Thursday, June 3, 2010

New transparency and regulation for the USA's airline industry is good news for all

Yesterday, the United State's Department of Transportation's proposed a mini-blizzard of new regulations. The move is a welcome, and long overdue, step not just for American travelers but for anyone flying into US Airports or using US carriers. At long last, consumers will be able to easily tell what a final airfare will be; they'll have a better guarantee that if they purchase a seat, that seat will actually be there for them on the plane; and they won't have to worry about being imprisoned on the tarmac for hours upon hours.

Here's a brief summary of the new proposed rules:
  • Pricing: Once an airfare is purchased, there can be no increase to the price (so no surprise fuel surcharges months after you bought the ticket). All fees must be included in the price that is initially shown to consumers not only on airline sites, but also on travel agency sites. Deceptive advertising practices, such as touting a low fare which then turns out to be only one leg of a round-trip ticket, will be banned. Baggage fees must be prominently displayed on the airline's home page. 
  • A new 24 hour rule for purchases: Passengers will be able to cancel a ticket they bought without penalty, within 24-hours of purchase. 
  •  Refunds of baggage fees when luggage is lost: Justice! This seems like the least the airlines could do in these cases.
  • Tarmac delays: Now, not only domestic flights but all international flights will be allowed a maximum of three hours on the runway. After that point, they'll have to turn back to the gate. The only exception to this rule will be planes carrying fewer than 30 passengers.
  • Bumping: Higher penalties will make it costlier for the airlines to bump passengers involuntarily off planes. Those passengers delayed for one-hour will now get $650 (previously it was $400); a two-hour or more delay will cost the airlines $1300 (as opposed to $800). In addition, a new rule mandates that bumped passengers be "verbally" offered a check or cash compensation (a much better compensation than a "free ticket" voucher, which puts the passenger into the same bucket as all the frequent flyer members. As you may know, it's now near impossible to redeem frequent flyer miles on many US carriers). Compensation will be offered even if the passenger is flying on a frequent flyer ticket.
  • Customer Service: All customer service rules will have to be put into the carrier's "contract of carriage" which will make them legally binding. Carriers are also being pushed to be more prompt in informing passengers when their planes are delayed or canceled.
The DOT has a 60-day comment period before it officially adopts these rules (which would then be adopted 180 days from now).

I have no doubt that the airlines will have a lot to comment about. They will likely warn that these rules will cause them to have to increase fares (as they'll no longer be able to as easily oversell cabin space) and cancel more flights (due to tarmac delays).

I say, let 'em pout! For too long, the USA's aviation industry has been a wild west in which the airlines could treat passengers any way they pleased with little consequence. These rules seem to inject some logic into a chaotic system, and I'm hoping that consumer rights organizations and ordinary citizens make their voices heard in favor of these proposed regulations. In particular, the transparent pricing rules are a huge improvement, and should be adopted by other countries, as well (are you listening Canada?).

(Photo from Creative Commons)

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