SFGate: Proposal could ease rules requiring disclosure of true cost of airfares

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Sunday, March 12, 2006 (SF Chronicle)
Proposal could ease rules requiring disclosure of true cost of airfares
Ed Perkins


   Say you log onto Expedia or Orbitz, search for the lowest airfare from
Chelm to Kampen, and see a fare of just $199 on Ferguson Airlines -- $100
less than on any other line. Only after you click "buy" do you come to a
screen that displays what you really have to pay: $199 base airfare, plus
$64 "fuel surcharge," $42 "retired employees' pension fund contribution,"
$26 "interest on airline debt," $22 "executive bonus fee," and $9
"lavatory cleaning fee." That $199 airfare just became $362 -- a total
that might well be higher than what you'd have paid with an airline that
priced its flights honestly.
   Don't laugh: That's just the way some airlines want to present airfares.
They're pushing for a broader government license to mislead you in their
price advertising. If the current sneak attack on advertising standards is
successful, every traveler will have a much tougher time sorting out the
true prices.
   Currently, the U.S. Department of Transportation requires airlines to
include in the published airfare the federal excise tax on airfares plus
any "surcharges" an airline might want to impose, while allowing them to
exclude any extras that vary depending on the specific schedule you book,
such as per-passenger taxes and fees imposed by the federal government or
individual airports. But late last year, DOT quietly issued a "notice of
proposed rulemaking" to revise its advertising policies.
   The proposed notice says DOT will consider four options: (1) maintain the
current practice, (2) end the exception for per-passenger
government-imposed taxes and fees, (3) eliminate all requirements for
airfare advertisements except that consumers be apprised of the total
purchase price before the purchase is made, or (4) eliminate
truth-in-advertising rules entirely. Although alternatives 1 and 2 would
nominally preserve or improve truthfulness, most likely they're merely
window dressing for a push to gut consumer protections entirely.
   My worries aren't just academic. Airlines in other countries already add=
 a
laundry list of unadvertised extras and surcharges; I'm sure the U.S.
lines would love nothing better than to do the same. Moreover, DOT already
approves one deception airlines routinely use: featuring round-trip fares
at half their true price, with fine print saying, "each way based on
round-trip purchase." In effect, DOT says it's OK for airlines to mislead
you in big type if they correct it in the fine print.
   To the extent possible, price advertising by airlines (or any other
companies, for that matter) should be required to pass a "buyability"
test. That means highlighted prices at which you can actually buy a
ticket. DOT alternative (2) would help hold airlines to a buyability
standard. DOT alternatives (3) and (4), on the other hand, would give them
carte blanche to split their true price into a phony base plus a bunch of
arbitrary "surcharges" and "extras." Uniform, buyable prices are
especially critical in these days of online comparisons, where we often
have to make a selection among options displayed on the first screen.
Clearly, then, DOT alternative (2) is by far the most beneficial option
for consumers; (3) or (4) would be disastrous.
   Unfortunately, the official comment period for this "stealth" rulemaking
procedure closed in mid-February. Unless enough travelers raise a big
enough stink, the airlines will probably get away with their ploy. If you
agree that giving airlines a broadened license to mislead is a really bad
idea, I urge that you log onto dms.dot.gov/support, and indicate your
support for fully inclusive price advertising. A note to your senator or
representative wouldn't be a bad idea, either.

   E-mail syndicated author Ed Perkins at eperkins@xxxxxxxxx --------------=
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Copyright 2006 SF Chronicle

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