No more surprises: The DOT wants more transparency in ancillary service fees when selling airline tickets

Following a chaotic summer travel season, complaints in the travel industry have been soaring, prompting US President Joe Biden and the US Department of Transportation (DOT) to propose new regulations that will help protect passenger rights. In the latest regulations, the White House announced a proposed rule requiring airlines and third-party travel sites to be more transparent. 

The announcement is part of a more significant effort from the administration to help lower consumer prices as record-high inflation continues. It also comes as the midterm elections in the US are approaching. 

Passengers Deserve the Right to Know 

Under the proposed regulation, airlines and third-party travel sites must disclose any additional fees charged “from the first search to touchdown.” These charges typically range from choosing a seat for families or choosing a different seat for lone passengers, changing or canceling the flight, and for checked or carry-on baggage.

Currently, most US carriers show cheaper airfares when customers first consider possible flight alternatives. In such cases, the customers get excited about cheap flights but end up paying a separate cost due to the additional and unexpected fees associated with the carriers’ service.

To encourage transparency and help the consumers make well-informed choices, the proposal seeks to provide passengers with the essential price information at the first display so that they can choose the best deal armed with the complete information.

A full display of prices will be required for all flights to, within, and from the US. Since seat availability and fees fluctuate based on demand and season, the proposal will also require airlines and ticketing agents to enable passengers traveling with young children to purchase seats with airfare at all points of sale. This would align with the DOT's previous warning to airlines to stop charging extra for seating kids with family.

According to US Transportation Department Secretary Pete Buttigieg:

“Airline passengers deserve to know the full, true cost of their flights before they buy a ticket. This new proposed rule would require airlines to be transparent with customers about the fees they charge, which help travelers make informed decisions and save money.” 

In light of this proposed rule, the industry trade group Airlines for America (A4A) wrote in an email that its members already offer transparency to consumers throughout the entire travel journey. These carriers provide details regarding the breakdown of airfares on their websites and provide consumers clarity regarding the total cost of a ticket. 

This also includes transparency on taxes and government fees on airline tickets, which account for over 20% of many domestic one-stop, roundtrip tickets.

A4A also added its members offer a range of options—including fully refundable fares—to increase accessibility to air travel and to help customers make ticket selections that best fit their needs. 
 
Biden and the DOT’s Fees-Disclosure Plan Met with Opposition 
 
Since being put forward by the DOT on September 26, 2022, the proposed regulation has already faced opposition and criticism from various airlines, travel advisors, and consumer advocates. 
 
Just last week, the American Society of Travel Advisors (ASTA) offered its support for this recent proposal in the industry, with Vice President of Advocacy Eben Peck saying the Society has long believed consumers deserve full transparency in airfares and optional ancillary service fees. 
 
However, Peck also said ASTA will still fight the provision requiring travel advisors to disclose fees during offline transactions, expressing concern about its impact on operations.

Meanwhile, airlines dismissed the proposed regulation as “unnecessary.”
 
Additionally, consumer advocate Bill McGee of the American Economic Liberties Project said the proposed regulations don't go far enough. He added that the DOT needs to abolish fees for families with children under 13 to sit together rather than merely making the costs more transparent.
 
The proposal is open for comments for 60 days, starting from when the notice is published in the US Federal Register. 
 
Changes… Again
 
The airline industry suffers from one of the worst customer satisfaction levels of any industry, and the complaints are piling up. The dissatisfaction trend has persisted for decades. 
 
The new proposal would benefit passengers, but it would be yet another regulation on the airline industry. While there have been several consumer-related proposals from the DOT, and it might look like the airlines can’t catch a break, DOT feels like it has to step in, as the industry cannot fix itself.

Most US airlines already display their pricing fully, but this new regulation would require all airlines to display their pricing transparently. It will level the playing field and force the airlines to compete on service and efficiency rather than marketing gimmickry. 
 
So far, the top US airlines have made almost USD 700 million solely on cancellation and change fees this year. Fees are a big part of the revenue. It is time they got the real estate they deserve - on the first display screen.