Rule2024-08609
Enhancing Transparency of Airline Ancillary Service Fees
Primary source
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Published
April 30, 2024
Effective
July 1, 2024
Issuing agencies
Transportation Department
Abstract
The U.S. Department of Transportation (Department or DOT) is issuing a final rule to strengthen protections for consumers by ensuring that they have access to fee information for transporting baggage and changing or canceling a flight before ticket purchase. Under the final rule, U.S. air carriers, foreign air carriers, and ticket agents must clearly disclose passenger-specific or itinerary- specific fees for these services to consumers whenever fare and schedule information is provided for flights to, within, and from the United States. The Department is further requiring that carriers provide useable, current, and accurate information regarding fees for these critical ancillary services to any entity that is required to disclose critical ancillary service fee information to consumers. This final rule is in response to the Executive order on Promoting Competition in the American Economy, which directs the Department to take various actions to promote the interests of American workers, businesses, and consumers. The rule will ensure that consumers have the information they need to understand the true costs of air transportation that apply to them, which will create a more competitive market with better outcomes for consumers.
Full Text
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[Federal Register Volume 89, Number 84 (Tuesday, April 30, 2024)]
[Rules and Regulations]
[Pages 34620-34677]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-08609]
[[Page 34619]]
Vol. 89
Tuesday,
No. 84
April 30, 2024
Part IV
Department of Transportation
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14 CFR Parts 259 and 399
Enhancing Transparency of Airline Ancillary Service Fees; Final Rule
Federal Register / Vol. 89 , No. 84 / Tuesday, April 30, 2024 / Rules
and Regulations
[[Page 34620]]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
14 CFR Parts 259 and 399
[Docket No. DOT-OST-2022-0109]
RIN 2105-AF10
Enhancing Transparency of Airline Ancillary Service Fees
AGENCY: Office of the Secretary (OST), Department of Transportation
(DOT).
ACTION: Final rule.
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SUMMARY: The U.S. Department of Transportation (Department or DOT) is
issuing a final rule to strengthen protections for consumers by
ensuring that they have access to fee information for transporting
baggage and changing or canceling a flight before ticket purchase.
Under the final rule, U.S. air carriers, foreign air carriers, and
ticket agents must clearly disclose passenger-specific or itinerary-
specific fees for these services to consumers whenever fare and
schedule information is provided for flights to, within, and from the
United States. The Department is further requiring that carriers
provide useable, current, and accurate information regarding fees for
these critical ancillary services to any entity that is required to
disclose critical ancillary service fee information to consumers. This
final rule is in response to the Executive order on Promoting
Competition in the American Economy, which directs the Department to
take various actions to promote the interests of American workers,
businesses, and consumers. The rule will ensure that consumers have the
information they need to understand the true costs of air
transportation that apply to them, which will create a more competitive
market with better outcomes for consumers.
DATES: This rule becomes effective on July 1, 2024.
FOR FURTHER INFORMATION CONTACT: Heather Filemyr, Ryan Patanaphan, or
Blane A. Workie, Office of Aviation Consumer Protection, U.S.
Department of Transportation, 1200 New Jersey Ave. SE, Washington, DC
20590, 202-366-9342, 202-366-7152 (fax), <a href="/cdn-cgi/l/email-protection#3e565b5f4a565b4c105857525b53474c7e5a514a10595148"><span class="__cf_email__" data-cfemail="a7cfc2c6d3cfc2d589c1cecbc2caded5e7c3c8d389c0c8d1">[email protected]</span></a>,
<a href="/cdn-cgi/l/email-protection#14666d757a3a647560757a75647c757a54707b603a737b62"><span class="__cf_email__" data-cfemail="45373c242b6b352431242b24352d242b05212a316b222a33">[email protected]</span></a>, or <a href="/cdn-cgi/l/email-protection#a7c5cbc6c9c289d0c8d5cccec2e7c3c8d389c0c8d1"><span class="__cf_email__" data-cfemail="bedcd2dfd0db90c9d1ccd5d7dbfedad1ca90d9d1c8">[email protected]</span></a> (email).
SUPPLEMENTARY INFORMATION:
A. Executive Summary
(1) Purpose of the Regulatory Action
The purpose of this final rule is to ensure that consumers know
upfront the fees carriers charge for transporting a first checked bag,
a second checked bag, and a carry-on bag and for canceling or changing
a reservation to avoid surprise fees that can add up quickly and add
significant cost to what may, at first, look like a cheap ticket.
Airlines \1\ have imposed separate fees for ancillary services related
to air travel beyond passenger air transportation as part of their
business model for many years.\2\ Ancillary service fees are not
subject to the 7.5% airline ticket tax that is used to support the
Aviation Trust Fund. These ancillary fees have become more complex over
time and continue to confuse consumers, as explained in section B (2).
Which airlines impose such fees, what services require payment of a
fee, the amount of the fee, and whether the same fees apply to all
passengers are in a continuous state of change. For example, during the
Coronavirus-19 (COVID-19) public health emergency, several airlines
advertised the elimination of ticket change fees, but despite these
general announcements, airlines continued to impose, or later
reimposed, change fees for certain fare types such as ``basic
economy.'' \3\ In this context, consumer organizations have long
advocated for more upfront disclosure of ancillary fees.\4\
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\1\ The preamble in this final rule uses the term ``airlines''
to refer to ``air carriers'' and ``foreign air carriers'' as those
terms are used in the Department's regulations. The two terms are
defined in 49 U.S.C. 40102(a)(2) and (a)(21).
\2\ See, e.g., Comment from the International Air Transport
Association, p.4 (``Airlines have been separating baggage fees from
the core transportation service for more than 14 years . . . .''),
available at <a href="https://www.regulations.gov/comment/DOT-OST-2022-0109-0085">https://www.regulations.gov/comment/DOT-OST-2022-0109-0085</a>.
\3\ See, e.g., Delta Air Lines, Delta Eliminates Change Fees,
Building On Commitment to Flexibility for Consumers, Aug. 31, 2020,
Alaska Airlines, Fly with Peace of Mind: Alaska Airlines Eliminates
Change Fees Permanently, Sept. 1, 2020, American Airlines, Wave
Goodbye to Change Fees, Spirit Airlines, How Can I Change or Cancel
My Reservation? (visited Feb. 29, 2024). Website screenshots
available in docket at <a href="https://www.regulations.gov/docket/DOT-OST-2022-0109">https://www.regulations.gov/docket/DOT-OST-2022-0109</a>.
\4\ See, e.g., Final Rule, Enhancing Airline Passenger
Protections, 74 FR 68983, 68984 (Dec. 30, 2009) (noting that the
subject of baggage fees disclosure would be included in future
rulemaking following concerns raised by consumers and consumer
associations). See also Final Rule, Enhancing Airline Passenger
Protections, 76 FR 23110, 23142 (Apr. 25, 2011).
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On July 9, 2021, the President issued E.O. 14036, ``Promoting
Competition in the American Economy,'' \5\ which launched a whole-of-
government approach to strengthen competition across many sectors,
including commercial aviation. Section 5, paragraph (m)(i)(F) of E.O.
14036 directed the Department to ``consider initiating a rulemaking to
ensure that consumers have ancillary fee information, including
`baggage fees,' `change fees,' and `cancellation fees,' at the time of
ticket purchase.'' This rulemaking responds to the direction in E.O.
14036 to provide improved ancillary fee disclosures to consumers
purchasing air transportation.\6\
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\5\ 86 FR 36987 (<a href="https://www.federalregister.gov/documents/2021/07/14/2021-15069/promoting-competition-in-the-american-economy">https://www.federalregister.gov/documents/2021/07/14/2021-15069/promoting-competition-in-the-american-economy</a>).
\6\ This rulemaking also addresses section 5, paragraph
(m)(i)(B) of E.O.14036. That section directed the Department to
promote enhanced transparency and consumer safeguards, as
appropriate and consistent with applicable law, including through
potential rulemaking, enforcement actions, or guidance documents,
with the aims of enhancing consumer access to airline flight
information so that consumers can more easily find a broader set of
available flights, including by new or lesser known airlines; and
ensuring that consumers are not exposed or subject to advertising,
marketing, pricing, and charging of ancillary fees that may
constitute an unfair or deceptive practice or an unfair method of
competition.
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(2) Overview of Existing Requirements
In 2011, the Department issued a final rule titled, ``Enhancing
Airline Passenger Protections,'' \7\ that sought to address consumer
concerns regarding the proliferation of ancillary fees. In the rule,
the Department added several disclosure requirements for airlines: (1)
a disclosure on the homepage for at least three months of any increase
in the fee for passenger baggage or any change in the free baggage
allowance for checked or carry-on baggage; (2) a notice on the first
screen with a fare disclosure that additional airline fees for baggage
may apply and where consumers can go to access these baggage fees; (3)
a notice on e-ticket confirmations regarding the free baggage allowance
for that flight and any applicable fee for the first and second checked
bag and carry-on bag; and (4) a disclosure of all fees for optional
services in one central place on the seller's website, with non-baggage
fees permitted to be expressed as ranges. Under the 2011 rule, the
Department determined that checked and carry-on baggage were
``fundamental'' to air travel, and the Department required that fees
for such services be expressed as specific charges on a central place
on the airline's website (alongside other ancillary fees), with
information about any differing prices and allowances based on the
passenger's status. Based on ticket agent concerns that the rule would
be costly to ticket agents as airlines are ``updating and changing fees
constantly,'' \8\ the Department applied fewer or modified disclosure
requirements to ticket agents.
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\7\ 76 FR 23110, supra.
\8\ Id. at 23145.
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Based on continued feedback by various stakeholders and advisory
[[Page 34621]]
committees (further discussed below), the Department explored further
changes to ancillary fee disclosure requirements in a 2014 notice of
proposed rulemaking (NPRM) \9\ and a 2017 supplemental notice of
proposed rulemaking (SNPRM).\10\ These efforts are further described in
section B below, though neither resulted in changes to the regulation.
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\9\ 79 FR 29970 (May 23, 2014).
\10\ 82 FR 7536 (Jan. 19, 2017).
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(3) Summary of Major Provisions
This final rule increases the protections provided to consumers as
set forth in the summary table below.
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Subject Requirement
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Covered Entities............. The final rule applies to U.S. air
carriers, foreign air carriers, and
ticket agents (excluding corporate
travel agents) that advertise or sell
air transportation directly to
consumers.
The Department defers for a later
rulemaking the determination of whether
metasearch sites that do not sell
airline tickets but display airline
flight search options directly to
consumers are ticket agents that must
disclose ancillary fee information
required by this rule.
Critical Ancillary Services.. The rule defines critical ancillary
services as any ancillary service
critical to consumers' purchasing
decisions. The ancillary services that
this final rule identifies as critical
to consumers are as follows: (1)
transporting a first checked bag, second
checked bag, and carry-on bag; and (2)
changing or canceling a reservation.
Any other service may also be determined,
after notice and opportunity to comment,
to be critical by the Secretary.
Disclosure of Fees and The final rule requires airlines and
Policies for Critical ticket agents to disclose fees for
Ancillary Services. critical ancillary services during the
itinerary search process at the first
point where a fare and schedule is
provided in connection with a specific
flight itinerary. The fee disclosure
includes noting that a fare category
does not allow changing or canceling a
reservation or transporting a checked or
carry-on bag if that is the case.
Policies for critical ancillary services
must be disclosed before ticket purchase
when a search is conducted online but
are not required to be disclosed with
the fare and schedule.
The information disclosed must be
accurate, clear, and conspicuous. Fees
cannot be displayed through a hyperlink,
but disclosure is permitted using pop-
ups, expandable text, or other means.
Links to Book a Flight with a This final rule requires airlines and
Carrier or an Online Travel ticket agents that sell airline tickets
Agency (OTA). to disclose critical ancillary service
fees on the first page of their online
platforms to which consumers are
directed after searching for flight
options on another entity's online
platform (a metasearch site) unless the
consumer was already provided accurate
fee information on the directing
entity's online platform.
Passenger-Specific and This final rule requires carriers and
Anonymous Searches. ticket agents to disclose the fees for
critical ancillary services as passenger-
specific itinerary information if a
consumer conducts a passenger-specific
itinerary search.
A passenger-specific itinerary search
refers to a search that takes into
account information specific to the
passenger (e.g., the passenger's status
in the airline's frequent flyer program,
the passenger's military status, or the
passenger's status as a holder of a
particular credit card) that was
affirmatively provided by that passenger
and information specific to the
itinerary (e.g., geography, travel
dates, cabin class, and ticketed fare
class such as full fare ticket) that may
impact the critical ancillary service
fees to be charged or policies to be
applied.
An anonymous itinerary search refers to a
search that does not take into account
information specific to the passenger
but does take into account information
specific to the itinerary (e.g.,
geography, travel dates, cabin class,
and ticketed fare class such as full
fare ticket) that may impact the
critical ancillary service fees to be
charged or policies to be applied.
Opting Out of Disclosures.... The final rule does not permit airlines
and ticket agents to omit disclosure of
first checked, second checked, or carry-
on baggage fees with the fare and
schedule information on their online
platform unless: (1) the airline/ticket
agent asks consumers at the beginning of
a search if they intend to travel with a
carry-on bag or checked bags; and (2) a
consumer affirmatively indicates that no
one in the booking party intends to
travel with carry-on bag or first or
second checked bags.
The final rule does not permit airlines
or ticket agents to enable consumers to
opt out of display of change and
cancellation fees on the airline's or
ticket agent's online platform.
Disclosures on Online The final rule requires airlines and
Platforms. ticket agents to disclose the fees and
policies for critical ancillary services
on airlines' or ticket agents' online
platforms.
The final rule defines ``online
platforms'' to be any interactive
electronic medium, including, but not
limited to, websites and mobile
applications, that allow the consumer to
search for or purchase air
transportation from a U.S. carrier,
foreign carrier, or ticket agent.
Offline (Telephone, In- The final rule requires airlines and
person) Disclosures of ticket agents to disclose to consumers
Airline Ancillary Service during an in-person or telephone inquiry
Fees. that critical ancillary fees apply if
that is the case and upon request
disclose those fees to consumers.
Sharing of Airline Ancillary This final rule requires airlines to
Service Fee Information. provide critical ancillary fee
information to any entity that is
required to disclose critical ancillary
service fee information to consumers.
Percentage-Off Advertisements The final rule requires airlines and
ticket agents that advertise percentage-
off discounts of a ``flight,''
``ticket,'' or ``fare'' to apply the
percentage-off discount to the full fare
(i.e., all mandatory government taxes/
fees and carrier-imposed charges/fees).
The final rule requires airlines and
ticket agents that advertise percentage-
off discounts of a ``base fare'' to
apply the percentage-off discount to the
full fare amount excluding all
government taxes and charges (i.e., all
mandatory carrier-imposed charges/fees).
[[Page 34622]]
Compliance/Implementation The final rule requires that: (1)
Period. airlines must provide required critical
ancillary fee data to ticket agents not
later than six months after this rule's
publication date, or October 30, 2024;
(2) airlines must comply with all other
regulatory requirements no later than 12
months after this rule's publication
date, or April 30, 2025; (3) ticket
agents that do not meet the Small
Business Administration (SBA) definition
of small entity must comply with all
regulatory requirements no later than 18
months after this rule's publication
date, or October 30, 2025; and (4)
ticket agents that that meet the SBA
definition of small entity must comply
with all regulatory requirements no
later than 24 months after this rule's
publication date, or April 30, 2026.
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(4) Costs and Benefits
The final rule changes how U.S. air carriers, foreign air carriers,
and ticket agents disclose information about certain ancillary fees for
flights. Expected benefits of the rule result from the reduction of
excess consumption of air travel, or deadweight loss, which occurs
because consumers who are unaware of ancillary service fees behave as
if the price for air travel is lower than it is. Annual benefits from
reducing deadweight loss are expected to amount to $5.5 million. The
other source of benefits estimated by the Department is from the time
consumers will save when they search for airfare because they no longer
need to interrupt their search to find information on ancillary service
fees. Depending on assumptions regarding the number of consumers who
consider ancillary fee information when they search for airfare, time
savings benefits are expected to range from $365 million to $484
million annually.
Expected costs of this rule include costs to consumers due to the
time needed to navigate increased amounts of information, which range
from $239 million to $331 million annually. The primary estimated costs
of the rule to carriers and ticket agents are the costs that they would
incur to modify their websites by adjusting their displays of fares,
schedules, and fees. Third parties involved in data exchange, such as
Global Distribution Systems (GDSs) and direct-channel companies might
incur some costs due the need to upgrade their systems, though the
Department acknowledges that these entities are already upgrading
systems for market reasons and have been for several years. Quantified
costs range from $286 million to $378 million annually.
One effect of better information on ancillary fees is that some
consumers will pay less for the ancillary services they use when they
travel by air. These economic effects are not societal benefits or
costs but represent a transfer from airlines to consumers, estimated to
be about $543 million annually. This transfer represents $543 million
in overpayment in fees for consumers, or from the perspective of
airlines, additional revenue from consumers who are surprised by fees
and, for example, then need to pay a higher fee at the airport to check
a bag. This transfer, as well as the benefits due to any reduction in
deadweight loss, accrue to consumers and are expected to occur
regardless of any time savings impacts.
B. Background
(1) Existing Ancillary Fee Disclosure Requirements
As noted above, the Department's existing regulations in 14 CFR
399.85 contain the requirements for ancillary fee disclosures as
promulgated in the 2011 final rule. Under 14 CFR 399.85(a), airlines
must promptly and prominently disclose any increase in fees for a
carry-on or first and second checked bags and any change in bag
allowances on the homepages of their websites. Paragraph (b) requires
airlines and ticket agents to disclose clearly and prominently on the
first screen with a fare quotation for a specific itinerary that
additional airline fees for baggage may apply and where consumers can
see these fees. Ticket agents may refer consumers to the airline
websites for specific baggage fee information or to their own sites if
they display airline baggage fees. Paragraph (c) requires airlines and
ticket agents to disclose on e-ticket confirmations information
regarding passengers' free baggage allowances and applicable fees for a
carry-on bag and a first and second checked bag, expressed as specific
charges taking into account any factors that affect those charges such
as passenger status. Paragraph (d) requires airlines to disclose the
fees for all ancillary services on their websites, accessible through a
conspicuous link from the carrier's homepage. The paragraph notes that
such fees may generally be expressed as a range, but baggage fees must
be expressed as specific charges taking into account any factors that
affect those charges.
Requirements in other regulations also have an impact on ancillary
fees. Under 14 CFR 253.7, airlines may not impose any terms restricting
refunds of the ticket price, charging monetary penalties on passengers,
or raising the ticket price, unless the passenger receives conspicuous
written notice of the salient features of those terms on or with the
ticket. In 14 CFR 399.88, sellers of scheduled air transportation may
not increase the price of passenger baggage after the air
transportation has been purchased by the consumer. As stated in the
NPRM for this rulemaking, while the text of 14 CFR 399.88 references
ancillary fees such as seat fees, the Department announced in 2011 that
it would enforce the prohibition on post-purchase price increases only
for carry-on bags and first and second checked bags.\11\
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\11\ See also Guidance on Price Increases of Ancillary Services
and Products not Purchased with the Ticket (December 28, 2011). The
application of the prohibition of the post-purchase price increase
was at issue in a lawsuit filed by two airlines against the
Department. The court considered the rule as applied under the
December 28, 2011, guidance and upheld the Department's rule
prohibiting post-purchase price increases as it is currently being
applied. Spirit Airlines, Inc., v. U.S. Dept. of Transportation
(D.C. Cir. July 24, 2012), slip op. at 20-21. Petition for Writ of
Certiorari denied on April 1, 2013.
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(2) Problems With Existing Requirements and Efforts To Improve
Disclosures
Following the 2011 final rule, described above, the Department
issued an NPRM titled ``Transparency of Airline Ancillary Service Fees
and Other Consumer Protection Issues'' in 2014.\12\ The 2014 rulemaking
contained various proposals to enhance consumer protections, including
a proposal to require the disclosure of certain airline ancillary
service fees (i.e., first checked bag, second checked bag, one carry-on
item, and advance seat selection) to consumers through all sales
channels on the first page on which a fare is displayed in response to
a specific flight itinerary search request. The proposal to require
disclosure of certain ancillary fees was based in part on a
recommendation by the Future of Aviation Advisory Committee (FAAC).\13\
The FAAC's 2010 report had
[[Page 34623]]
noted that, despite improvements in the air consumer experience, FAAC
members felt that consumers sought greater transparency in the total
cost of their tickets and that they should have the ability to choose
between carriers that either do not charge for certain services or
charge differing fees. The 2014 NPRM also relied on the statements of a
successor committee, the Advisory Committee on Aviation Consumer
Protection (ACACP), which in 2012 adopted the FAAC recommendation and
added that all participants in the airfare and fee distribution system
should be guided by principles of transparency, providing choices and
offers that meet consumer needs, and knowing the full price before
purchase.\14\ While the ACACP commended the Department's regulatory
efforts to add transparency, it noted that the aviation industry
offered a variety of business models, network choices, and optional
services, and that the level of choice was creating complexity for
consumers. The ACACP had heard from advocates and ticket agents that
consumers expect to know the cost of the entire trip before purchasing
a ticket.\15\
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\12\ 79 FR 29970 (May 23, 2014).
\13\ See Recommendation 11, in FAAC Final Report (2010),
available at <a href="https://www.transportation.gov/highlights/future-aviation-advisory-committee/faac-final-report">https://www.transportation.gov/highlights/future-aviation-advisory-committee/faac-final-report</a>.
\14\ Report of the Advisory Committee on Aviation Consumer
Protection 7-8 (Oct. 22, 2012), available at <a href="https://www.transportation.gov/airconsumer/ACACP/1st-ACACP-Report-22OCT2012">https://www.transportation.gov/airconsumer/ACACP/1st-ACACP-Report-22OCT2012</a>.
\15\ Id., see, e.g., Transcript--Advisory Committee on Aviation
Consumer Protection, First Meeting, June 28, 2012, available at
<a href="https://www.regulations.gov/document/DOT-OST-2012-0087-0095">https://www.regulations.gov/document/DOT-OST-2012-0087-0095</a>.
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In issuing the 2014 proposal on disclosure of certain airline
ancillary service fees, the Department explained that the proposal was
necessary because the 2011 rule, while a step in the right direction,
did not fully address the problem of lack of transparency of ancillary
services and products. The 2014 proposal on disclosure of airline
ancillary service fees generated significant comments from consumers,
airlines, ticket agents, and other interested parties. During the
pendency of the 2014 rulemaking, the ACACP recommended that DOT require
that change and cancellation fees be clear and displayed before ticket
purchase.\16\ Consumer advocates had asserted at an ACACP meeting held
on June 23, 2015, that such fees had become significant and difficult
to ascertain.\17\ At that time, the ACACP also discussed baggage fees
and allowances, with consumer advocates noting that baggage allowance
rules were confusing to consumers and that it was difficult for
consumers to understand which airline's rules apply. At the same
meeting, a ticket agent representative stated that every baggage fee
scheme had ``multiple layers and exceptions'' that were not always
dynamically available to ticket agents.\18\
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\16\ Record of Meeting, Ninth Meeting of the Advisory Committee
on Aviation Consumer Protection 3 (Sept. 1, 2015), available at
<a href="https://www.transportation.gov/airconsumer/ACACP/9th-meeting-Sept-1/record">https://www.transportation.gov/airconsumer/ACACP/9th-meeting-Sept-1/record</a>.
\17\ See Record of Meeting, Eighth Meeting of the Advisory
Committee on Aviation Consumer Protection 3-5 (June 23, 2015),
available at <a href="https://www.transportation.gov/sites/dot.gov/files/docs/resources/individuals/aviation-consumer-protection/285976/acacp-record-8th-meeting-23june2015.pdf">https://www.transportation.gov/sites/dot.gov/files/docs/resources/individuals/aviation-consumer-protection/285976/acacp-record-8th-meeting-23june2015.pdf</a>; see also Record of Meeting,
Ninth Meeting of the Advisory Committee on Aviation Consumer
Protection (Sept. 1, 2015).
\18\ Id.
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In 2016, the Department decided not to issue a final rule on the
issue of transparency of airline ancillary services given the
complexity of the issues and additional considerations identified by
comments submitted on the 2014 NPRM. Instead, the Department decided to
seek additional information on the disclosure of fees for ancillary
services in a supplemental rulemaking.\19\ In January 2017, the
Department issued an SNPRM, which focused solely on the issue of
transparency of certain ancillary service fees.\20\ In the 2017 SNPRM,
the Department proposed to require fees for a first and second checked
bag and a carry-on bag to be disclosed at all points of sale wherever
fare and schedule information is provided to consumers. While the SNPRM
was pending, in September 2017, the U.S. Government Accountability
Office (GAO) noted that consumer group representatives stated that it
had become ``increasingly difficult for consumers to compare airfare
ticket prices, fees, and associated rules, and understand what is
included in their purchases.'' \21\ On December 14, 2017, the SNPRM was
withdrawn with the Department noting that the withdrawal is consistent
with Executive Order (E.O.) 13771, Reducing Regulation and Controlling
Regulatory Costs.\22\ After the withdrawal, a number of State attorneys
general urged the Department to reverse its decision, stating that they
``regularly hear reports from consumers in [their] states who are
confused and frustrated by these fees, which significantly alter the
total cost of travel.'' \23\ E.O. 13771 was later revoked.\24\
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\19\ In 2016, the Department issued a final rule that
promulgated regulations related to carrier reporting, disclosure of
codeshare operations, and display bias, while separating out the
ancillary fee disclosure and ticket agent definition issues into
separate rulemaking efforts. 81 FR 76800 (Nov. 3, 2016). The ticket
agent rulemaking remains pending. See Fall 2023 Unified Agenda for
rulemaking titled ``Air Transportation Consumer Protection
Requirements for Ticket Agents'' (RIN 2105-AE57) at <a href="https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2105-AE57">https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2105-AE57</a>.
\20\ 82 FR 7536 (Jan. 19, 2017).
\21\ GAO 17-756, Commercial Aviation: Information on Airline
Fees for Optional Services (September 2017), p. 33 at <a href="https://www.gao.gov/assets/gao-17-756.pdf">https://www.gao.gov/assets/gao-17-756.pdf</a>.
\22\ 82 FR 58778 (Dec. 14, 2017).
\23\ Letter from attorneys general from 16 States and the
District of Columbia to Secretary Elaine L. Chao (Dec. 20, 2017).
\24\ On January 20, 2021, the President issued E.O. 13992,
``Revocation of Certain Executive Orders Concerning Federal
Regulation,'' which revoked E.O. 13771 and certain other Executive
orders.
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While the disclosure regulations promulgated in 2011 remain in
place, consumer advocates continue to express concerns to the
Department that there is a market failure in air transportation pricing
because consumers are unable to determine the true cost of air travel
prior to ticket purchase. They have also raised concerns that consumers
often find the process of determining the baggage fees that apply to
them to be a complicated and time-consuming process. Consumer advocates
have asserted that a lack of passenger-specific information regarding
fees for ancillary services at the time of ticket purchase is causing a
market failure by limiting the ability of consumers to understand the
true cost of the travel they are looking to purchase and compare
pricing between carriers and travel options. Consumer advocates have
also noted a significant increase in the number of ancillary service
fees imposed by carriers.
Certain members of Congress have expressed support for full, more
specific, disclosure of ancillary service fees. Members of Congress
have also sponsored legislation on this topic.\25\ Further, the Joint
Explanatory Statement of the 2018 Consolidated Appropriations Act
requested that the Department work in collaboration with industry,
consumers, and other stakeholders to establish guidelines on
[[Page 34624]]
transparency of airline ancillary fees.\26\ Subsequently, the
Department tasked the Aviation Consumer Protection Advisory Committee
(ACPAC) with examining this issue again.\27\
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\25\ See, e.g., Letter from Representative Nita M. Lowey to
Secretary Elaine Chao (Dec. 8, 2017). See also section 203 of S.
3222, Airline Passengers' Bill of Rights (introduced by Senators
Blumenthal, Markey, Whitehouse, Wyden, and Casey on November 17,
2021) at <a href="https://www.congress.gov/bill/117th-congress/senate-bill/3222/text?r=7&s=1">https://www.congress.gov/bill/117th-congress/senate-bill/3222/text?r=7&s=1</a>, proposing to mandate that DOT require airlines,
online travel agencies (OTAs), metasearch engines and other ticket
agents that provide flight search tools disclose all applicable
taxes and ancillary fees at any point in which the fare is shown and
in telephone communication with a prospective consumer in the U.S.
at any point in which the cost of the air transportation is
disclosed. See also The Unfriendly Skies: Consumer Confusion Over
Airline Fees, Staff Report of Minority Staff of Senate Commerce
Committee (August 6, 2015) at <a href="https://www.blumenthal.senate.gov/imo/media/doc/8%206%2015%20FINAL%20Airline%20Report.pdf">https://www.blumenthal.senate.gov/imo/media/doc/8%206%2015%20FINAL%20Airline%20Report.pdf</a>, finding that
ancillary fees, such as change and cancellation penalties, are
increasingly less transparent regarding the true cost of air travel
and recommending more transparency from the airline industry.
\26\ <a href="https://www.congress.gov/congressional-record/2018/03/22/house-section/article/H2697-1">https://www.congress.gov/congressional-record/2018/03/22/house-section/article/H2697-1</a> at page H2872.
\27\ See <a href="https://www.regulations.gov/document/DOT-OST-2018-0190-0001">https://www.regulations.gov/document/DOT-OST-2018-0190-0001</a>.
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In 2019, during a meeting of the ACPAC, two consumer organizations
underscored the difficulties faced by consumers in determining the
total cost of air travel.\28\ Consumer advocates maintained that
consumers were confused by the complex charts that carriers and ticket
agents provide to consumers to determine their baggage fees. The ACPAC
heard from several consumer advocacy groups, including Travelers
United, the National Consumers League (NCL), and the Global Business
Travel Association (GBTA) regarding this issue. Consumer organizations
that presented to the ACPAC stressed the importance of ensuring
consumers can accurately and easily compare travel costs, inclusive of
ancillary fees, and they recommended that ancillary fee information
should be clearly displayed early in consumer purchase decisions.\29\
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\28\ See Summary of April 4, 2019 ACPAC Meeting 11-13, available
at <a href="https://www.regulations.gov/document/DOT-OST-2018-0190-0019">https://www.regulations.gov/document/DOT-OST-2018-0190-0019</a>.
\29\ See Summary of April 4, 2019 ACPAC Meeting 10-16, available
at <a href="https://www.regulations.gov/document/DOT-OST-2018-0190-0019">https://www.regulations.gov/document/DOT-OST-2018-0190-0019</a>; see
also Summary of September 24, 2020 ACPAC Meeting 19-20, available at
<a href="https://www.regulations.gov/document/DOT-OST-2018-0190-0025">https://www.regulations.gov/document/DOT-OST-2018-0190-0025</a>.
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In December 2020, the ACPAC submitted a report to the Department
recommending that the Department remain vigilant to ensure compliance
with the existing transparency requirements. The ACPAC was silent on
whether the Department should issue a new rulemaking on transparency of
airline ancillary fees.\30\ In July 2021, E.O. 14036 directed the
Department to consider initiating a rulemaking to ensure consumers have
ancillary fee information at the time of ticket purchase.
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\30\ Report of the Aviation Consumer Protection Advisory
Committee 5 (Dec. 31, 2020), available at <a href="https://www.transportation.gov/individuals/aviation-consumer-protection/acpac-report-secretary-transportation-december-31-2020">https://www.transportation.gov/individuals/aviation-consumer-protection/acpac-report-secretary-transportation-december-31-2020</a>.
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Based on E.O. 14036 and the above-described history of concerns
raised by consumer organizations and individual consumers, including
the individual complaints the Department has received reflecting the
confusion consumers experience regarding ancillary fees,\31\ the
Department determined that this rulemaking is necessary to address
ongoing inadequacies in existing ancillary fee disclosure requirements.
It appears that consumers are generally unaware of the amount of the
ancillary fees that apply to them when they book tickets. Consumer
advocates contend that the ancillary services and fees that airlines
currently post on their websites are not sufficiently useful to
consumers to determine the cost of travel because airlines generally
provide a range of fees for ancillary services aside from baggage.
Airlines acknowledge that the fees for ancillary services often vary
based on various factors such as the type of aircraft used, the flight
on which a passenger is booked, or the time at which a passenger pays
for the service or product. Regarding baggage fees, consumer advocacy
organizations have reported to the Department that consumers often find
the process of determining the baggage fees that apply to them to be a
complicated and time-consuming process. Consumer advocates also
expressed the view that because most passengers travel once per year or
less, they may not be aware of certain ancillary service fees.\32\
Advocates further argued that the practice of drip pricing, a pricing
technique in which firms advertise only part of the price and reveal
other charges later as the customer goes through the buying process,
tends to lock consumers into engaging with a given seller, and reduces
competition, because the customer has invested time and energy into the
purchasing process and thus is less likely to abandon the purchase
entirely and re-institute a fuller search for options.\33\
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\31\ See, e.g., <a href="https://www.regulations.gov/document/DOT-OST-2022-0109-0021">https://www.regulations.gov/document/DOT-OST-2022-0109-0021</a>, <a href="https://www.regulations.gov/document/DOT-OST-2022-0109-0022">https://www.regulations.gov/document/DOT-OST-2022-0109-0022</a>, <a href="https://www.regulations.gov/document/DOT-OST-2022-0109-0023">https://www.regulations.gov/document/DOT-OST-2022-0109-0023</a>.
\32\ Presentation of <a href="http://FlyersRights.org">FlyersRights.org</a> (FlyersRights), available
at <a href="https://www.regulations.gov/document/DOT-OST-2018-0190-0046">https://www.regulations.gov/document/DOT-OST-2018-0190-0046</a>.
\33\ Id.; see also Presentation of American Antitrust Institute,
available at <a href="https://www.transportation.gov/airconsumer/ACPAC/June2022Meeting/webcast">https://www.transportation.gov/airconsumer/ACPAC/June2022Meeting/webcast</a> (Day 1 morning session), and Federal Trade
Commission, ECONOMIC ANALYSIS OF HOTEL RESORT FEES, (Jan. 2017),
available at <a href="https://www.ftc.gov/system/files/documents/reports/economic-analysis-hotel-resort-fees/p115503_hotel_resort_fees_economic_issues_paper.pdf">https://www.ftc.gov/system/files/documents/reports/economic-analysis-hotel-resort-fees/p115503_hotel_resort_fees_economic_issues_paper.pdf</a>.
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Following the issuance of E.O. 14036, the ACPAC met again in June
2022 to address the issue of transparency of airline ancillary service
fees.\34\ During the meeting, DOT solicited comment on topics being
considered for the NPRM on ancillary fee transparency. These topics
included identifying ancillary service fees critical to consumers, the
sharing of airline data regarding critical ancillary service fees with
ticket agents, and how to best display this information to consumers.
DOT also solicited comment on whether fees for certain ancillary
services should be disclosed at the first point in a search process
where a fare is listed. At the meeting, a consumer advocate stated that
consumers still do not know the specific amounts of baggage and change
and cancellation fees that apply during the ticket purchase
process.\35\ Another consumer advocate expressed concerns with drip
pricing.\36\ The advocate also stated that baggage fees vary by airline
and can depend on the flight, the time, and the day. A representative
of the American Antitrust Institute stated that cancellation fees were
discontinued at the beginning of the pandemic and then returned, and
that drip pricing practices lock consumers into higher costs and
suppresses competition. The representative also urged the Department to
set policies to provide full fee information up front so consumers can
make informed purchasing decisions based on the total cost of their
itineraries.\37\
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\34\ See <a href="https://www.transportation.gov/airconsumer/ACPAC/June2022Meeting">https://www.transportation.gov/airconsumer/ACPAC/June2022Meeting</a>. A webcast of the meeting is available to view on
the ACPAC website. Speakers' materials have been posted to the ACPAC
docket at <a href="https://www.regulations.gov/docket/DOT-OST-2018-0190">https://www.regulations.gov/docket/DOT-OST-2018-0190</a>. On
the second day of the meeting, the ACPAC addressed the separate but
related issue of availability of airline flight information.
\35\ Aviation Consumer Protection Advisory Committee (ACPAC)
June 28 and 29, 2022 Meeting Minutes 8, available at <a href="https://www.regulations.gov/document/DOT-OST-2018-0190-0073">https://www.regulations.gov/document/DOT-OST-2018-0190-0073</a>.
\36\ Id. at 9.
\37\ Id. at 10.
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The Department continues to receive hundreds of consumer complaints
each year regarding ancillary fees.\38\ Based on past experience, the
Department understands that the number of consumer complaints it
receives directly from consumers is a small fraction of the total
complaints received each year by airlines and ticket agents.\39\ The
requirements to provide specific baggage fee information and a range of
fees for other ancillary services have not been as helpful to consumers
in
[[Page 34625]]
determining the true cost of travel as the Department had anticipated
when issuing its final rule in 2011.
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\38\ As noted in the NPRM of the present rulemaking, the Office
of Aviation Consumer Protection (OACP) received over 550 complaints
regarding change and cancellation fees and over 140 complaints
regarding seat fees in 2021. In 2022, OACP received over 750
complaints regarding change and cancellation fees. During the first
5 months of 2023, OACP received over 300 complaints regarding change
and cancellation fees.
\39\ Compare, e.g., the 2,095 disability complaints filed with
the Department in 2022 (available on page 66 of Air Travel Consumer
Report issued February 2023, <a href="https://www.transportation.gov/sites/dot.gov/files/2023-04/February%202023%20ATCR_Revised.pdf">https://www.transportation.gov/sites/dot.gov/files/2023-04/February%202023%20ATCR_Revised.pdf</a>), and the
42,306 disability complaints received by airlines in 2022 (available
at <a href="https://www.transportation.gov/resources/individuals/aviation-consumer-protection/2022-disability-related-complaints-received-all">https://www.transportation.gov/resources/individuals/aviation-consumer-protection/2022-disability-related-complaints-received-all</a>).
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C. Notice of Proposed Rulemaking
The Department published its NPRM on Enhancing Transparency of
Airline Ancillary Service Fees on October 20, 2022.\40\ The NPRM was
initially open to public comment for a period of 60 days (until
December 19, 2022). During this time, the ACPAC was informed about the
NPRM's principal provisions and heard from stakeholders at its meeting
on December 8, 2022. Following several commenters' request for an
extension due to the complexity of the rulemaking, the comment period
was extended for 35 days until January 23, 2023.\41\ On January 12,
2023, the ACPAC met again to deliberate and make recommendations
related to the NPRM. Then, on January 18, 2023, the Department received
a request to further extend the comment period on the basis that the
requestor was not able to view the January 12, 2023, ACPAC meeting, and
that at the time the request for extension was submitted, the meeting
materials had not been posted to the docket. On January 20, 2023, the
Department declined to extend the comment period based on that request
noting that a video recording of the full meeting was posted
publicly.\42\ The Department received another request for additional
time to provide comments on the NPRM, based primarily on technological
and interface issues identified by the petitioner. In response, the
Department posted a notice to its website stating that it was
considering whether to grant that request and provided a preliminary
list of recommendations made by the ACPAC at its January 12
meeting.\43\
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\40\ 87 FR 63718 (Oct. 20, 2022).
\41\ 87 FR 77765 (Dec. 20, 2022).
\42\ See <a href="https://www.transportation.gov/airconsumer/AncillaryFeeNPRM-Denial-Extension-Comment-Period">https://www.transportation.gov/airconsumer/AncillaryFeeNPRM-Denial-Extension-Comment-Period</a>. See also 88 FR
4923 (Jan. 26, 2023).
\43\ See <a href="https://www.transportation.gov/airconsumer/AncillaryFeeNPRM-Procedural-Information-January23-2023">https://www.transportation.gov/airconsumer/AncillaryFeeNPRM-Procedural-Information-January23-2023</a>.
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On January 23, 2023, three commenters petitioned the Department for
a public hearing on the NPRM pursuant to the Department's regulation on
rulemakings relating to unfair and deceptive practices, 14 CFR 399.75.
By a notice on March 14, 2023, the Department scheduled the hearing for
March 30, 2023, and reopened the rulemaking to public comment from
March 14 through April 6, 2023 (seven days following the hearing).\44\
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\44\ 88 FR 15622 (Mar. 14, 2023).
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(1) Overview of Proposals
In the NPRM, the Department proposed to require airlines and ticket
agents to disclose on the first page displayed following an itinerary
search the fees for a first and second checked bag, a carry-on bag,
ticket change and cancellation, and seat assignments that would enable
a child 13 or under to be seated adjacent to an accompanying adult
(``family seating''). The fees would need to be disclosed on the first
page displayed following an itinerary search in which fare and
itinerary information is shown, and they would need to be adjusted
based on passenger-specific information provided by the consumer. The
NPRM also proposed that the disclosures be displayed on the screen
without the use of links or pop-ups, and that the same disclosures also
be made during in-person or phone transactions. To enable ticket agents
to provide the disclosures, the NPRM proposed that airlines provide fee
rule information to ticket agents that sell or display air
transportation. The Department did not propose to require that airlines
provide the information to GDSs, which facilitate the purchase of
tickets between airlines and consumers, but do not display or sell
airline tickets to consumers. The NPRM proposed that these data sharing
and disclosure requirements would become effective within six months of
the issuance of a final rule. Specific provisions of the NPRM are
discussed in more detail in section E of this document.
(2) ACPAC Meetings on the Proposals
As noted above, after the NPRM was published, the ACPAC held two
meetings to deliberate on the NPRM's provisions and to make
recommendations. At its December 8, 2022, meeting, the ACPAC heard from
Department staff regarding the proposed rule's provisions and from
members of the public regarding their views.\45\ The ACPAC's airline
representative raised questions about the need for a rulemaking and
asked about the Department's application of the unfair and deceptive
practices standard. He questioned the Department's analysis of whether
consumers were substantially injured. A member of the public
representing the International Air Transport Association (IATA) also
questioned whether consumers were unaware of the price imposed for
baggage or seating before purchasing a ticket, and he indicated that it
would be costly and time-consuming for systems to conduct complex
calculations on a passenger- or itinerary-specific basis to produce the
proposed fee disclosures. He expressed his view that the rule should
make fee information clear to consumers before purchase rather than
during the itinerary search stage. The ACPAC's consumer representative
raised questions about the impact the proposed disclosures would have
on the amount of information being presented to consumers on screen. A
member of the public representing Travelers United expressed the view
that regulation is needed on fee disclosures and that consumers are
harmed if they go through the reservation process and find out at the
end that extra fees exist. A member of the public representing the
American Society of Travel Advisors (ASTA) expressed concern about the
proposed rule's treatment of offline (i.e., telephone or in person)
disclosures, and he urged the Department to make such offline
disclosures available upon request or at the agent's discretion. A
member of the public representing the Computer & Communications
Industry Association (CCIA) stated that aggregators such as metasearch
entities should not be subject to the rule.
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\45\ Meeting minutes are available at <a href="https://www.regulations.gov/document/DOT-OST-2018-0190-0110">https://www.regulations.gov/document/DOT-OST-2018-0190-0110</a>.
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On the issue of data distribution to ticket agents, the IATA
representative noted that his organization supports the Department's
proposal not to mandate that airlines distribute fee information to
ticket agents through GDSs, but that the costs of implementing the data
sharing proposal within the six-month compliance period would be
significant. Multiple members of the public representing ticket agents
and GDSs expressed the view that the Department should require airlines
to distribute fee information to GDSs and disagreed with what they saw
as GDSs being excluded from the proposal. In their view, GDSs were the
most efficient method to move data from airlines to ticket agents, and
that without using GDSs, ticket agents would have to bear resource-
intensive costs to enter into agreements with airlines and to make data
visible to customers.
Speakers at the December 8 meeting expressed differing views on
whether the proposed compliance period of six months would be feasible,
with the ACPAC's consumer representative stating that six months was
not unrealistic given that capabilities exist for GDSs to provide the
data necessary for ticket agents to comply, while speakers representing
airlines and ticket agents asserted that six months was insufficient
time, although acknowledging that the use of GDSs to transfer data
could enable the proposed
[[Page 34626]]
requirements to be implemented more quickly than not using GDSs.
On January 12, 2023, the ACPAC publicly deliberated and voted on
recommendations related to ancillary fees.\46\ The ACPAC
recommendations concerned the types of ancillary service fees that
should be disclosed, the manner and form of the disclosures (e.g.,
whether pop ups, roll overs, or links are acceptable), the timing of
the disclosures, the application of fee disclosures to telephone or in-
person inquiries, the ability for consumers to opt out of receiving the
disclosures, the transactability of ancillary fees, the process for
data sharing by airlines to ticket agents, the entities covered, and
the appropriate compliance timeframes. On January 23, 2023, to
facilitate the public's consideration of this NPRM, the Department
publicly posted a written summary of the recommendations adopted by the
ACPAC at its January 12 meeting.\47\ The ACPAC's specific
recommendations are discussed in section E, where the Department
discusses these matters in substance.
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\46\ The committee voted in favor of moving forward with
deliberation and issuing recommendations at the January 12, 2023,
meeting, with the member representing airlines voting against moving
forward while the NPRM's comment period remained open. The meeting
minutes are available at <a href="https://www.regulations.gov/document/DOT-OST-2018-0190-0111">https://www.regulations.gov/document/DOT-OST-2018-0190-0111</a>.
\47\ See Procedural Information Regarding Enhancing Transparency
of Airline Ancillary Service Fees (January 23, 2023) at <a href="https://www.transportation.gov/airconsumer/AncillaryFeeNPRM-Procedural-Information-January23-2023">https://www.transportation.gov/airconsumer/AncillaryFeeNPRM-Procedural-Information-January23-2023</a>.
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(3) Public Hearing Regarding Proposals
Under 14 CFR 399.75, when the Department issues a proposed
regulation declaring a practice in air transportation or the sale of
air transportation to be unfair or deceptive to consumers under the
authority of 49 U.S.C. 41712(a), any interested party may file a
petition to hold a hearing on the proposed regulation. Section 399.75
further provides that the petition for a hearing shall be granted if
the petitioner makes a clear and convincing showing that granting the
petition is in the public interest. Factors in determining whether a
petition is in the public interest include, but are not limited to: (i)
Whether the proposed rule depends on conclusions concerning one or more
specific scientific, technical, economic, or other factual issues that
are genuinely in dispute or that may not satisfy the requirements of
the Information Quality Act; (ii) Whether the ordinary public comment
process is unlikely to provide an adequate examination of the issues to
permit a fully informed judgment; (iii) Whether the resolution of the
disputed factual issues would likely have a material effect on the
costs and benefits of the proposed rule; (iv) Whether the requested
hearing would advance the consideration of the proposed rule and the
General Counsel's ability to make the rulemaking determinations
required by this section; and (v) Whether the hearing would
unreasonably delay completion of the rulemaking.
On January 23, 2023, three commenters petitioned the Department for
a public hearing on the NPRM. Airlines for America (A4A) raised two
questions in its petition: (1) whether consumers are or are likely to
be substantially injured or are misled by airlines' current disclosures
of ancillary service fees; and (2) whether disclosures of itinerary-
specific ancillary fees at the time of first search will result in the
display of incomplete or inapplicable ancillary fee information, cause
consumer confusion, and distort the marketplace. The Travel Technology
Association (Travel Tech) stated in its petition that there is a
fundamental disputed factual issue as to whether the proposed display
requirements would benefit or harm consumers. Travel Tech also
expressed the belief that the proposed disclosures are technically
infeasible and requested a hearing to discuss these concerns as well as
the Department's proposed time frame for compliance. In its comment on
the NPRM, Google LLC also requested a hearing based on its assertion
that the Department's analysis was flawed and that it was deficient in
providing complaint-based evidence justifying the rulemaking. In
arguing that a hearing is in the public interest pursuant to 14 CFR
399.75, A4A and Travel Tech asserted that each of the criteria in 14
CFR 399.75 for determining whether a hearing was in the public interest
and must therefore be granted had been met. The Department granted the
public hearing to afford stakeholders an opportunity, in addition to
the public comment process, to present factual issues that they believe
are pertinent to the Department's decision on the rulemaking.\48\ The
hearing was held on March 30, 2023,\49\ and a video recording of the
full hearing was posted to the Department's website.\50\
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\48\ 88 FR 13389 (Mar. 3, 2023).
\49\ 88 FR 15622 (Mar. 14, 2023). The Department granted a
postponement to the hearing's originally scheduled date of March 16,
2023, due to concerns by A4A and Travel Tech that the original 15
days' notice was insufficient to identify speakers and to compile
data responsive to the subjects presented in the March 3 notice. A4A
also stated that it would have difficulty finding participants due
to the hearing being scheduled during the Spring Break season.
\50\ <a href="https://www.transportation.gov/airconsumer/AirlineAncillaryFeeNPRM/March30_Public_Hearing_Recording">https://www.transportation.gov/airconsumer/AirlineAncillaryFeeNPRM/March30_Public_Hearing_Recording</a>.
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Before the hearing, A4A raised objections about the designated
Hearing Officer appointed by the Department.\51\ The organization made
a request for the appointment of a hearing officer that would be
``neutral,'' rather than the Department's designated Aviation Consumer
Advocate. Under the Department's regulation, the designation of a
hearing officer is left to the discretion of the General Counsel.\52\
The duty of the hearing officer is to preside over the hearing and to
place the hearing minutes in the docket. The General Counsel, not the
hearing officer, determines the Department's actions following a
hearing.\53\ In addition, the Department stated in a Federal Register
document \54\ that the appointment was appropriate because: (1) the
designated hearing officer is a career civil servant who will execute
the role in a neutral, fair, and professional manner; (2) the
designated hearing officer's responsibilities as an Aviation Consumer
Advocate are the same responsibilities that this individual has as an
Assistant General Counsel of the Office of Aviation Consumer Protection
and such responsibilities do not result in bias; and (3) the Hearing
Officer's role is to conduct the meeting using generally accepted
meeting management techniques and to not serve as a decisionmaker. As
such, the Department proceeded with its appointment of the Department's
designated Aviation Consumer Advocate as the hearing officer for the
March 30, 2023, hearing.
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\51\ <a href="https://www.regulations.gov/document/DOT-OST-2022-0109-0718">https://www.regulations.gov/document/DOT-OST-2022-0109-0718</a>.
\52\ 14 CFR 399.75(b)(5)(ii).
\53\ 14 CFR 399.75(b)(6).
\54\ 88 FR 15622 (Mar. 14, 2023).
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A4A also objected to the second subject discussed at the hearing,
``whether disclosures of itinerary-specific ancillary fees at the time
of first search will result in the display of incomplete or
inapplicable ancillary fee information, cause consumer confusion, and
distort the marketplace.'' \55\ A4A stated that, in advance of the
hearing, the Department asked the public for information on current
carrier and ticket agent practices, including how ancillary fee
information is currently displayed, how many existing online booking
systems do not display specific ancillary fees on itinerary search
result pages but
[[Page 34627]]
display ancillary fees on other pages of the booking process, whether
the lack of ancillary fee information at the time of itinerary and fare
selection for current systems results in higher total trip costs, and
information from consumers on the time spent searching on current
carrier or ticket agent websites. A4A asserted that these questions did
not address A4A's intent in presenting the second subject of the
hearing, which A4A explained was the impact of the Department's
proposals on consumers. A4A stated that the failure to address this
issue rendered the hearing ineffective. The Department disagrees with
A4A's assertions that the public hearing failed to address the issue
A4A posed for discussion and that the hearing was ineffective. In its
notice announcing the public hearing,\56\ the Department stated that it
welcomed, for issue 2, ``data and information regarding any potential
for consumer confusion from overcrowded displays or information
overload that could result from the Department's proposal, particularly
on mobile or other devices with smaller displays.'' The Department also
solicited ``any other information that is pertinent to the Department's
determination on this proposal.'' These requests for information are
aligned with A4A's stated focus of the hearing's second subject and did
not render the hearing ineffective.
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\55\ This subject was offered by A4A in its petition for a
public hearing. See <a href="https://www.regulations.gov/comment/DOT-OST-2022-0109-0091">https://www.regulations.gov/comment/DOT-OST-2022-0109-0091</a>.
\56\ 88 FR 13389 (Mar. 3, 2023), available at <a href="https://www.federalregister.gov/documents/2023/03/03/2023-04510/enhancing-transparency-of-airline-ancillary-service-fees">https://www.federalregister.gov/documents/2023/03/03/2023-04510/enhancing-transparency-of-airline-ancillary-service-fees</a>.
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As provided in 14 CFR 399.75, following the completion of the
hearing process, the General Counsel shall consider the record of the
hearing, and shall make a reasoned determination whether to terminate
the rulemaking; to proceed with the rulemaking as proposed; or to
modify the proposed rule. Based on the record in this rulemaking
proceeding, including the comments submitted by members of the public,
the recommendations of the ACPAC, and the information received during
the public hearing, the Acting General Counsel has determined that the
Department should proceed with the rulemaking. The Department has made
several adjustments that reflect the public input received, as
discussed in section E.
D. Statutory Authority
(1) Unfair and Deceptive Practices
The Department is implementing the revised regulatory requirements
in this rule pursuant to its statutory authority in 49 U.S.C. 41712 to
prohibit unfair and deceptive practices in air transportation and the
sale of air transportation. Under section 41712, a practice is
``unfair'' to consumers if it causes or is likely to cause substantial
injury, which is not reasonably avoidable, and the harm is not
outweighed by benefits to consumers or competition.\57\ A practice is
``deceptive'' to consumers if it is likely to mislead a consumer,
acting reasonably under the circumstances, with respect to a material
matter. A matter is material if it is likely to have affected the
consumer's conduct or decision with respect to a product or
service.\58\ Proof of intent is not necessary to establish unfairness
or deception.\59\ The elements of unfair and deceptive are further
elaborated by the Department in its guidance document.\60\
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\57\ 14 CFR 399.79(b)(1).
\58\ 14 CFR 399.79(b)(2).
\59\ 14 CFR 399.79(c).
\60\ 87 FR 52677 (Aug. 28, 2022).
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In the NPRM, the Department tentatively determined that several
practices conducted by airlines and ticket agents were unfair and
deceptive in air transportation or the sale of air transportation.
Members of the public provided input on the Department's preliminary
determinations, including through submission of written comments and
statements made at public meetings (i.e., ACPAC meetings and the March
30, 2023, public hearing). After fully considering the public input,
the Department has concluded that the practices identified below are
unfair and deceptive.
(a) Bag Fees and Policies
Pursuant to its authority under section 41712, the Department is
requiring airlines and ticket agents to disclose the fees for a first
and second checked bag and a carry-on bag whenever fare and schedule
information is provided to a consumer in response to a passenger-
specific or anonymous itinerary search. The Department is also
requiring disclosure of the applicable weight and dimensions of the
first checked bag, second checked bag, and a carry-on bag before ticket
purchase on an online platform.
(i) Carriers
The Department has concluded that a carrier commits an unfair and
deceptive practice in the sale of air transportation when it discloses
an airfare in response to a consumer's itinerary search without
providing accompanying information on applicable fees for a first and
second checked bag and a carry-on bag and when it fails to disclose
weight and dimension information for that baggage before ticket
purchase on an online platform.
Regarding fees, the Department has heard from consumers and other
stakeholders that such fees, which had once been included in the
airfare but may now be broken out from the airfare depending on the
airline, route, fare class, or other factors, are often difficult to
ascertain during the itinerary search and ticket purchase process. We
find that the practice of not disclosing first and second checked bag
and carry-on bag fees with the quoted airfare at the time of an
itinerary search during the ticket purchase process prevents consumers
from knowing the true cost of their tickets, and that the practice may
cause consumers to invest time pursuing a ticket purchase based on an
appealing airfare that ends up resulting in less favorable overall
costs to the consumer when baggage fees are added. Under this rule, the
bag fees disclosed must be passenger-specific fees if a passenger
affirmatively provides information such as the passenger's status in
the airline's frequent flyer program, the passenger's military status,
or the passenger's status as a holder of a particular credit card. If
the passenger does not affirmatively provide passenger-specific
information, then the carrier must provide itinerary-specific fees,
which would apply to the anonymous shopper, taking into account
geography, travel dates, cabin class, and ticketed fare class (e.g.,
full fare ticket). The failure to disclose either passenger-specific or
itinerary-specific bag fees with the quoted airfare at the time of an
itinerary search is unfair because it causes or is likely to cause
substantial injury, which is not reasonably avoidable, and the harm is
not outweighed by benefits to consumers or competition.
The substantial injury this practice is likely to cause is the
additional time spent searching to find the total cost of travel and
any additional funds spent on air transportation that might have been
avoided if the consumer had been able to determine the true cost of
travel up front and readily select the best price. This harm is not
reasonably avoidable even with the disclosures mandated in the 2011
rulemaking that improved consumer access to first and second checked
bag and carry-on bag fee information by requiring those fees to be
displayed on airlines' websites. Airlines often disclose bag fees in an
untailored, static format or in complex charts that are confusing to
consumers and not readily available when consumers need the information
to consider whether an itinerary and price offering best suits their
needs. The harm that consumers
[[Page 34628]]
experience is not outweighed by benefits to consumers or competition
because consumer confusion about applicable bag fees harms, rather than
benefits, competition and creates less than optimal purchasing
decisions by consumers. In addition, because existing disclosure
requirements of baggage fees did not apply to online platforms other
than websites, consumers who searched for air transportation on those
platforms may not have received the baggage fee information that this
final rule now requires. The Department has determined that the
disclosure of passenger-specific or anonymous itinerary-specific fees
whenever fare and schedule information is provided would promote
informed buyers, enhance competition, and lower prices. The practice of
not disclosing passenger-specific or anonymous itinerary-specific fees
for first and second checked bags and carry-on bags when fare and
schedule information is provided is also deceptive in that it misleads
consumers into believing the total purchase price from one carrier for
a particular itinerary or fare type is cheaper than that of another
when that may not be the case. This belief is reasonable as carriers
and agents often disclose only the airfare and not bag fees during an
itinerary search. As carriers have different policies regarding the
fees and limitations imposed to transport baggage, and because
variation within each carrier depends on the fare category purchased or
the status of the passenger, the current requirement that carriers
inform consumers that fees for baggage may apply and where consumers
can see these baggage fees during the booking process is not providing
consumers sufficient notice of the total cost of the air
transportation. Consumers are often diverted to complex charts that are
confusing, prolong the consumer's process of evaluating itineraries and
fares for purchase, and may ultimately not be instructive for many
consumers in determining the bag fee that would apply to them. The cost
of the first and second checked bag and carry-on bag is often material
to consumers, as knowing such costs in conjunction with the ticket
price is likely to affect the consumer's purchase decisions as well as
whether to check or carry-on a bag.\61\
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\61\ As noted in the NPRM, the GAO found that since airlines
first imposed checked baggage fees, the number of checked bags per
passenger has declined. GAO also explains that checked baggage fees
have led to greater amounts of carry-on baggage. GAO 10-785,
Commercial Aviation: Consumers Could Benefit from Better Information
about Airline-Imposed Fees and Refundability of Government-Imposed
Taxes and Fees (July 14, 2010) at <a href="https://www.gao.gov/assets/gao-10-785.pdf">https://www.gao.gov/assets/gao-10-785.pdf</a>.
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The Department has also determined that it is an unfair practice to
not disclose on an online platform the applicable weight and dimension
allowances of a first checked bag, a second checked bag, and a carry-on
bag, adjusted based on passenger-specific information if information
specific to the passenger has been affirmatively provided. However, the
Department is of the view that, unlike fees, it is sufficient to
provide weight and dimension allowances of a first checked bag, a
second checked bag, and a carry-on bag before ticket purchase to avoid
engaging in an unfair and deceptive practice. The Department agrees
with the comments, which are discussed in section E (4)(b), that
providing the policy information is less critical to consumers'
decision making than the fees themselves; accordingly, the Department
is allowing disclosure of these policies later in the ticket purchase
process. Nevertheless, the practice of not disclosing applicable weight
and dimension allowances is likely to also cause substantial injury to
consumers if not disclosed prior to ticket purchase given airlines'
policies on bag size vary and consumers who learn that the weight and
dimensions allowances of the selected carrier are stricter than the
common bag size may decide to select a different carrier. This harm is
not reasonably avoidable because, even though existing regulations
require the disclosure of this information on e-ticket confirmations,
this disclosure is provided after ticket purchase, thereby depriving
consumers of the ability to fully evaluate potentially better options
for them prior to ticket purchase. There is no countervailing benefit
to consumers or competition from the practice of not disclosing weight
and dimension allowances of baggage before ticket purchase, as the lack
of information to consumers reduces their ability to evaluate ticket
purchases and harms competition.
(ii) Ticket Agents
The Department has concluded that a ticket agent commits an unfair
and deceptive practice in the sale of air transportation when it
discloses an airfare in response to a consumer's itinerary search
without providing accompanying information on applicable fees for a
first and second checked bag and a carry-on bag and when it fails to
provide weight and dimension information for that baggage before ticket
purchase on an online platform. As noted above, the Department has
heard from consumers and other stakeholders that baggage fees are often
difficult to ascertain during the itinerary search and ticket purchase
process. This difficulty is exacerbated on ticket agent channels in
many cases, given the numerous airline and itinerary options presented.
We find that the practice of not disclosing baggage fees with the
quoted airfare at the time of an itinerary search prevents consumers
from knowing the true cost of their air tickets, and that the practice
may cause consumers to invest time pursuing a ticket purchase based on
an appealing airfare that ends up resulting in less favorable overall
costs to the consumer when baggage fees are later added. The failure to
disclose bag fees with the quoted airfare at the time of an itinerary
search is unfair because it causes or is likely to cause substantial
injury, which is not reasonably avoidable, and the harm is not
outweighed by benefits to consumers or competition.
The substantial injury this practice is likely to cause is the
additional time spent searching to find the total cost of travel and
any additional funds spent on air transportation that might have been
avoided if the consumer had been able to determine the true cost of
travel up front and readily select the best price. This harm is not
reasonably avoidable, as described regarding carriers in section D
(1)(a)(i). In addition, ticket agents provide a means for consumers to
evaluate different travel options, often on different airlines. The
harm of increased time and costs involved in the ticket purchase
process is not outweighed by benefits to consumers or competition
because consumer confusion about applicable bag fees harms, rather than
benefits, competition and creates less than optimal purchasing
decisions by consumers. The Department has determined that the
disclosure of passenger-specific fees whenever fare and schedule
information is provided would promote informed buyers, enhance
competition, and lower prices.
The practice of not disclosing passenger-specific fees for first
and second checked bags and carry-on bags when fare and schedule
information is provided is also deceptive in that it misleads consumers
into believing the total purchase price from one carrier for a
particular itinerary or fare type is cheaper than that of another when
that may not be the case. This belief is reasonable as ticket agents
often disclose only the airfare and not bag fees during an itinerary
search. The current requirement that ticket agents provide a generic
notice that ``fees for baggage
[[Page 34629]]
may apply'' during the booking process is not providing consumers
sufficient notice of the total cost of the air transportation. Although
existing regulations require carriers and ticket agents to inform
consumers during the booking process about where consumers can see
baggage fees, ticket agents may refer consumers to the carrier's
website to search for fees, which would necessitate the consumer
leaving the ticket agent's website, prolonging the consumer's process
of evaluating itineraries and fares for purchase. The cost of the first
and second checked bag and carry-on bag is often material to consumers,
as knowing such costs in conjunction with the ticket price is likely to
affect the consumer's purchase decisions.
The failure to disclose the applicable weight and dimension
allowances of a first checked bag, a second checked bag, and a carry-on
bag, adjusted based on passenger-specific information affirmatively
provided by the consumer, is also an unfair practice. The Department
has decided to require disclosure of these weight and dimension
allowances before ticket purchase, rather than during the itinerary
search process like bag fees, because the Department has been persuaded
by commenters that providing this information is less critical to
consumers' decision making than the fees themselves. This practice is
likely to cause substantial injury to consumers given airlines'
policies on bag size vary and consumers may have to pay more to
transport their bags because of high airline fees for oversized or
overweight bags than would have been the case if they knew the weight
and dimensions allowances prior to ticket purchase and selected a
different carrier with a bag size and dimension allowance that suited
their circumstances. This harm is not reasonably avoidable, because
even though existing regulations require the disclosure of this
information on e-ticket confirmations, the disclosure is provided after
ticket purchase, thereby depriving consumers of the ability to fully
evaluate the cost of their ticket before purchase. There is no
countervailing benefit to consumers or competition from the practice of
not disclosing weight and dimension allowances of baggage before ticket
purchase, as the lack of information to consumers reduces their ability
to evaluate ticket purchases and harms competition.
(b) Change and Cancellation Fees and Policies
Pursuant to its authority under section 41712, the Department is
requiring airlines and ticket agents to disclose the fees to change and
cancel a ticket in response to a passenger-specific or anonymous
itinerary-specific search and to disclose ticket change and
cancellation policies before a consumer's purchase of air
transportation on an online platform.
(i) Carriers
The Department concludes that a carrier commits an unfair practice
in the sale of air transportation when it discloses an airfare in
response to a consumer's itinerary search without providing
accompanying information on applicable change and cancellation fees and
fails to provide change and cancellation policies before ticket
purchase on an online platform. The practice is unfair because it
causes or is likely to cause substantial injury, which is not
reasonably avoidable, and the harm is not outweighed by benefits to
consumers or competition.
The Department currently requires the disclosure of these fees on
or with the ticket.\62\ This requirement, however, means that consumers
often receive information about these fees after the purchase of the
ticket is already made (i.e., upon receipt of the ticket confirmation),
which the Department determines in this final rule is not sufficient
disclosure. The practice of not disclosing these fees while consumers
select an itinerary and fare causes substantial injury to consumers in
that passengers may not be aware of the change and cancellation fees
that apply to a particular fare being offered, and they may then select
a fare without adequate notice that they could incur significant fees
to change or cancel their tickets.
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\62\ See 14 CFR 253.7.
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These harms are not reasonably avoidable if the carrier does not
provide disclosures on its cancellation or change fees during the
itinerary search process and policies before ticket purchase on an
online platform. Although carriers are already required to have change
and cancellation policy and fee information available on their
websites, the existing rule allows carriers to provide the fee
information in a range. Consumers are harmed when they do not know the
specific change or cancellation fee that would apply to them during the
itinerary search process, particularly when the ranges provided by some
carriers are so wide as to be virtually useless.\63\ Consumers may also
find it difficult to ascertain the change, cancellation, and refund
policies that apply to the specific ticket they are selecting if the
airline does not disclose such information during the booking process.
Moreover, change fees, even if not in a range, and change and
cancellation policies may not be simple to understand, as fare
categories, passenger status, ticket type (e.g., award ticket
purchases), and other factors may impact the applicable change and
cancellation fees and policies. Further, because the cancellation and
change fee information is not provided during the itinerary-search
process, consumers would need to interrupt their booking process to
search for the information and extend the time needed to complete a
booking. The harm that consumers experience is not outweighed by
benefits to consumers or competition because, like baggage fees and
dimensions, consumer surprise or confusion about applicable change and
cancellation fees and policies harms, rather than benefits,
competition. The Department believes that the disclosure of passenger-
specific or non-passenger-specific change and cancellation fees during
the itinerary-search process would promote informed buyers, enhance
competition, and lower prices.
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\63\ See, e.g., United Airlines, Upgrades and Optional Service
Charges (original page accessed Feb. 29, 2024) (showing ``Other
Flight Changes and Cancellations'' as ``$0 to $1,000 per traveler,
based on applicable fare rules''); Delta Air Lines, Change or Cancel
Overview (original page accessed Feb. 29, 2024) (showing potential
change and cancellation fees of ``$0-400'' for non-refundable
fares); American Airlines, Optional Service Fees (original page
accessed Feb. 29, 2024) (showing change fees of ``up to $750'').
Website screenshots available in docket at <a href="https://www.regulations.gov/docket/DOT-OST-2022-0109">https://www.regulations.gov/docket/DOT-OST-2022-0109</a>.
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In addition, consumers are substantially harmed if they are not
provided the following additional disclosures about change and
cancellation policies before purchase on an online platform: (1) any
prohibitions or conditions that limit a consumer's ability to change or
cancel a ticket; (2) whether the consumer's reservation can be
cancelled within 24 hours of purchase without penalty or whether it can
be held at the quoted fare for 24 hours without payment, provided the
reservation is made one week or more prior to a flight's departure;
\64\ (3) the form of the refund or credit that would be provided; (4)
that the consumer is responsible for any fare differential on a changed
ticket, if applicable; and (5)
[[Page 34630]]
whether the consumer will receive a refund of the difference in fare if
the consumer changes their flight and selects a less costly replacement
flight. Disclosure of change and cancellation policy terms, such as
whether the consumer would be required to pay a fare differential for a
ticket change and whether the consumer can receive a refund in the
original form of payment, may impact the consumer's decision on whether
to purchase the selected itinerary or wait until the consumer is more
certain of their travel plans. While important, these disclosures of
the details of the change and cancellation policies are less critical
at the time of itinerary search than the change and cancellation fees
themselves. Accordingly, the Department is of the view that, unlike
fees, it is sufficient to disclose change and cancellation policies
before ticket purchase to avoid engaging in an unfair practice.
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\64\ This rule requires that the carrier disclose its 24-hour
cancellation or hold policy on the last page of the booking process
as this is the point in the purchase process at which this
disclosure is most relevant to consumers.
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The Department also concludes that the practice of not disclosing
change and cancellation fees with an airfare in response to a
consumer's itinerary search and change and cancellation policies before
ticket purchase on an online platform is deceptive. Without proper
notice, consumers acting reasonably would be misled with respect to the
change and cancellation fees and policies that apply to their ticket
and may believe that changes or cancellations are possible at no fee or
at a reduced fee. As noted above, many carriers changed their ticket
change policies during the COVID-19 public health emergency, and such
changes were publicly promoted by the carriers. A reasonable consumer
may believe that he or she can change a ticket free of charge when that
might not be the case, or he or she may choose to purchase a fare type
that does not allow changes, believing erroneously that a change is
allowed. Comments by consumer advocates and individuals suggest that
consumers do consider change and cancellation fees and policies when
making purchasing decisions, particularly during emergency situations
such as a pandemic or potential severe weather events such as hurricane
seasons.\65\ The change and cancellation fees and policies are
therefore material because they could affect the consumer's decision on
whether to purchase an airline ticket and if so, which airline to
select. As such, the Department concludes that the failure to disclose
change and cancellation fees during the itinerary-search process and
change and cancellation policies before ticket purchase on an online
platform is deceptive.
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\65\ See comments submitted in the docket for the 2014 NPRM,
which can be accessed at <a href="https://www.regulations.gov/search?filter=DOT-OST-2014-0056">https://www.regulations.gov/search?filter=DOT-OST-2014-0056</a>. See also, e.g., Minutes or webcast
(at 2:15:55) of the January 12, 2023, ACPAC meeting, available at
<a href="https://www.transportation.gov/resources/individuals/aviation-consumer-protection/aviation-consumer-protection-advisory-committee">https://www.transportation.gov/resources/individuals/aviation-consumer-protection/aviation-consumer-protection-advisory-committee</a>.
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(ii) Ticket Agents
The Department concludes that a ticket agent commits an unfair
practice in the sale of air transportation when it discloses an airfare
in response to a consumer's itinerary search without providing
accompanying information on applicable change and cancellation fees and
fails to provide change and cancellation policies before ticket
purchase on an online platform. The practice is unfair because it
causes or is likely to cause substantial injury, which is not
reasonably avoidable, and the harm is not outweighed by benefits to
consumers or competition.
The Department currently requires that carriers disclose change and
cancellation fees and policies on or with the ticket, but current
regulations do not require ticket agents to disclose such fees and
policies during the ticket purchase process. As such, consumers
purchasing tickets from certain ticket agents may be unaware of the
change and cancellation fees and policies that would apply to them if
they were to proceed with the purchase of a ticket. The Department
understands that a substantial number of consumers purchase their
tickets through ticket agents.\66\ The practice of not disclosing these
fees while consumers select an itinerary and fare causes substantial
injury in that consumers may not be aware of the change and
cancellation fees that apply to a particular fare being offered, and
they may then select a fare without adequate notice that they could
incur significant fees to change or cancel their tickets. In addition,
consumers incur substantial injury if they are not provided the
following disclosures about change and cancellation policies before
purchase on an online platform: (1) any prohibitions or conditions that
limit a consumer's ability to change or cancel a ticket; (2) whether
the consumer's reservation can be cancelled within 24 hours of purchase
without penalty or whether it can be held at the quoted fare for 24
hours without payment, provided the reservation is made one week or
more prior to a flight's departure; \67\ (3) the form of the refund or
credit that would be provided; (4) that the consumer is responsible for
any fare differential, if applicable; and (5) whether the consumer will
receive a refund of the difference in fare if the consumer changes
their flight and selects a less costly replacement flight. Disclosure
of change and cancellation policy terms, such as whether the consumer
would be required to pay a fare differential for a ticket change and
whether the consumer can receive a refund in the original form of
payment, may impact the consumer's decision on whether to purchase the
selected itinerary or wait until the consumer is more certain of their
travel plans. While important, these disclosures of the details of the
change and cancellation policies are less critical at the time of
itinerary search than the change and cancellation fees themselves and
any prohibitions on the ability to change and cancel a ticket, which
must be disclosed at that point. Accordingly, the Department is of the
view that, unlike fees, it is sufficient to disclose change and
cancellation policies before ticket purchase to avoid engaging in an
unfair and deceptive practice. These harms are not reasonably avoidable
if the ticket agent does not provide disclosures on cancellation or
change fees when it provides an airfare in response to a consumer's
itinerary search and policy information before purchase on an online
platform. Ticket agents often refer consumers to carrier web pages that
contain fee information, but this information is allowed to be
expressed as a range rather than a specific applicable number.\68\ This
means that many consumers cannot determine the change and cancellation
fees that would apply to them. Also, it is disruptive and time-
consuming for consumers purchasing from ticket agents to navigate away
from the ticket agents' online platform to the carrier's website to
search for the information. Change and cancellation policies and fees
may be difficult to understand, as fare categories, passenger status,
ticket type (e.g., award ticket purchases), and other factors such as
where the passenger is flying may impact the applicable change and
cancellation fees and policies. The harm that consumers
[[Page 34631]]
experience is not outweighed by benefits to consumers or competition
because, like baggage fees, consumer surprise or confusion about
applicable change and cancellation fees after airfare purchase harms,
rather than benefits, competition. The Department believes that the
disclosure of passenger-specific or non-passenger-specific change and
cancellation fees during the itinerary-search process and policies
before ticket purchase on an online platform would promote informed
buyers, enhance competition, and lower prices.
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\66\ See, e.g., remarks by a representative of ASTA at the
ACPAC's June 28, 2022, meeting. The representative stated that 44%
of air tickets were sold by travel agencies (excluding OTAs), 39%
were sold on airline websites, 12% were sold by OTAs, and 5% are
sold through offline direct channels. Meeting minutes can be found
at <a href="https://www.regulations.gov/document/DOT-OST-2018-0190-0073">https://www.regulations.gov/document/DOT-OST-2018-0190-0073</a>.
\67\ This rule requires that the ticket agent disclose whether
it has a 24-hour cancellation or hold policy on the last page of the
booking process as this is the point in the purchase process at
which this disclosure is most relevant to consumers.
\68\ See, e.g., fn. 61, above.
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The Department also concludes that the practice of not disclosing
change and cancellation fees with an airfare in response to a
consumer's itinerary search and policies before ticket purchase on an
online platform to be deceptive. Without the required notice, consumers
acting reasonably would be misled with respect to the change and
cancellation fees and policies that apply to their ticket and may
believe that changes or cancellations are possible at no fee or at a
reduced fee. As noted above, many carriers changed their ticket change
policies during the COVID-19 public health emergency, and such changes
were publicly promoted by the carriers. A reasonable consumer may
believe that his or her ticket may be changeable free of charge when
that might not be the case, or he or she may choose to purchase a fare
type that does not allow changes, believing erroneously that a change
is permitted. Comments by consumer advocates and individuals suggested
that consumers do consider change and cancellation fees and policies
when making purchasing decisions, particularly during emergency
situations such as a pandemic or potential severe weather events such
as hurricane seasons. The change and cancellation fees and policies are
therefore material because they could affect the consumer's decision on
whether to purchase an airline ticket and if so, which airline to
select. As such, the Department concludes that the failure to disclose
change and cancellation fees during the itinerary-search process and
policies before ticket purchase on an online platform is deceptive.
(c) Percentage-Off Discounts
After careful consideration of the comments submitted in this
rulemaking, the Department has concluded that, when the terms
``flight,'' ``ticket,'' or ``fare'' are used in a percentage-off
advertisement, it is an unfair and deceptive practice for an airline or
ticket agent to not apply the percentage off the total cost of the
ticket. Additionally, the Department has concluded that, when the term
``base fare'' is used in a percentage-off advertisement, it is an
unfair and deceptive practice for an airline or ticket agent to not
apply the percentage off the full fare amount excluding all government
taxes and charges.
These types of percentage-off advertisements are deceptive as they
mislead reasonable consumers on a material matter. A reasonable
consumer seeing an advertisement for a 25% discount off a flight, a
ticket, or a fare would believe that he or she is receiving 25% of the
entire ticket based on a common understanding of those terms as
supported by comments discussed in section E. That reasonable consumer
would be misled if he or she were to find out that the 25% off discount
applied to only a portion of the ticket price. Similarly, a reasonable
consumer seeing an advertisement for a 30% discount off a ``base fare''
would believe that he or she is receiving 30% off the full fare
excluding all government taxes and fees based on a common understanding
of that term as supported by comments discussed in section E. That
individual would be misled if he or she received a 30% off only a
portion of the carrier-imposed mandatory charges. The percentage
discounts are a material matter because they affect the price that
consumers pay for the air transportation.
These types of percentage-off advertisements are also unfair as
they have potential to cause substantial harm to consumers that is not
reasonably avoidable and not outweighed by countervailing benefits to
consumers or competition. Consumers may be substantially harmed because
they are likely to encounter higher charges than expected if a seller
advertises an appealing offer by stating ``50% off a flight'' or ``50%
off a base fare'' so consumers will click on the advertisements only to
find out that it is 50% off only a small portion of the ticket, which
can multiply if a consumer relies on the promotional discount for
multiple passengers on an itinerary or for an individual passenger
traveling on a higher cost itinerary. The harm is not easily avoided
due to a lack of clarity in the advertising language that carriers use.
The harm that consumers experience from this practice is not outweighed
by benefits to consumers or competition because the lack of clarity
about the offered fare harms, rather than promotes, competition.
(d) Data Sharing
This final rule requires U.S. and foreign air carriers to provide
any entity required to disclose critical ancillary fee information
directly to consumers useable, current, and accurate information of the
fee rules for critical ancillary services if the carrier provides fare,
schedule, and availability information to that entity. The information
provided by carriers to these entities must be sufficient to ensure
compliance with any applicable disclosure requirements. The failure of
a carrier to provide critical ancillary fee information to entities
required to disclose this information to consumers is an unfair
practice. Approximately half of air travel tickets are sold by ticket
agents.\69\ There is likely substantial harm to consumers if an entity
required to disclose accurate critical ancillary fee information to
consumers is unable to do so due to the carrier's failure to provide
such information to that entity. Consumers are substantially harmed
under these circumstances because consumers must then spend additional
time searching to find the total cost of travel and consumers may spend
additional funds on air transportation that could have been avoided if
the consumer had the critical ancillary fee disclosed to them. This
harm is not reasonably avoidable, as consumers would have to leave the
ticket purchase process to review fees provided in each carrier
website. In addition, once at a carrier website, consumers will likely
not be able to determine the fee for changing and canceling a
reservation as carriers provide that information in a range.\70\
Consumers will also likely have difficulty determining the fee for
transporting a carry-on bag, a first checked bag, and second checked
bag because baggage fee structures are often complex and require charts
and calculators to show the cost of fees. This harm is not outweighed
by benefits to consumers or competition as the sharing of critical
ancillary service fee information enables consumers to access critical
ancillary fee information from a larger variety of ticket purchase
[[Page 34632]]
vendors, which improves, rather than harms, competition.
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\69\ ACPAC Meeting Minutes (June 28, 2022), p. 13 at <a href="https://www.regulations.gov/document/DOT-OST-2018-0190-0073">https://www.regulations.gov/document/DOT-OST-2018-0190-0073</a>. In its written
comment, ASTA stated that 48 percent of total sales and aggregate
spending were sold by travel agencies in 2019. <a href="https://www.regulations.gov/comment/DOT-OST-2022-0109-0083">https://www.regulations.gov/comment/DOT-OST-2022-0109-0083</a>.
\70\ See fn. 61 (showing that some airlines provide a large
range for change or cancellation fees, with United, for example,
quoting ``$0 to $1,000 per traveler'').
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(e) Additional Unfair or Deceptive Practices
Additional discussion of unfair and deceptive practices identified
in this final rule is provided in sections E (1)(c) (failure of a
carrier or ticket agent that sells air transportation to make critical
ancillary fee disclosures at the first page of its website or other
online platform to which a consumer is directed after searching for
flights on a metasearch site where that information is not provided); E
(3)(d) (failure of a carrier or ticket agent to disclose that the
purchase of a seat is not required for travel particularly when
consumers are provided seats to choose where many require a fee to
reserve); E (10)(a) (failure of a ticket agent that sells air tour
packages to disclose that additional baggage fees may apply when a
passenger books an air tour package without an identifiable carrier and
the failure to disclose the passenger-specific fees for a carry-on bag,
first checked bag, and second checked bag when the carrier is known);
and E (10)(c) (failure of a ticket agent to display baggage fees in
text form on the e-ticket confirmation that has traditionally applied
to carriers).
(f) Stakeholder Comments and DOT Responses
Comments: Airlines and airline associations disagreed with the
Department's proposed determination that not providing fee disclosures
at the beginning of the ticket purchase process was an unfair and
deceptive practice. Several airline commenters asserted that the
Department did not provide adequate justification that consumers
experienced or would likely experience substantial injury, as required
by the analysis of an unfair practice. Spirit Airlines asserted that it
already displays ancillary fees during the booking process, and that
95% of its customers advance past baggage selection pages, showing that
concerns about injury are unfounded. A4A stated, ``Every A4A passenger
air carrier displays or makes available at first search results the
ancillary fee information that DOT proposes for a consumer conducting
an anonymous search in the direct channel via rollovers or links.''
\71\ A4A also noted that the Department did not differentiate its
unfair and deceptive practice analysis between airlines and ticket
agents in the NPRM, and the organization asserted that the rulemaking
should be withdrawn with respect to airlines because consumer harm was
avoidable. A4A, IATA, the National Air Carrier Association (NACA), and
others asserted that the number of ancillary fee consumer complaints
cited by the Department was too small to conclude substantial harm, and
that the complaints do not evidence a lack of transparency. IATA and
other airline associations asserted that consumers already understand
that ancillary services are available for a fee, and because they have
information on fees before they purchase tickets, there is no
substantial harm. Similar statements were made by airline
representatives at the ACPAC meeting held on December 8, 2022. At that
meeting, a representative of IATA stated that the Department did not
provide evidence that consumers do not know the price imposed for
baggage before purchasing a ticket.
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\71\ Comment of A4A, pages 17-18, available at <a href="https://www.regulations.gov/comment/DOT-OST-2022-0109-0090">https://www.regulations.gov/comment/DOT-OST-2022-0109-0090</a>.
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Airlines also asserted that the proscribed practices were not
likely to mislead a consumer acting reasonably under the circumstances,
as required by the analysis of a deceptive practice. Multiple airlines
noted, for example, that because ancillary fees are already on airline
websites, it was not reasonable to conclude that the non-display of
fees during the initial itinerary search was deceptive. A4A commented
that the Department did not use the right standard for a consumer
``acting reasonably,'' as part of its deceptive practice analysis, and
the organization asserted that the Department should instead use
enforcement processes rather than rulemaking to address problematic fee
disclosure practices.
Individual commenters and multiple State attorneys general asserted
that airlines were treating consumers unfairly regarding fees and that
consumers were likely to be misled by current disclosures. Some of
these individual commenters expressed frustration about the ticket
purchase process, noting that when they attempt to buy a ticket they
view as being a particular cost, the total cost increases when fees are
later added. One commenter noted that some consumers would realize they
could not afford the total cost of a trip had they known about bag fees
when they selected their ticket. One commenter noted that it would be
extremely rare for a passenger to travel without any baggage at all.
Another commenter self-identified as a frequent traveler and stated
that understanding and paying for ancillary fees was confusing and
frustrating, particularly on third-party applications. Multiple State
attorneys general commented that they hear every day from consumers who
are deceived by ``junk fees'' and have launched education campaigns to
protect consumers from hidden fees, junk fees, and drip pricing. The
State attorneys general also noted that their offices receive numerous
complaints about airlines' lack of disclosures of baggage and change
and cancellation fees. FlyersRights stated that because airlines have
increased the number and cost of ancillary fees, consumers are misled
into believing that the cost of air travel will be cheaper than it is.
The organization added that ancillary fees are often necessary for
travel and used to be included in the base fare.
The Department received mixed comments from ticket agent
representatives on its assertion that it is an unfair and deceptive
practice not to provide disclosure of critical ancillary service fees
before ticket purchase. The United States Tour Operators Association
(USTOA) commented that the Department did not adequately demonstrate
consumer harm, adding that consumers are aware that there are baggage
fees and that there were few consumer complaints. As a metasearch
entity, Google expressed its view that the Department did not explain
how consumers were harmed by not having fee disclosures until the
ticket purchase stage of the booking process and that consumers are
aware of fees. Google also noted that the Department's sampling of
consumer complaints did not show that the fee was not disclosed, but
that consumers were surprised by the amount of the fees or the
applicability of fees. However, ASTA commented that consumers are
confused from airlines' unbundling their ancillary services, and that
ancillary service fees remain difficult for consumers to discover and
are hard to understand when they are found. ASTA added that ancillary
fees are revealed too late in the search process to permit effective
comparison shopping. Skyscanner stated that it shared the goal of
enhancing competition and avoiding the unfair and deceptive practice of
failing to inform consumers of the full cost of travel.
Ticket agents also commented on ensuring that they had access to
ancillary fee data from airlines. One ticket agent commenter noted that
consumers using third-party websites to purchase tickets may not have
access to fee data and that lack of data provisioning is an unfair and
deceptive practice. One metasearch entity commented that requiring data
sharing with metasearch companies would reduce the risk that the
transportation
[[Page 34633]]
will be sold to consumers in an unfair or deceptive manner. As for
airlines' view on data sharing, at the ACPAC meeting held on December
8, 2022, the airline representative noted the Department did not
provide an unfair and deceptive practice analysis for its proposal on
the sharing of fee information to ticket agents.
DOT Response: The Department has carefully considered the public
comments on this issue and has determined that the practices identified
in this rulemaking meet the elements of an unfair and deceptive
practice. Those entities opposing the Department's position generally
asserted that the Department did not provide sufficient evidence of
substantial injury, that the Department relied on a small number of
consumer complaints, that the consumer harm is avoidable as the fees
are presented on airline websites, and that consumers are aware that
ancillary fees exist. Other comments opposing the Department's position
stated that consumers are not interested in ancillary fees when booking
tickets and that the Department did not conduct an unfair and deceptive
practice analysis regarding its data-sharing proposal. The Department
disagrees that there is insufficient evidence of substantial injury.
Consumer complaints are only one metric that the Department uses to
gauge whether an unfair or deceptive practice is occurring. The
Department also relies on the statements of consumer advocates, all of
which have consistently expressed concern about consumer confusion over
ancillary fees throughout the years that rulemaking has been
contemplated on this subject. The Department finds it reasonable to
rely on the statements of the many consumer advocates, State attorneys
general, and consumer organizations as representative of the views of
consumers, and, when further confirmed by consumer complaints, to
determine that substantial harm is occurring or is likely to occur.
These positions by consumers were reaffirmed in their comments to the
NPRM. Comments submitted by members of the public in this rulemaking
also clearly evidence that consumers are surprised by the amount of
ancillary fees charged when they purchase tickets.
The Department also disagrees that the consumer harm is reasonably
avoidable. While the fees for baggage and other ancillary services are
provided on airline websites, such fees are not disclosed on ticket
agent websites and are difficult to ascertain prior to ticket purchase.
Ancillary fees, except for baggage, may be expressed in a range, and
baggage fee structures are often complex and require charts and
calculators to show the cost of fees. Some fees may also not be
applicable to passengers who purchase tickets on one airline's website
for flights that will be operated by a different airline.
The Department also disagrees with the premise that consumers are
well-informed about airline fees. While many consumers may be aware of
the existence of fees, a large number of consumers do not know the
amount of the fees that will apply to them, given the complexity of fee
structures. Comments from consumers affirm this belief, and Google and
others acknowledged this fact in their comments. Having fee disclosures
up front during the booking process would mitigate the consumer
surprise at the level of fees to be imposed. The Department disagrees
with the assertion that consumers not purchasing baggage fees during
ticket purchase (or otherwise skipping pages that disclose baggage
information) is indicative that they are not interested in baggage
fees. Consumer advocates and commenters have noted that baggage is a
critical ancillary service, and the decision not to purchase baggage
services during the ticket purchase process does not mean that the
consumer will not purchase a bag later or that the amount of the fee is
not important to the consumer.
Regarding the airline representative's statement at the December 8,
2022, ACPAC meeting that the Department did not conduct an unfair or
deceptive analysis of the data sharing proposal in the NPRM, the
Department has determined in this final rule that failure to disclose
baggage and change and cancellation fees to consumers as specified in
the rule is an unfair and deceptive practice. The Department has also
determined that the failure for a carrier to provide critical ancillary
fee information to any entity required to disclose this information to
consumers that displays or sells the carrier's flights directly to
consumers to be an unfair practice. The Department's analysis complies
with its regulations, which require an analysis supporting a conclusion
that a practice is unfair or deceptive to consumers pursuant to 14 CFR
399.75(c). At the ACPAC meeting, the Department responded to the
airline representative by noting that data sharing is related to the
disclosure of fees because, without data sharing, the disclosure of
fees would not be possible for a large segment of consumers. The
Department provides its analysis of how the failure to share critical
ancillary fee information is an unfair practice in section D (1)(d).
Finally, the Department disagrees with the suggestion that it
should pursue enforcement action under its unfair and deceptive
practices authority, rather than conducting a rulemaking. As stated by
the Department at the December 8, 2022, ACPAC meeting, the airline
representative's suggestion that the Department take enforcement action
instead of conducting rulemaking would be difficult if the current
regulation permits or does not address the practices that are of
concern. The Department issues this regulation to address the
inadequacy in the current regulation.
(2) Other Authorities
In carrying out aviation economic programs, including issuing this
final rule under 49 U.S.C. 41712, the Department is required to
consider the factors identified in 49 U.S.C. 40101 as being in the
public interest and consistent with public convenience and necessity.
Under 49 U.S.C. 40101(a)(4), the Department is required to consider the
availability of a variety of adequate, economic, efficient, and low-
priced services without unreasonable discrimination or unfair or
deceptive practices as being in the public interest. Under section
40101(a)(9), it is also in the public interest to prevent unfair,
deceptive, predatory, or anticompetitive practices in air
transportation. The Department is also required by section 40101(a)(12)
to consider as being in the public interest encouraging, developing,
and maintaining an air transportation system relying on actual and
potential competition to provide efficiency, innovation, and low
prices.
Except for Southwest Airlines, airline commenters generally
asserted that the Department's rulemaking would harm competition by, in
their view, making it more difficult for consumers to view travel
options. Ultra low-cost carriers also believed that the rule would
undermine their business model of unbundling ancillary services from
the cost of airfare. Airlines expressed the view that the popularity of
unbundled offerings showed that consumers preferred those models and
not that they were being deceived. Southwest Airlines stated that the
number and complexity of fees by airlines made comparison shopping more
difficult, and it commented that it was appropriate for the Department
to reduce the complexity of disclosures.
Some ticket agents such as USTOA and metasearch entities such as
Google stated that the existing marketplace provided transparency and
that the rule would diminish consumer choice and competition. In
contrast, others such as
[[Page 34634]]
ASTA commented that ancillary service fees are not accessible in a
timely manner and that identifying the total travel cost is complex,
confusing, and needlessly time-consuming for consumers. Travel Tech
noted that, because ticket agents do not universally receive
information on critical ancillary service fees from airlines, some
ticket agents are currently unable to display those fees at any point
in the booking process. Skyscanner commented that it strongly supports
the Department's goal of making critical ancillary fees more
transparent for consumers. Some ticket agents also noted that a lack of
transactability of ancillary fees on ticket agent websites would
disincentivize consumers from purchasing air travel on those websites.
Consumers generally stated that the rule would facilitate price
comparison, encourage competition, and prevent airlines from using
hidden fees to gain an unfair advantage. Consumer advocacy groups
asserted that market competition requires transparency and informed
consumers, with consumers benefiting from the availability of reliable
fee information from multiple sources. One individual stated that the
rule would reduce options and make travel less affordable.
After considering the public comments, the Department has
determined that this rule serves the public interest as articulated
above. This rule improves the transparency of airline pricing through
the increased disclosure of fees for critical ancillary services during
the itinerary search process. As carriers vary on their policies for
such fees and such information is often not provided during the
purchase process, consumers of air transportation may have difficulty
understanding the actual and potential costs of accessing the air
transportation between different carriers. By improving this
transparency, this rule allows for better understanding of airline
ticket pricing, of which these fees are often a critical component,
thereby encouraging price competition. The Department acknowledges
concern about screen clutter and a potential reduction in travel
options being displayed to consumers; as such, the Department has
adjusted its disclosure requirements from those proposed in the NPRM to
allow for more flexibility in the manner of display of information and
to reduce the potential for the harms identified by the commenters.
To answer the concerns of carriers, the Department believes that
this rule does not undermine the business model of unbundled offerings.
The rule does not prohibit such a model, and by improving the
disclosure of fees associated with ancillary services, the Department
believes that the rule helps to improve the model by making it more
transparent to consumers. We do note that the unbundled model has
proliferated in the marketplace, but we do not agree with commenters'
assertion that this is evidence that the model is preferred by
consumers and not that they are being deceived by airlines' current
disclosure practices. The Department has presented its analysis of how
a failure of carriers or tickets agents to provide the disclosures
required in this final rule represents an unfair or deceptive practice.
We are also not persuaded by ticket agents' concern that a lack of
transactability of ancillary fees would disincentivize purchases on
ticket agents' websites. As noted in sections E (3)(c) and E (7), this
final rule does not require the disclosure or transactability of family
seating fees. The Department is considering issues related to family
seating in a separate rulemaking.\72\ This rule also does not require
ticket agents to make the fees for a first checked bag, second checked
bag, and carry-on bag transactable on ticket agent websites. Due to the
post purchase price increase prohibition in 14 CFR 399.88, airlines are
currently prevented from increasing the baggage fees that apply to a
consumer's booking after the time of the consumer's ticket purchase. We
have seen little evidence that consumers are choosing to forgo using
ticket agent websites as a direct result of not being able to purchase
baggage fees on those websites. These circumstances have predated this
rule, and the Department does not believe that the addition of new
critical ancillary fee disclosures during the purchase process will
change that behavior.
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\72\ See <a href="https://www.transportation.gov/regulations/report-on-significant-rulemakings">https://www.transportation.gov/regulations/report-on-significant-rulemakings</a>.
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E. Comments and DOT Responses
(1) Covered Entities
The Department proposed to cover U.S. air carriers; foreign air
carriers; ticket agents that sell airline tickets, whether traditional
brick-and-mortar travel agencies, corporate travel agents, or OTAs; and
metasearch sites that display airline flight search options directly to
consumers. The Department proposed that GDSs would not be covered by
the proposal as GDSs arrange for air transportation but do not sell or
display a carrier's fare to consumers.
This final rule covers U.S. and foreign air carriers as proposed.
It also covers ticket agents that sell or display airline tickets,
except for corporate travel agents, which are excluded from coverage
for the reasons explained later in this document. This rule does not
make a determination on whether metasearch entities and aggregators
that advertise, but do not sell, airline tickets, are ticket agents and
would thus be covered by this rule. However, if the Department were to
determine in a separate rulemaking \73\ that metasearch entities and
aggregators are ticket agents as defined in 49 U.S.C. 40102(a)(45),
then they would be covered by this rule as well.\74\ The Department's
response to comments about which entities should be covered by this
final rule and explanations for all modifications from the NPRM are
described in the sections that follow. Discussion of which operations
and online platforms of covered entities are covered by this final rule
is provided in section E (2).
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\73\ Air Transportation Consumer Protection Requirements for
Ticket Agents (RIN 2015-AE57), (abstract explains that this
rulemaking would address whether to codify in regulation a
definition of ``ticket agent'' and whether to require large ticket
agents to adopt minimum customer service standards), Fall 2023
Unified Agenda of Regulatory and Deregulatory Action at <a href="https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2105-AE57">https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2105-AE57</a>.
\74\ 49 U.S.C. 40102(a)(45) defines a ticket agent as ``a person
(except an air carrier, a foreign air carrier, or an employee of an
air carrier or foreign air carrier) that as a principal or agent
sells, offers for sale, negotiates for, or holds itself out as
selling, providing, or arranging for, air transportation.''
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(a) U.S. and Foreign Air Carriers
Proposal: The Department proposed fee and policy disclosure of
critical ancillary services by U.S. and foreign carriers during the
booking process when fare and schedule information is provided. In
addition, the Department proposed to require that the carriers provide
the fee information for critical ancillary services to ticket agents
that sell or display the airlines' fare and schedule information.
Comments: A4A stated that ``DOT data does not demonstrate the
existence of any significant problems with airline ancillary-fee
transparency, and therefore this NPRM as applied to airlines should be
withdrawn.'' According to A4A, the regulation of airlines is
unnecessary because airlines already disclose fees for critical
ancillary services. A4A added that any unfair or deceptive practices
occur on indirect channels (e.g., OTAs, metasearch sites,
``traditional'' travel agencies, and travel management companies). An
individual commenter stated that the rule appeared to be focused on
problems with disclosures by large U.S. carriers, suggesting that the
rule should not cover other entities like foreign carriers and small
network carriers.
[[Page 34635]]
DOT Response: This final rule covers U.S. and foreign air carriers
because the issue of lack of transparency of airline ancillary service
fees is not limited to indirect channels as asserted by airline
commenters or limited to large U.S. carriers as suggested by an
individual commenter. The Department wants to ensure that consumers
know, when fare and schedule information is provided during the booking
process, the fees charged for transporting a first and second checked
bag, transporting a carry-on bag, and canceling or changing a flight
whether they are purchasing the ticket from an airline or a ticket
agent. Approximately 45% of tickets are sold by airlines directly to
consumers, and the remainder is sold through ticket agents,\75\ so it
is important to cover not only ticket agents but also carriers.
Further, it is important to ensure that consumers purchasing air
transportation from small carriers or foreign air carriers that fly to
and from the U.S. are protected from unfair and deceptive practices
equal to those purchasing tickets from U.S. carriers and ticket agents.
Accordingly, as discussed in section D, the unfair and deceptive
practices that the Department is addressing in this final rule relate
to ticket agents and carriers regardless of the carrier's size or
country affiliation for flights to, within, and from the U.S.
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\75\ ACPAC Meeting Minutes (June 28, 2022), p. 13 at <a href="https://www.regulations.gov/document/DOT-OST-2018-0190-0073">https://www.regulations.gov/document/DOT-OST-2018-0190-0073</a>.
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(b) Ticket Agents That Sell Air Transportation
Proposal: The Department proposed to require all ticket agents that
sell air transportation, including corporate travel agents, to disclose
to consumers the fees and policies for ancillary services that are
critical to a consumer's purchasing decision. The Department solicited
comments in the NPRM on whether it should exclude corporate travel
agents from coverage of the final rule because the display content for
such agents is typically negotiated by the business client involved.
Comments: The Department's proposal to apply the transparency
requirements regarding critical ancillary services to ticket agents
that sell air transportation was challenged only as it relates to
corporate travel agents and small ticket agents. Consumer groups,
including the U.S. PIRG Education Fund, generally supported covering
ticket agents. An individual commenter asked the Department to clarify
that OTAs have responsibility for the disclosure of ancillary fees
provided on their websites because carriers lack control over the
display of information on those sites. Some airlines and organizations,
including Spirit Airlines and A4A, expressed concerns about the
accuracy of disclosures on ticket agent websites, and Southwest
Airlines supported extending disclosure requirements to ticket agents.
Allied Tour & Travel, a small ticket agent, expressed concerns about
the burden of compliance for small tour operators that include airfare
in a travel package.
Regarding corporate travel agents, multiple ticket agent
associations asked the Department to exclude them from the final rule's
coverage. These commenters generally stated that the Department should
exempt corporate travel agents from the final rule's requirements
because ancillary fee disclosures by those agents are the subject of
contractual agreement between a business client and the travel agent,
with the relevant ancillary services and fees negotiated as part of the
contract. The Travel Management Coalition (TMC) testified at the
Department's March 30, 2023, public hearing that its customers are
frequent travelers, often use the same routes, and are highly familiar
with ancillary fee information. In addition, Travel Tech commented that
certain ancillary fees, like family seating fees, are irrelevant for
corporate clients, and others, including baggage fees and flight change
fees, are not a significant consideration in corporate travelers'
purchasing decisions. TMC agreed that its customers rarely check bags
or travel with children. Further, ASTA noted that the corporate client,
not the business traveler, generally pays the cost of transportation,
including fees.
These commenters also cited various precedents for treating
business travel differently under consumer protection laws. ASTA and
Travel Tech stated that the exclusion for corporate travel agents would
be consistent with the European Union's framework, and TMC testified
that Congress recognized the distinction between corporate and public
travel in the FAA Reauthorization Act of 2018 (2018 FAA Act) by
creating an exemption from certain customer service requirements if the
sale of an airfare was made pursuant to a corporate contract.
Travel Tech, ASTA, and TMC suggested that the Department define
``corporate travel agent'' for purposes of a regulatory exclusion as a
travel agency ``engaged in the provision of travel services primarily
to business entities pursuant to a written contract for the business
travel of such business entities' employees.'' GBTA instead recommended
that the Department exempt what it termed ``private'' and ``consortia/
agency fares'' in the final rule. It asked that DOT consider private
fares to be ``[d]iscounted or lane (fixed fares between two cities/
airports) fares negotiated by travel managers that the airline `files'
with [the Airline Tariff Publishing Company (ATPCO)], to be made
available to the organization's agencies of record, as documented in
the airline contract, for their travelers to book online or offline.''
GBTA further suggested that the Department define ``consortia fares/
agency fares'' as proprietary fares negotiated by mega agencies and
consortia \76\ offered to customers as an alternative to published
fares.
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\76\ A travel consortium is a collection of independent travel
agencies that combine resources to increase their visibility,
revenue, and marketing opportunities. The independent travel
agencies that are part of a consortia are known as ``mega-agencies''
and can offer their customers a consortia rate, which is a preferred
negotiated or partnership rate.
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In contrast, American Airlines urged the Department not to adopt an
exception for corporate travel agents. The airline's comment stated
that it is unreasonable and potentially infeasible to exempt corporate
travel agents because few serve exclusively corporate travelers for
corporate travel and consumers increasingly book travel that combines
business and personal travel.
DOT Response: The Department continues to apply the requirements to
disclose critical ancillary service fees and policies to ticket agents
that sell air transportation; however, the Department is excluding
corporate travel agents from these requirements. In excluding corporate
travel agents from coverage of this final rule, the Department is
agreeing with commenters that there is no need for DOT to apply
transparency rules for corporate travel arrangements that are
contractually entered into by sophisticated entities.
In this rule, the Department is adopting the definition of
corporate travel agent as proposed by Travel Tech, ASTA, and TMC, with
some modifications. This final rule defines corporate travel agent as a
ticket agent that provides travel services to the employees of a
business entity pursuant to a written contract with that entity for the
business travel of its employees. The ``ticket agent'' need not be a
single travel agent to meet the definition in this final rule, but
could instead be a consortium of travel agents, as suggested in GBTA's
comment.
While some commenters recommended that DOT exclude corporate travel
agents if they are primarily engaged in such activity, the
[[Page 34636]]
Department instead adopts a transaction-specific approach and is
applying this rule to ticket agents that are not acting as corporate
travel agents in the specific transaction at issue. Under the final
rule, if a ticket agent acts entirely as a corporate travel agent with
respect to a transaction or a corporate flight booking portal, for
example, then the rule's ancillary fee disclosure requirements would
not apply for that transaction or on that booking portal. Because
ticket agents may act as a corporate travel agent with respect to
certain clients and also have booking systems available to the general
public, this rule does not exclude a ticket agent that sells air
transportation from the requirement to display fees or policies for
critical ancillary services due to that agent's ``primary'' activity as
a corporate travel agent. This approach ensures information about
critical ancillary services are not improperly excluded from leisure
travelers who are not covered by a contractual agreement. A
transaction-specific approach prevents consumer confusion from the
presence of inconsistent information offered on different platforms.
This transaction-specific approach also addresses the concerns
raised by American Airlines that few travel agents serve exclusively
business clients. Those travel agents that provide airfare sales
exclusively to business entities under a written contract for the
business travel of the business entities' employees would be fully
excluded from the rule's requirements. Those travel agents engaged in a
mix of business and non-business sales would need to provide the
ancillary fee disclosures required by this final rule to any traveler
selecting flights who is not engaged in business travel covered by a
written contract.
As for section 427 of 2018 FAA Act, which was cited by TMC in
support of its request for an exclusion, it demonstrates that exclusion
from consumer protection requirements for sales made pursuant to
corporate contracts is not unusual. Section 427 provides protection
from enforcement for noncompliance of any customer service standard or
requirement in a DOT final rule that requires ticket agents to adopt
customer service standards applicable to carriers to the extent ``the
sale of air transportation is made . . . pursuant to a specific
corporate or government fare management contract.'' While the
Department is addressing the issue of whether to require ticket agents
to adopt minimum customer service standards applicable to carriers in
another rulemaking,\77\ the Department agrees with TMC that section 427
differentiates between corporate and public travel.
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\77\ See Air Transportation Consumer Protection Requirements for
Ticket Agents (RIN 2015-AE57) at <a href="https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2105-AE57">https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2105-AE57</a>.
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Regarding Allied Tour & Travel's comment, the Department has
determined that the disclosures required by this rule should apply to
ticket agents, regardless of size. Creating different standards based
on the ticket agent's size would add to consumer confusion, as noted
earlier, due to the presence of inconsistent information on different
platforms. In consideration of the potential for varying degrees of
burden, however, this final rule provides those ticket agents that meet
the SBA definition of a small entity with additional time to comply
with the rule's requirements beyond the time permitted for other ticket
agents, in recognition that it may take additional time for small
ticket agents to comply with new disclosures (discussed in section F).
(c) Metasearch Sites
Proposal: The Department proposed to require entities that do not
sell airline tickets but display airline flight search options directly
to consumers (i.e., metasearch sites) to display critical ancillary
service fees when fare and schedule information is provided. The
Department proposal treated metasearch entities as ticket agents.
Comments: Multiple metasearch entities, CCIA, and Travel Tech
expressed their view that metasearch entities do not meet the statutory
definition of ``ticket agent,'' and should not be subject to the rule
because they do not sell air transportation. Booking Holdings also
noted that many parts of the proposed rule, such as the transactability
of family seating fees, were inapplicable to metasearch sites as they
do not sell tickets. CCIA also raised privacy and security concerns
about the possibility that such entities would need to handle personal
or payment information, which they do not handle today. Google added
that it does not currently collect passenger information and expressed
concern that it would need to do so under the proposed rule to verify
passenger identities.
Metasearch entities, as well as CCIA and Travel Tech, also
overwhelmingly disagreed with the NPRM's proposal that metasearch
entities be covered under the rule. CCIA, for example, stated in
written comments and at public meetings that metasearch entities should
be excluded from the rule's disclosure requirements because they do not
have access to fee information and the rule's disclosure requirements
would clutter and negatively impact displays, on which aggregators and
metasearch entities compete. Booking Holdings added that a prescriptive
approach to metasearch displays will reduce the number of routes
offered as part of the initial itinerary search results and have a
detrimental effect on competition. It stated that metasearch entities
should be afforded flexibility in fee disclosures to ensure they
provide innovative and interactive displays for consumers to quickly be
able to understand available travel options.
From the airline perspective, Southwest Airlines expressed support
for applying fee disclosure requirements to metasearch entities, noting
that they are an important source of information and that the
disclosure rules should apply to them to mitigate consumer confusion on
fees. The airline added that section 427 of the 2018 FAA Act directed
the Department to apply consistent consumer protection requirements to
all large ticket agents to the extent feasible.
DOT Response: The Department recognizes the important role
metasearch entities play in providing information to consumers and
facilitating comparison shopping. As stated previously, the Department
is undertaking this rulemaking pursuant to its authority to prohibit
carriers and ticket agents from engaging in unfair or deceptive
practices. Under 49 U.S.C. 40102(a)(45), a ticket agent is ``a person
(except an air carrier, a foreign air carrier, or an employee of an air
carrier or foreign air carrier) that as a principal or agent sells,
offers for sale, negotiates for, or holds itself out as selling,
providing, or arranging for, air transportation.'' Also as noted by
Southwest Airlines in its comment, section 427 of the 2018 FAA Act \78\
calls for a consistent level of consumer protection regardless of where
consumers purchase airfares and related air transportation services.
The Act uses section 40102(a)(45)'s existing definition of ``ticket
agent'' and clarifies that the term includes ``a person who acts as an
intermediary involved in the sale of air transportation directly or
indirectly to consumers, including by operating an electronic airline
information system, if the person--(i) holds the person out as a source
of information about, or reservations for, the air transportation
industry; and (ii) receives compensation in any way related to the sale
of air transportation.''
[[Page 34637]]
Section 427 directs the Department to use this definition when issuing
its final rule requiring ticket agents to adopt customer service
standards.\79\ The Department is deferring to that rulemaking its
determination of whether metasearch sites that do not sell airline
tickets but display airline flight search options directly to consumers
are ticket agents that must disclose ancillary fee information
required.
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\78\ Public Law 115-254 (Oct. 5, 2018).
\79\ See Air Transportation Consumer Protection Requirements for
Ticket Agents (RIN 2015-AE57) at <a href="https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2105-AE57">https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2105-AE57</a>.
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During the pendency of that separate rulemaking, although the
Department's Office of Aviation Consumer Protection (OACP) has enforced
the Department's aviation consumer protection rules against metasearch
entities in the past based on its view that metasearch entities are
ticket agents,\80\ OACP will not enforce the disclosure requirements in
this rulemaking against metasearch entities. This enforcement position
notwithstanding, the Department encourages airlines and metasearch
sites to enter into voluntary agreements to share critical ancillary
fee information and for metasearch entities to voluntarily disclose
this information to consumers with the fare and schedule information
while further regulatory action is under consideration. The Department
also notes that the Federal Trade Commission has concurrent
jurisdiction over ticket agents and has the authority to both determine
whether metasearch entities are ticket agents and take action against
ticket agents as well as entities that are not ticket agents
irrespective of DOT action.
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\80\ See, e.g., DOT Order 2022-2-6 (FlightHub Group, Inc., et
al.) (Feb. 9, 2022).
---------------------------------------------------------------------------
To ensure consumers have access to critical ancillary service fee
information upfront, while the Department considers the status of
metasearch entities in a separate rulemaking, the Department is
requiring that airlines and ticket agents that sell air transportation
disclose critical ancillary service fees on the first page of their
website or other online platforms to which consumers are directed after
searching for flight options on a metasearch site unless the consumer
was already provided accurate fee information on the metasearch site.
In many cases, airlines and ticket agents that provide fare, schedule,
and availability information to metasearch entities permit the
metasearch entity to electronically direct consumers to a page on the
airline or ticket agent's website that does not require the consumer to
initiate a new itinerary search. Because consumers directed to an
airline's or ticket agent's website or other online platform from a
separate metasearch site may not have an opportunity to view the
critical ancillary service fees that apply to them, this rule requires
that airlines and ticket agents display the required critical ancillary
service fee information on the landing page on the airline or ticket
agent's online platform to which consumers are directed after using a
metasearch site. The rule permits an exception in situations where the
consumer was provided accurate critical ancillary service fee
information on the referring entity's website.
The Department considers it to be an unfair and deceptive practice
for a carrier or ticket agent that sells air transportation to fail to
make critical ancillary fee disclosures at the first page of its
website or other online platform to which a consumer is directed after
searching for flights on a metasearch site where that information is
not accurately provided. As discussed in section D (1), consumers are
substantially harmed if critical ancillary fee information is not
provided to them early in the search process, as ancillary fees such as
baggage, change, and cancellation fees are critical to consumers'
purchasing decisions and may make up a significant portion of the total
cost of travel. The harm is not reasonably avoidable because consumers
will likely not be able to determine the fee for critical ancillary
services even if a consumer expends time and effort by leaving the
booking system to try to determine the fees that apply to the
itinerary. Typically, carriers provide change and cancellation fees as
a range when viewed outside of the booking process. Consumer advocates
have also shared with the Department that consumers have difficulty
determining the fee for transporting a carry-on bag, a first checked
bag, and second checked bag because baggage fee structures are often
complex and require charts and calculators to figure out the fees. The
lack of fee information is not outweighed by countervailing benefits to
competition or consumers. In fact, the lack of information hinders
consumers from being able to understand the true cost of their travel
and harms competition, rather than benefiting it. The practice is also
deceptive because a reasonable consumer would be misled to believing
the cost of the travel is lower than what the true cost is if the fees
for critical ancillary services are excluded. The disclosure of the
fees is material because the fees could affect the consumer's decision
on whether to purchase an airline ticket and if so, which airline to
select.
If metasearch entities are ultimately deemed to be ticket agents
subject to this rule, the Department believes that concerns about
screen clutter and impacts on innovation have been adequately addressed
by the changes the Department has made to the final rule after
considering public comments. As noted in this preamble, the final rule
provides increased flexibility on method of display of critical
ancillary fees, and it does not require the disclosure or
transactability of family seating fees.
Regarding concerns about privacy and security of consumer data by
metasearch entities, while fee disclosures must be passenger-specific
if the consumer affirmatively provides information regarding their
status (e.g., frequent flyer status, military status, credit card
holder status), such consumer-supplied information is not required to
be validated before fees are displayed. Entities covered by this rule
are required to disclose passenger-specific fee information based on
the status that a consumer purports to have when conducting an
itinerary search, regardless of whether the consumer holds such status.
The rule does not require entities to collect passenger name, frequent
flyer number, or credit card information, and does not implicate the
privacy or security concerns raised by metasearch entities. See
discussion on passenger-specific information in section E (5).
(2) Covered Operations
Proposal: The Department proposed to require fee and policy
disclosures of critical ancillary services by airlines and ticket
agents on websites marketed to U.S. consumers where air transportation
is advertised or sold. On whether a website is ``marketed to U.S.
consumers,'' the Department noted in the NPRM that the determination
would be based on a variety of factors--for example, whether the
website is in English, whether the seller of air transportation
displays prices in U.S. dollars, or whether the seller has an option on
its website that differentiates sites or pages designed for the United
States. In addition to the website disclosures, the Department proposed
similar disclosures of critical ancillary services by U.S. and foreign
carriers for tickets purchased by telephone or in-person for flights
to, within, or from the United States. On fee information distribution,
the Department proposed to require that airlines provide fee and policy
information about critical ancillary services to ticket agents that
sell or display airlines' fare or schedule information for air
transportation to, from, or within the United States.
[[Page 34638]]
Comments: Air Canada commented that the scope of the rule was
broad, and that covering websites marketed to U.S. consumers could
result in small ticket agents in foreign jurisdictions leaving the U.S.
market because they cannot afford the upfront costs. The airline also
expressed concern regarding possible conflicts with foreign consumer
protection laws such as those in the European Union.
Among ticket agent and metasearch stakeholders, Travel Tech and
Skyscanner expressed agreement with the Department that the rule should
apply only to those websites designed for use by U.S. consumers.
Skyscanner also suggested that the rule's definition of a ``consumer''
should be limited to consumers physically located in the United States
when searching for or purchasing tickets. Similar to Air Canada,
Skyscanner argued that covering consumers not physically in the United
States risks legal conflict with consumer protection regulations in
other countries.
Booking Holdings said that the proposed disclosures can be required
only when a passenger searches for air transportation and added that
air transportation as defined by statute does not apply to flights
wholly between two foreign points which it interprets as meaning that
passengers in the United States who search for flights between two
foreign points are not entitled to receive the disclosures set forth in
this rule. Skyscanner called for clarification on whether the rule
would apply to foreign carriers serving non-U.S. points on flights
carrying a U.S. carrier code, expressing the view that foreign carrier
flights between non-U.S. points should not be subject to this rule when
not carrying a U.S. carrier code, even if the flight can be booked on a
website marketed to U.S. consumers.
DOT Response: After carefully considering the public comments, the
Department has decided to require fee and policy disclosures of
critical ancillary services by airlines and ticket agents if they
market to consumers in the United States. Under these circumstances,
the final rule requires airlines and ticket agents to disclose the fees
for critical ancillary services on airlines' or ticket agents' websites
and other online platforms such as mobile applications (apps). It also
requires airlines and ticket agents to disclose critical ancillary fees
to consumers during an in-person or telephone discussion about an
airline's fare and schedule if they market to U.S. consumers. The
Department has used the phrase ``marketed to U.S. consumers'' and
similar terminology in other aviation consumer protection and civil
rights regulations applicable to websites.\81\
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\81\ See, e.g., 14 CFR 259.6, 259.7, and 382.43(c), and existing
regulation 14 CFR 399.85(d).
---------------------------------------------------------------------------
In one of these rulemakings, the Department explained that the
characteristics of a ``website that markets air transportation to the
general public inside the United States includes, but is not limited
to, a site that: (1) contains an option to view content in English, (2)
advertises or sells flights operating to, from, or within the United
States, and (3) displays fares in U.S. dollars.'' \82\ The Department
further explained ``that non-English (e.g., Spanish) websites targeting
a U.S. market segment would also be covered; whereas websites that
block sales to customers with U.S. addresses or telephone numbers, even
if in English, would not.'' \83\ Similarly, in this rulemaking, the
Department stated that it would consider a variety of factors to
determine whether a website is marketed to U.S. consumers, including
whether the website is in English, whether the seller of air
transportation displays prices in U.S. dollars, or whether the seller
has an option on its website that differentiates sites or pages
designed for the United States.\84\ This final rule applies the same
factors in determining whether tickets are marketed to U.S. consumers
in-person and by phone. This final rule's applicability to online and
offline platforms marketed to U.S. consumers is consistent with the
Department's longstanding position.
---------------------------------------------------------------------------
\82\ 78 FR 67882, 67886 (Nov. 12, 2013).
\83\ Id.
\84\ 87 FR 63718, 63725 (Oct. 20, 2022).
---------------------------------------------------------------------------
We have also considered the comments on the scope of air
transportation for tickets that include flight segments between two
foreign points. Congress authorized the Department to prevent unfair or
deceptive practices or unfair methods of competition in air
transportation,\85\ which includes interstate air transportation \86\
and foreign air transportation.\87\ The phrase ``when any part of the
transportation is by aircraft'' is used in the definition of foreign
air transportation, which evidences an understanding that foreign air
transportation is not limited to a single flight segment between the
United States and a foreign country, but that it can be composed of
``parts,'' including trips with stopover points and/or flights between
two foreign points, provided that the passenger's overall journey is
between a place in the United States and a place outside the United
States. However, the Department agrees with commenters that flights
between two foreign points with no connection to the United States are
not foreign air transportation, and the requirements in this rule do
not apply to such flights. The Department has determined that ``foreign
air transportation'' includes journeys to or from the United States
with brief and incidental stopover(s) at a foreign point without
breaking the journey.
---------------------------------------------------------------------------
\85\ 49 U.S.C. 40102(a)(5) defines ``air transportation'' as
foreign air transportation, interstate air transportation, or the
transportation of mail by aircraft.
\86\ 49 U.S.C. 40102(a)(25) defines ``interstate
transportation'' as the transportation of passengers or property by
aircraft as a common carrier for compensation, or the transportation
of mail by aircraft between a place in a State, territory, or
possession of the United States and (i) a place in the District of
Columbia or another State, territory, or possession of the United
States; (ii) Hawaii and another place in Hawaii through the airspace
over a place outside Hawaii; (iii) the District of Columbia and
another place in the District of Columbia; or (iv) a territory or
possession of the United States and another place in the same
territory or possession; and when any part of the transportation is
by aircraft.
\87\ 49 U.S.C. 40102(a)(23) defines ``foreign air
transportation'' as the transportation of passengers or property by
aircraft as a common carrier for compensation, or the transportation
of mail by aircraft, between a place in the United States and a
place outside of the United States when any part of the
transportation is by aircraft.
---------------------------------------------------------------------------
For purposes of this final rule, we define a break in journey to
mean a deliberate interruption by a passenger of a journey between a
point in the United States and a point in a foreign country where there
is a stopover at a foreign point scheduled. The Department determines
whether a stopover is a deliberate interruption depending on various
factors such as whether the segment between two foreign points and the
segment between a foreign point and the United States were purchased in
a single transaction and as a single ticket/itinerary, whether the
segment between two foreign points is operated or marketed by a carrier
that has no codeshare or interline agreement with the carrier operating
or marketing the segment to or from the United States, and whether the
stopover at a foreign point involves the passenger picking up checked
baggage, leaving the airport, and continuing the next segment after a
substantial amount of time. For example, a passenger that is traveling
on a single ticket that originates or terminates in the United States
but also includes travel between two foreign points on a flight
marketed with a U.S. carrier code would be considered traveling in
foreign air transportation. We believe this approach fully
[[Page 34639]]
addresses the extraterritoriality concerns raised by some commenters.
Regarding comments suggesting that the Department's requirements
apply only to consumers residing in the United States, we disagree. The
Department's authority to prevent unfair or deceptive practices or
unfair methods of competition in air transportation is not limited to
aviation consumers who are residents of the United States. The
Department acknowledges Air Canada and Skyscanner's concern about the
potential for conflict with international requirements. However, there
has not been evidence provided that covering consumers not physically
in the United States risks legal conflict with consumer protection
regulations in other countries as the commenters assert. Further,
although the protection of this rule is not limited to consumers who
reside in the United States, this rule only applies to airlines and
ticket agents if they market to consumers in the United States.
In response to Air Canada's concern that small ticket agents in
foreign jurisdictions may leave the U.S. market, the Department is of
the view that entities that participate in the U.S. market by marketing
to U.S. consumers must comply with the same consumer protection
requirements to ensure consumers know the fees charged for critical
ancillary services upfront regardless of where consumers purchase air
fares and related transportation services. This helps to mitigate the
potential for surprise fees that can add up and quickly overcome what
may, at first, look like a cheap ticket.
(3) Critical Ancillary Services
Proposal: The Department proposed to require carriers and ticket
agents disclose upfront fee and policy information for all ancillary
services critical to a consumer's air transportation purchasing
decisions. The Department proposed to treat the following ancillary
services as critical: transporting a first checked, second checked,
and/or carry-on baggage, changing or canceling a reservation, and
obtaining adjacent seating when traveling with a young child (i.e.,
family seating), but it did not propose a definition of ``critical
ancillary service.'' The Department solicited comment on whether its
proposed list of critical ancillary fees should be expanded or limited,
how to address future adoption by airlines of additional ancillary
service fees, and how to ensure their disclosure to the extent that
they are of critical importance to consumers.
General Comments: Several airlines and associations questioned the
Department's basis for selecting those ancillary fees classified as
``critical'' in the NPRM and not others. For example, United Airlines
stated that the list of ancillary fees that the Department proposed to
consider critical was ``arbitrary and perplexing'' and added that it
was unclear why DOT had proposed to treat the selected ancillary
service fees as critical and not others, such as ``advanced seat
assignments, preferential seating, charges for boarding passes, and
charges for basic onboard refreshments like water, coffee, and sodas.''
Similarly, Air Canada listed ``advanced seat selection, access to in-
flight entertainment, in-flight meals, and lounge access'' as other
fees that could be disclosed and stated that ``to meet the goal of
allowing consumers to have full cost information . . . all ancillary
fees of every kind would have to be included on the first page,'' which
it acknowledged would be ``impossible.'' Finally, IATA asked the
Department ``to set forth in greater detail [its] determination that
these [proposed] optional services are indeed `critical.' ''
A few airline commenters also stated that the selection of fees
would disadvantage ultra-low-cost carriers (ULCCs). For example, United
Airlines stated, ``[w]hether intentional or not, the Department's
choice of `critical' ancillary fees seems to arbitrarily favor carriers
who bundle those particular services and disfavors other airlines,
particularly [ULCCs],'' adding that the ``rulemaking ultimately could
cause a global increase in ticket prices by incentivizing all carriers
to include those services in the cost of a ticket even though most
passengers do not use the services.'' Frontier Airlines also expressed
a similar view at the Department's March 30, 2023, public hearing and
in its written comments. Frontier Airlines added that, in its view,
unbundling is more transparent, economically efficient, and lower cost
for consumers, who do not need to pay for ancillary services they will
not use.
A comment from FlyersRights and a joint comment from multiple
groups representing consumers recommended that, instead of requiring
separate disclosure of ancillary fees, the Department require ticket
sellers to allow consumers to select their desired ancillary services
and then provide a single total fare inclusive of the selected
ancillary services. The joint comment stated that its proposal would
allow consumers to ``compare search results more immediately and
accurately,'' avoiding clutter and unnecessary calculations by
consumers. Consumer groups also suggested that the Department require
disclosure of ancillary service fees that may in the future become more
prevalent or may be of particular importance to consumers.
Comments regarding each of the ancillary services that the
Department proposed to consider critical to consumers' purchasing
decisions and comments on additional ancillary services are discussed
in sections E (3)(a) through E (3)(d).
DOT Response: The Department has determined that it is appropriate
to provide a definition of ``critical ancillary service'' in this final
rule. This final rule defines critical ancillary service to mean ``any
ancillary service that is critical to consumers' purchasing decisions''
and identifies transporting the first checked bag, second checked bag,
and carry-on bag and changing and cancelling a reservation as critical
ancillary services. In addition, the Department addresses the potential
for future adoption by airlines of additional ancillary service fees
that may be critical to consumers' purchasing decisions by including in
the definition of critical ancillary service ``any other services
determined, after notice and opportunity to comment, to be critical by
the Secretary.''
Regarding the impact of this rule on ULCCs, the Department does not
agree with some commenters' view that this rule will unfairly
disadvantage ULCCs. Rather than placing ULCCs at a competitive
disadvantage, the Department expects that this rule will promote
competition by making fees for critical ancillary services more
transparent for consumers. This will allow consumers to evaluate
whether to purchase air transportation on a given carrier, including a
ULCC, with the benefit of more complete up-front pricing information.
Given the benefits of the ``unbundled'' ULCC model that Frontier and
others touted in their comments, improved transparency should not cause
ULCCs to fundamentally alter such a business model (i.e., changing from
an unbundled model to a bundled model). Moreover, nothing in this final
rule requires them to do so.
The Department is not adopting in this final rule the
recommendation of some consumer organizations to require airlines and
ticket agents to display a total fare that is inclusive of all
ancillary fees selected by the consumer. Currently, some airlines apply
different baggage fees depending on when and where the ancillary
service is purchased (e.g., in advance, at the airport, etc.), which
may make display of a single fare, inclusive of baggage fees,
impracticable. In addition, requiring a ticket agent to display a total
``fare'' that
[[Page 34640]]
includes baggage that cannot be purchased with the ticket on its site
could result in consumer confusion about the cost of the fare purchased
and what it includes.\88\ Further, change and cancellation fees, which
also may vary based on the circumstances of the change or cancellation
for any given ticket, may be less useful incorporated into the fare
presented because the consumer is unlikely to know at the time of
ticket purchase whether they will change or cancel their ticket, and
the applicability of certain fees may be mutually exclusive (e.g., a
fee to cancel a ticket 30 days in advance and a fee to cancel a ticket
on the day of travel cannot both be imposed).
---------------------------------------------------------------------------
\88\ This final rule does not require baggage fees to be
transactable by ticket agents for the reasons discussed in section E
(7).
---------------------------------------------------------------------------
(a) Transporting First Checked Bag, Second Checked Bag, and Carry-On
Bag
Proposal: The Department proposed to treat fees for a first
checked, second checked, and a carry-on bag as critical ancillary fees
that airlines and ticket agents must disclose to consumers with fare
and schedule information. This proposal was intended to replace the
existing requirement for carriers and ticket agents to provide a
generic notice during the booking process that baggage fees may apply
and where the consumer can find these fees on the carrier's website.
In proposing to treat fees for a first checked bag, second checked
bag, and carry-on bag as critical, the Department noted that consumer
commenters to the Department's 2014 NPRM most commonly identified these
baggage fees as critical, and such fees continue to serve as a leading
source of consumer complaints regarding ancillary fees to the
Department.\89\ The Department further explained that the cost of
baggage fees is often material to consumers and likely to affect their
purchasing decisions. In addition, the Department noted that, although
the 2011 final rule improved consumer access to baggage fee information
by requiring airlines and ticket agents to display the fees for first
checked, second checked, and carry-on bags on their websites, airlines
and ticket agents often disclose those fees in static form in charts
that are confusing to consumers and may be provided outside of the
booking flow. The Department also noted that consumers continue to
report confusion regarding the total cost of baggage fees in connection
with complex itineraries, interline tickets, and codeshare flights.
---------------------------------------------------------------------------
\89\ See Number of Consumer Complaints Received by the U.S.
Department of Transportation Office of Aviation Consumer Protection
Regarding Ancillary Fees, 2019-May 31, 2023, available in docket at
<a href="https://www.regulations.gov/docket/DOT-OST-2022-0109">https://www.regulations.gov/docket/DOT-OST-2022-0109</a>.
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Comments: Industry commenters were split on whether the fees for
first checked bag, second checked bag, and carry-on bag are critical to
consumer's purchasing decisions. Airlines and airline associations
generally took the position that such fees were not critical. Some
ticket agents agreed with the Department's preliminary conclusion that
fees for first checked bag second checked bag, and carry-on bag are
critical; other ticket agents disagreed.
Industry commenters who stated that fees for first checked bag,
second checked bag, and carry-on bag are not critical to consumers'
purchasing decisions asserted that such fees are already available
under existing industry practices and regulatory requirements and that
consumers are aware of the existence of baggage fees. For example, Air
Canada stated that ``baggage fee information is already transparent and
fully disclosed on a carrier's website where passengers have easy
access to relevant information,'' citing to its own general baggage fee
disclosures. Frontier Airlines noted that it discloses ancillary fee
information to consumers during the booking process before purchase.
Similarly, American Airlines commented that it currently provides
itinerary- or passenger-specific baggage fees before purchase, and IATA
stated at the Department's March 30, 2023, public hearing that one
large international carrier found that 98 percent of the visits to that
airline's websites exposed passengers to the pages with fees on
baggage, seat selection, and refund policies, while the remaining two
percent of consumers did not go far enough in the booking flow to see
these fees. At that hearing, A4A added that many consumers are members
of loyalty programs and are already aware of the ancillary structures
of their preferred carriers. Further, Air Canada commented that the
decrease in checked baggage and increase in carry-on baggage since the
addition of checked baggage fees--documented in a GAO study that the
Department cited in the NPRM--``supports a logical conclusion that
consumers are evidently aware of checked-baggage fees.'' Air Canada
also stated, however, that ``[c]alculation of baggage fees is a complex
process and the display of this information on the first page where
fares are shown cannot be calculated in certain instances until the
carriers are chosen, such as on a multi-carrier itinerary.'' IATA
raised similar concerns about the complexity of calculating these fees.
These commenters added that, in their view, the number of
complaints related to baggage fee disclosures and the number of
passengers who travel without baggage demonstrate that such fees are
not critical. For example, Frontier Airlines asserted that the number
of baggage fee complaints received by the Department was ``de
minimis.'' Similarly, IATA testified at the Department's March 30,
2023, public hearing that in 2022, 3.64 percent of airline complaints
related to baggage, with a vast majority pertaining to baggage fee
refunds, and Booking Holdings reported that approximately 0.1 percent
of the U.S. complaints received by Priceline in 2022 related to baggage
fees. In addition, A4A testified at the Department's March 30, 2023,
hearing that the lack of civil penalties against U.S. airlines
demonstrated the absence of a market failure requiring additional
regulation. Frontier Airlines further stated in its hearing testimony
and in written comments that over 40 percent of Frontier's passengers
do not pay any seating and baggage fees, fewer than 30 percent purchase
a first checked bag, fewer than five percent purchase a second checked
bag, and fewer than 20 percent purchase a carry-on bag. Further,
American Airlines commented that ``the majority of travelers on
American Airlines do not check any luggage, and less than a quarter of
travelers on American [Airlines] actually have to pay for any checked
bags.''
A lack of use by consumers of Google's baggage filter tool was also
cited by A4A in its testimony at the Department's March 30, 2023,
hearing as evidence that baggage fees are not critical to consumers'
purchasing decisions. Google had commented that only 1.3 percent of the
consumers conducting a search on Google Flights use a feature that
enables consumers to integrate bag fees into the displayed costs for
flights. Google provided this data to support its suggestion that the
Department ``consider deferring the disclosure [of ancillary service
fees] until after a specific itinerary has been selected.'' Google did
not assert that transporting baggage is not a critical ancillary
service. Further, in a supplemental response, Google presented the
results of a 2018 survey it conducted of U.S. consumers which showed
that 54% of people decide about baggage for travel prior to ticket
purchase.
Similarly, other industry commenters who agreed with the
Department's preliminary conclusion that fees for first
[[Page 34641]]
checked, second checked, and carry-on baggage are critical to
consumers' purchasing decisions generally stated that baggage was the
most common type of ancillary service used by consumers. For example,
Travel Tech stated that ``baggage fees are the most important ancillary
fees'' for most passengers because ``[a]lmost all airline passengers
travel with some amount of baggage, whether carry-on or checked, and
baggage fees often constitute a practical limit on what consumers can
carry with them on trips or what they can bring back from a
destination.'' Though it agreed that baggage fees are important to
consumers, Travel Tech testified at the Department's March 30, 2023,
public hearing that, based on a survey it conducted, 90 percent of U.S.
adults are aware of the possibility of paying additional fees for
optional services beyond the cost of their airline ticket. But Travel
Tech acknowledged that the study did not ask whether consumers were
aware of the amount of such fees. Also supporting the importance of
baggage fees, Skyscanner reported that its internal user research
demonstrated that ``many users are much more concerned about baggage
allowances and fees than any single other type of ancillary fee,'' with
84 percent of surveyed users stating it was important to know whether a
ticket price includes checked baggage. Similarly, Google reported that
in a survey it conducted of U.S. consumers in 2018, 71 percent planned
to check one bag, six percent planned to check more than one bag, and
21 percent did not plan to check any baggage.
Groups representing consumers and some individual consumers also
supported the Department's proposal to treat fees for a first checked
bag, second checked bag, and carry-on bag as critical and to require
improved disclosures of those fees. For example, at the Department's
March 30, 2023, hearing, an American Economic Liberties Project (AELP)
representative stated that at the nonprofit organizations where he
worked including AELP, he heard from many air travelers who were
unaware of fees charged by the ULCCs, including fees for carry-on
baggage. This representative further testified that while awareness of
checked bag fees has risen, carry-on baggage fees continuously confound
travelers and that both consumer organizations where he recently worked
receive many complaints from consumers about carry-on and checked
baggage fees. This representative cited one instance in which a
passenger on Spirit Airlines reported that he had to leave his carry-on
bag in his car at the airport because he did not have enough money for
the carry-on baggage fee and assumed that only checked bags incurred
fees. The Department notes that in response, Spirit Airlines commented
that AELP did not provide a date for this incident and stated that it
did not appear to be consistent with current consumer knowledge about
unbundled fares. The AELP representative added that many travelers fly
less than once a year and do not understand the intricacies of flying
and are confused by ancillary fees. In addition, FlyersRights testified
that improved disclosure of the ancillary fees proposed in the NPRM
would decrease consumer confusion and allow airlines to compete based
on the total cost of a ticket.
Similarly, most individual consumers who commented on this aspect
of the proposal requested improved baggage fee disclosures for reasons
including that, in their view, it is rare for consumers to travel with
no bags at all, baggage fees can significantly increase the total cost
of air travel, and improved disclosures would enable comparison
shopping. For example, one consumer expressed being surprised with fees
for checked baggage and stated that requiring disclosure of baggage
fees when airlines and ticket agents first provide itinerary search
results ``would be immensely helpful in comparing prices via airfare
website searches'' and cited his experience purchasing a flight on a
ticket agent's website, only to discover after purchase that
undisclosed baggage fees made the overall cost of travel higher than on
another airline that the consumer had passed over during the search
process.
Finally, AARP generally supported the Department's baggage fee
disclosure proposal but also asked DOT to prohibit first checked bag
fees entirely, and members of the Commissioned Officers Association of
the U.S. Public Health Service (USPHS) asked DOT to encourage airlines
to waive baggage fees for all members of the uniformed service,
including the USPHS.
DOT Response: The Department has determined that fees for a first
checked, second checked, and carry-on bag are critical to a consumer's
purchasing decision. The Department disagrees with industry commenters'
assertion that the first checked bag, second checked bag, and carry-on
bag are not critical, and that their disclosure is unnecessary.
Consumers have voiced concerns that the fees for these bags can
significantly increase the total price of the airfare beyond what was
offered at the time of itinerary search. While estimates of the
percentage of consumers who travel with a first checked bag, second
checked bag, or carry-on bag vary among commenters, most comments
support the conclusion that many consumers travel with a first checked,
second checked, and/or carry-on bag. Statements by Travel Tech and
others that most consumers travel with at least one type of baggage are
supported by Google's comment that its survey reflects that 71 percent
of U.S. consumers plan to check a bag on an upcoming trip. Skyscanner's
internal survey and comments from consumer advocates and individual
consumers provide further support for the conclusion that these fees
are critical to consumers' purchasing decisions. Given this
information, the Department is not persuaded by airlines' arguments
that fees for a first checked bag, second checked bag, and carry-on bag
are unimportant to consumers based on the percentage of consumers
conducting a search on Google Flights for baggage information and the
number of passengers who travel without baggage.
In addition, as discussed in section B, GAO has documented that
baggage fees have shifted consumers' purchasing behavior by encouraging
consumers to bring only a carry-on bag to avoid checked bag fees. Air
Canada cited this GAO study as support for its view that passengers are
aware of the existence of baggage fees, and Travel Tech similarly
reported that its own survey indicated that 90 percent of consumers
were aware that ancillary fees may be charged. However, neither the GAO
study nor any of the comments submitted provide evidence that consumers
are aware of the amount of the fees for first checked, second checked,
and carry-on baggage at various airlines. Indeed, the complexity that
Air Canada and IATA observed that carriers face in calculating baggage
fees is likely even more burdensome to consumers who try to calculate
the fees applicable to their itineraries based often on static
information provided by carriers and ticket agents.
In addition, some airlines now charge passengers for carry-on
baggage. Indeed, on some carriers, the fees for a carry-on bag may be
more costly than a first checked bag, which may surprise consumers who
are accustomed to carrying on bags without charge.\90\ These
developments further demonstrate the need for carriers and ticket
agents to disclose the fees for a
[[Page 34642]]
first checked bag, a second checked bag, and a carry-on bag to
consumers so that consumers understand how baggage fees may affect the
total cost of their airfare and are able to determine which carrier's
flight option best suits their circumstances.
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\90\ See Comments of Spirit Airlines at 12; see also Enhancing
Transparency of Airline Ancillary Service Fees Regulatory Impact
Analysis RIN 2105-AF10, Table 1, available at <a href="https://www.regulations.gov/document/DOT-OST-2022-0109-0002">https://www.regulations.gov/document/DOT-OST-2022-0109-0002</a>.
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The Department concludes that existing required disclosures do not
adequately address the harm to consumers. Carriers and ticket agents
are currently not required to provide fees for a first checked bag, a
second checked bag, or a carry-on bag in a manner that is readily
available when consumers are considering a given fare and itinerary.
Instead, fees are often provided in static charts that confuse
consumers and do not provide adequate information about the fees that
apply based on the consumer's passenger-specific information. The fact
that some carriers may voluntarily provide passenger-specific baggage
fee information required by this new rule is not a reason for the
Department not to require its disclosure by all ticket agents and
airlines.
The Department rejects airline commenters' argument that the number
of complaints related to baggage fee disclosures and lack of civil
penalties for baggage fee violations demonstrate that such fees are not
critical. As explained in section B, the number of complaints is only
one consideration used to determine whether the Department should
address an unfair or deceptive practice through regulation. Also, the
Department does not view the lack of civil penalties against U.S.
carriers under existing regulatory requirements to demonstrate that a
regulation is not needed. The lack of civil penalties under existing
rules could instead provide further support for the Department's
conclusion that its concerns with existing ancillary fee disclosures
are not adequately addressed by existing regulations.
The Department is not adopting recommendations by AARP to prohibit
fees for a first checked bag and by the Officers Association of the
USPHS to encourage airlines to waive fees for its members because those
recommendations are beyond the scope of this rulemaking.
(b) Changing and Cancelling a Reservation
Proposal: In the NPRM, the Department identified fees for changing
or canceling a reservation as being critical to consumers when they
choose among air transportation options. The Department proposed to
require carriers and ticket agents to disclose change and cancellation
fees and policies to consumers during the booking process when fare and
schedule information is provided.
In proposing to treat these services as critical, the Department
shared its view that not disclosing to passengers upfront the
significant fees that they would incur should they need to change or
cancel the reservation is an unfair and deceptive practice. The
Department explained that carriers are currently not required to
provide consumers with change or cancellation fee information until
after ticket purchase. In addition, the Department noted that although
carriers may have separate web pages that list change and cancellation
fees, this information is permitted to be provided in a range. The
Department added that, even if not provided in a range, change and
cancellation fees may not be simple to understand, as fare categories,
passenger status, ticket type, and other factors may impact the
applicable change and cancellation fees. Further, the Department
explained that carriers are currently permitted to display change and
cancellation fees outside the booking flow, which disrupts passengers'
searches and costs them time. Finally, the Department reported that
change and cancellation fees are among the top three types of ancillary
service complaints it receives.
Comments: Groups representing consumers generally supported the
Department's proposal to consider change and cancellation fees to be
critical to the consumer's purchasing decision and to require airlines
and ticket agents to display such fees to consumers. A joint comment
from multiple groups representing consumers noted that improved
disclosure of change and cancellation fees ``would benefit consumers,
particularly because many travelers may not budget for such fees when
booking flights.'' This comment further observed that, based on data
from the Department's Bureau of Transportation Statistics (BTS), air
carriers collected nearly $3 billion in revenue from these charges in
2019.\91\ The commenter asserted that while some airlines had modified
their change and cancellation policies due to COVID-19, the changes
were limited, with many airlines still applying these fees to the
lowest-tier fares. In addition, FlyersRights testified at the
Department's March 30, 2023, public hearing that disclosure of the
critical ancillary fees identified in the NPRM would decrease consumer
confusion and improve competition in the market. AARP also supported
the proposed requirement for carriers and ticket agents to display
change and cancellation fees but asked the Department to work to reduce
or eliminate change and cancellation fees.
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\91\ Citing ``Reservation Cancellation/Change Fees by Airline
2021,'' Bureau of Transportation Statistics. May 2, 2022, <a href="https://www.bts.gov/newsroom/reservation-cancellationchange-fees-airline-2021">https://www.bts.gov/newsroom/reservation-cancellationchange-fees-airline-2021</a>.
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In contrast, airlines and their associations generally opposed the
Department's proposal to treat ticket changes and cancellations as
critical ancillary services. These commenters asserted that such
services are not critical because few passengers change or cancel
flights, and complaints regarding change and cancellation fees
represent a small percentage of the overall number of complaints
submitted to the Department. In addition, airlines and their
associations stated that airlines already provide disclosure of change
and cancellation fees on their websites, consumers are already aware of
the potential costs associated with changing or cancelling a flight,
and many carriers have removed these fees since the emergency of the
COVID-19 pandemic. Among these commenters, American Airlines noted that
15 percent of its passengers change or cancel flights, and Frontier
testified at the Department's March 30, 2023, hearing that fewer than
10 percent of its passengers paid change or cancellation fees. A4A
testified at the same hearing that the cancellation fee complaints to
the Department included in the docket do not appear to be related to
transparency and represent a small percentage of the overall number of
passengers, and so, in its view, the mandatory display of those fees is
unnecessary.
Ticket agents and their associations offered different views on
whether change and cancellation fees are critical to consumers'
purchasing decisions and should be displayed. Amadeus stated that
change and cancellation fees are critical to consumers' purchasing
decisions, and Travel Tech supported disclosure of these fees before
purchase. However, the U.S. Travel Association stated that the fees
identified by the Department ``are incidental and not `critically
important' to air transportation.'' In addition, at the Department's
March 30, 2023, public hearing, Skyscanner expressed concern that
disclosing only a fixed change fee without also disclosing the
applicable fare difference, which would necessarily be unknown at the
time of purchase, would provide incomplete information to consumers and
cause confusion. Air Canada made a similar argument in its written
comments.
Three of the four ACPAC members expressed the view that ticket
change
[[Page 34643]]
and cancellation fees were critical to consumers. The ACPAC Chair, who
is also the member representing state governments, stated that the
ability to change and cancel a ticket was more important to consumers
now due to an increase in flight cancellations and the potential for an
increase in infectious disease numbers. The ACPAC had several
recommendations related to ticket change and cancellation, which are
discussed in later sections.
DOT Response: The Department has determined that the fees imposed
on a consumer to change or cancel a ticket (i.e., passenger-initiated
changes or cancellations) \92\ are critical to a consumer's purchasing
decision, and this final rule maintains the proposed requirement that
airlines and ticket agents must disclose these fees to consumers. The
Department is not persuaded by industry commenters who stated that
change and cancellation fees are not critical, and disclosure is
unnecessary. The Department agrees with the commenters who stated that
change and cancellation fees can pose a significant, unexpected
financial burden to consumers and that improved transparency will
reduce consumer confusion and promote competition.
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\92\ When referring to change or cancellation fees or policies,
this rule is referring to consumer- or passenger-initiated changes
or cancellations of tickets. This rule does not address changes or
cancellations initiated by carriers.
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As noted in section B, the number of complaints is only one
consideration used to determine whether the Department should address
an unfair or deceptive practice through regulation. Nor do the
calculations by some airlines that 10-15 percent of their passengers
change or cancel flights suggest that change and cancellation fees are
not critical given the significant financial cost that change and
cancellation fees impose to those passengers who are subject to them.
In addition, existing disclosure requirements do not address this
issue. As the Department noted in the NPRM, existing regulations do not
require airlines or ticket agents to disclose specific change and
cancellation fees during the booking process before ticket purchase.
There are no existing rules for ticket agents to provide change and
cancellation fees, and the existing rules allow airlines to provide
change and cancellation fees in ranges rather than specific amounts,
making it difficult for consumers to determine the fee that would apply
to their ticket.
The Department is not persuaded that it should defer regulation in
this area because some carriers have eliminated change and cancellation
fees. These carrier
[…truncated; see source link]Indexed from Federal Register on April 30, 2024.
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