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Update on DOT Consumer Protection Rulemaking

10/31/2016

ASTA Members:

On October 18, the U.S. Department of Transportation (DOT) announced a number of measures intended to enhance protections for air travelers and promote competition in the airline industry. As discussed in our September 1 member news item, what started out as a rulemaking focused on airline ancillary fees has morphed into a more targeted set of consumer protection measures.

There are two items DOT is moving forward on that have direct impacts on travel agencies, though neither is a major change to current rules or ASTA's prior guidance:

  • Code-Share Disclosures – DOT is formalizing an existing requirement that carriers and ticket agents disclose any code-share arrangements at "first mention" of such a flight during oral conversations and on the "first display" of such flights on their websites. (This is in keeping with both current law and ASTA guidance on code-share disclosure.)
  • Undisclosed Display Bias – DOT is prohibiting "undisclosed biasing" by carriers and ticket agents in any internet displays containing the fare and schedule information of multiple carriers. This applies to any entity that "operates an electronic airline information system, e.g., GDS, corporate booking tool, or internet flight search tool, that combines the schedules, fares or availability information of more than one air carrier." Any bias "not based on user selection or corporate contract travel arrangement" must "clearly disclose[d]" to the consumer. (Again, this is also in keeping with current DOT guidance.)

These provisions are effective 30 days from the formal publication of the rules in the Federal Register, which should happen in the next few days.

While action is not imminent, there is one item of concern in DOT's announcement:

  • Customer Service Standards for Large Travel Agents – In its May 2014 Notice of Proposed Rulemaking (NPRM), DOT proposed requiring travel agents with annual revenues of $100 million or more to adopt minimum customer service standards, such as mandated response deadlines for customer complaints and providing an option to hold a reservation at the quoted fare for 24 hours. In ASTA's comments on the NPRM, we argued that additional regulation of travel agencies, large or small, is unnecessary given that "travel agents operate in market conditions that are likely to punish such conduct well before the government can do so. And there is no record of consumer harm perpetrated by travel agents." On October 18, DOT identified this provision as one for which "we believe that we have obtained sufficient information but need additional time to complete the regulatory analysis, we are postponing the issuance of a final rule until a later date." Rest assured ASTA will continue to fight this proposal with all tools at our disposal.

Noteworthy in the recent announcement is what DOT is not moving forward on. These include:

  • Airline Ancillary Fees – In 2014 DOT proposed requiring the airlines to disclose fee information for basic ancillary services to all ticket agents to which a carrier provides its fare information. However, it did not propose that agents be allowed to sell those services (we called this "transparency without transactability"). In its filing, ASTA argued against this "halfway" measure, pointing to the lack of "significant market improvements regarding transparency and de minimis advances regarding transactability" since DOT began studying this issue in 2011. DOT now says it will be issuing a Supplemental Notice of Proposed Rulemaking on this issue "in light of the complexity of the issues and additional considerations identified by comments submitted on the NPRM."
  • Disclosure of Carriers Marketed/Not Marketed – In 2014, DOT raised the possibility of requiring "large" travel agencies to disclose in their online displays that not all carriers that serve a particular market are marketed by the travel agent where that is the case. No text was proposed, rather the Department sought comment on the best way to handle it and provided several options for doing so. On October 18, DOT said it "carefully considered all of the comments and has decided not to adopt [this] requirement."
  • Incentive Disclosure – In 2014, DOT asked for comment on whether to require any ticket agent that decides to bias its displays and disclose the existence of bias to also disclose any incentive payments it is receiving for engaging in such a display bias. We argued strenuously against this idea, noting that "forcing agents to reveal this information to consumers, where it has no relationship to what the consumer pays...will disturb in unpredictable ways the existing commercial relationships between suppliers and agents." Thankfully, DOT announced that it has "decided not to require the disclosure of information regarding incentives...[as] the prohibition on undisclosed biasing is sufficient to protect consumers."

More on the DOT rulemaking and associated regulatory actions can be found here.

On the whole, we think this latest round of DOT consumer protection rules will benefit the flying public and the travel agency community that serves them. In particular, it is good news that proposals related to code-share disclosure and online biasing conform to existing Department guidance and do not add substantial new disclosure burdens to agencies. We also applaud the Department for setting aside unwarranted proposals on disclosure of carriers marketed and not marketed in ticket agents' online displays and of travel agency incentive payments.

At the same time, we are disappointed that DOT is further delaying regulation on the disclosure of fees for basic ancillary services at all points of sale, an issue it has been studying for over five years. We are also concerned that the issue of new customer service standards for large agencies is back on the table, and we will be doing all we can to fight the proposal over the next few months.

We will keep you fully updated on these and other issues, and will be incorporating the DOT's actions into the 2017 version of our Regulatory Compliance Handbook and test (see 2016 version here).

If you have any questions, don't hesitate to contact us at Govtaffairs@asta.org.

ASTA owns the federal copyrights in the information which it has created above. If you are a dues-paid member of ASTA you may, as a privilege of ASTA membership, use the information above in that business and may share the information with the management and staff, BUT you MAY NOT REDISTRIBUTE OR DISCLOSE BY ANY METHOD the information to ANY PERSON OR FIRM THAT IS NOT AN ASTA MEMBER. Your use of this information constitutes your agreement that if you violate the distribution restriction set out above, you will be liable to ASTA, as liquidated damages, in the amount of $7,500.

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