Monitoring regulatory burdens and risks

By Eben Peck

Eben PeckIn the next few weeks, ASTA will be releasing, exclusively to our members, the "U.S. Travel Agency Regulatory Compliance Handbook," a "plain English" backgrounder on the major federal statutes and regulations directly impacting travel agents. It is intended to help our members fulfill their regulatory obligations, especially those related to the sale of air travel.

This is crucial and timely information for all agents to be aware of, as not only are the consequences of noncompliance severe, but the Department of Transportation (DOT), the primary regulator in this arena, has grown more aggressive in the past few years.

DOT penalties on "ticket agents," a definition that covers travel agents, spiked from $90,000 in 2009 to $670,000 in 2012, and last year alone travel agencies of various sizes were assessed civil penalties ranging from $10,000 to $180,000.

When selling air travel or a tour or cruise package that contains an air component, travel agencies often have the same federal obligations as the airlines, but they rarely have huge in-house legal or regulatory departments to help with compliance. Three of the major regulatory obligations covered in ASTA's compliance handbook are outlined below:

  • Advertising/price rule: Travel agents are prohibited from displaying, advertising or offering airfares, including tour and cruise packages that contain an air component, that do not include the full and final price, including mandatory government fees and taxes and mandatory agency fees.
  • Codeshare rule: In any direct communication with a consumer, travel agents must disclose the name of the operating (as opposed to the ticketing) carrier before a booking is made.
  • Insecticide rule: Travel agents must refer ticket purchasers to the DOT's "disinsection" (insecticide) website when selling travel to countries that require aircraft to be treated with insecticides prior to flight or while occupied.

Among the other regulations covered in the handbook are the baggage fee disclosure rule, e-ticket expiration rule, hazardous materials disclosure rule, opt-out rule, price increase rules and secure flight rule.

January 2013 ASTA chartASTA's regulatory handbook not only outlines a travel agency's obligation with each rule but also provides supplemental guidance that ASTA has obtained directly from the DOT in response to concerns expressed by our members.

Helping our members navigate the labyrinth of complex federal regulations is at the core of ASTA's mission, but so is representing the interests of our members with regulators and legislators. To this end, ASTA is keenly aware of the significant cost that these and many other proposed regulations have on travel agencies, especially smaller agencies.

In some cases, these regulatory costs are imposed without regard to consumer complaints -- or lack thereof -- or to any other data related to travel agents. (In contrast, regulations on airlines are based on a well-documented history of substandard performance of consumer protection obligations by the airline industry.)

On the hazardous materials regulation alone, ASTA estimated $24 million in agency training costs, $14 million in reprogramming costs and $27 million annually in ongoing compliance costs. All this in an industry made up overwhelmingly of small businesses, struggling in the face of low profit margins and the recent economic downturn.

We do not lay out the regulatory burdens on our industry to argue for their wholesale elimination or to attack the rationale behind individual requirements (though the insecticide and hazardous materials regulations strike us as particularly wrong-headed).

Rather, our role is to highlight for policymakers the extent to which our industry is impacted by a proposed or existing regulation, with the goal that they will keep this in mind as they consider adopting a new or modified rule.

And we have had a significant impact in shaping the outcome of many of these rules. For example, ASTA worked with the Department of Homeland Security for many years to help develop a secure flight rule that not only met our nation's security interests but also met the needs of our members.

We will be holding a webinar for our Corporate Advisory Council and consortia members on Jan. 29 to walk through the contents of the regulatory white paper and provide members tips for regulatory compliance, and we expect to schedule additional member webinars in the near future.

Going forward, we hope that all travel agents will support their industry and ASTA. Our mission is to educate, promote and represent travel agents, who are ambassadors to the traveling public and are on the front lines of the many consumer issues that the above regulations seek to address, making the travel experience as safe, affordable and fun as possible.

Eben Peck is ASTA's vice president for government affairs. Contact him at epeck@asta.org. 

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