Q: I recall that Spirit and Southwest went to court last summer to try to overturn the Department of Transportation's (DOT) so-called "full-fare advertising rule" that was scheduled to go into effect Jan. 24. Has the court already ruled? If not, will the rules go into effect automatically? What is the rule's practical significance for travel agencies?
A: The U.S. Court of Appeals for the District of Columbia Circuit, which is the court to which the airlines have appealed, refused the airlines' request to stay the effectiveness of the rule until the final outcome of the appeal. There will be no ruling until at least a month after the parties' last legal briefs are due on Feb. 17, which means that the rule will go into effect on Jan. 26, since the DOT agreed to a two-day postponement last month.
The appealing carriers, which are now supported in court by the airline trade associations, do not have much of a shot at winning their case, as the DOT's brief makes clear that it does have ample evidence that consumers have been confused by the old rules, which allow advertising of a prominent "base fare" with taxes and government fees in fine print. So agencies should assume that the new rule will stay in effect for good.
The most important part of the rule will prohibit any ad, written quote or oral quote that does not quote the full fare as one price, inclusive of all taxes and fees. According to DOT, the rule covers travel agency service and transaction fees, except those quoted using corporate-oriented online booking engines.
The rule applies to any product that must be purchased with air transportation, such as cruises and tours when you require the client to buy the air through you. So you cannot quote an air/sea discount package as "$1,000 plus taxes and fees."
The second most important part of the rule prohibits a practice that airlines engage in but agencies rarely do: advertising a one-way fare when a roundtrip purchase is required. This has long been a deceptive practice, and it is about time that the government stamped it out.
A couple of rules will apply to agencies that operate tours or sell FITs. One bans post-purchase price increases, even if the airline imposes an increase on the tour operator, unless the increase is due to an increase in government-imposed taxes or unless the passenger was provided full disclosure of the potential for the increase and affirmatively agreed to the potential for such an increase prior to purchase.
Also, tour quotes cannot include opt-out features, such as travel insurance premiums. If these are optional, they must be offered separately as opt-in items, so consumers don't inadvertently pay for what they don't want.
Finally, the new rule requires better disclosure of baggage allowances and fees, but agencies can expect the GDS to program these additional requirements into automated itinerary quotes starting this week. However, there is still no requirement that carriers disclose all their other optional fees through the GDSs.
The DOT will be on the lookout for violations, especially in agencies' online ads, but possibly also in telephone quotes by frontline agents. Therefore, it is urgent that you instruct your staff to follow these rules beginning Jan. 26.
Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at [email protected].