A DOT rule finalized over the Thanksgiving holiday during the waning weeks of the Trump administration to codify the meaning of "unfair and deceptive practices," has drawn kudos from the airline industry and ASTA but scathing criticism from consumer advocates.
Unfair and deceptive practices is the standard under which the department undertakes punitive action against both airlines and travel advisors and is the guiding principle used by the department to implement consumer-protection regulations, such as rules governing tarmac delays, post-purchase price increases and overbooking by airlines.
Under the new rule, a practice is defined as unfair, "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."
A practice is defined as deceptive to consumers "if it is likely to mislead a consumer, acting reasonably under the circumstances, with respect to a material matter."
The definition is modeled on the definition the Federal Trade Commission uses to police unfair practices in other industries. The new rule was proposed by the trade group Airlines for America in response to a notice for suggestions put forward by the DOT.
"The rule will benefit the public and regulated entities by providing greater transparency and predictability on how the department conducts its aviation consumer protection rulemaking and enforcement activities," the DOT said in a Nov. 27 press release.
The rule also requires the DOT in future enforcement orders to state the basis for determining that a practice is unfair or deceptive. In addition, it codifies the department's standing practice of offering airlines and travel advisors the opportunity for an informal hearing before any enforcement action is taken against them,
And it requires that formal hearings be held by the DOT as it develops future airline consumer-protection regulations that haven't been mandated by Congress.
ASTA executive vice president of advocacy Eben Peck endorsed the new rule on Tuesday.
"We spend a great deal of time helping our members -- 'ticket agents' in the eyes of DOT -- comply with the department's many rules and regulations related to selling air travel and avoid fines for noncompliance," he wrote in an email. "As such, anything that provides additional clarity to our members in terms of how the DOT intends to police the industry, as this proposal appears intended to do, is welcome."
Peck noted that the proposal makes no changes to existing regulations that ASTA supports, such as the full-price advertising and tarmac delay rules.
Airlines for America also reiterated its support for the measure. "This reform is a critical step forward in ensuring a data-driven regulatory process, which will produce widespread and lasting benefits for air travelers, airlines and the economy," spokeswoman Katherine Estep said in an email.
Consumer advocates, however, contend that the rule will hamper the DOT's airline oversight capabilities.
"The DOT's decision is a big early holiday present to the airline industry and a big bag of coal for consumers," said Kurt Ebenhoch, executive director of Travel Fairness Now. "It will cause making changes that benefit the flying public far more difficult, drawn out and expensive, something the airlines can afford but consumers cannot."
Ebenhoch argued that the requirement for formal hearings when the DOT develops consumer-protection rules will unnecessarily slow the process.
Opponents of the rule included the two Democrats on the five-person FTC.
Mirroring the FTC's definition of unfair practices, "would undermine passenger protections and make it difficult to hold airlines accountable for widespread harms," wrote commissioner Rohit Chopra in a comment submitted to the public record before the rule was finalized. "Given the significant consolidation in the industry and the lack of choice on most routes, it is unreasonable to expect 'market forces' to correct these harms."
Chopra argued that the FTC's definition has hampered the commission's own ability to tackle unfair business practices such as subprime lending. However, state competition authorities have been able to fill-in enforcement gaps.
That isn't possible with airlines, since federal law prohibits states from acting on their own to combat airline abuses.