The Obama administration on Wednesday is pushing forward
several new and proposed regulations that it says will enhance transparency and
spur competition in the airline industry.
“At the U.S. DOT we are committed to a system of fair
treatment and fair play,” the department’s secretary, Anthony Foxx, said during
a conference call with the media.
The DOT is issuing final rules Wednesday that require online
ticket agents to reveal when they
display sponsored airline content in search results and that toughen the
operational reporting requirements of airlines — most notably related to
on-time performance and baggage handling.
In addition, the DOT will begin moving toward a final rule
that requires airlines to refund passengers for lost, damaged and delayed
baggage. As part of that process, regulators will define what constitutes a
“substantial delay.” The baggage-refund rulemaking process comes at the behest
of Congress, which included a requirement for such refunds in the FAA
reauthorization bill it passed in July.
Those directives are just some of the air travel-related
efforts that the DOT is putting forward. In addition, the department will begin
exploring whether airlines should be required to share the price of certain
ancillary products — most notably seat assignments, baggage fees and change
fees — with ticket sellers so that customers get an all-in price while online
Finally, the DOT is issuing a request for information from
consumer groups, airlines and other industry stakeholders in order to determine
whether it should regulate the common airline practice of only selling some
content offerings through indirect channels, such as OTAs and GDSs, while
displaying the full offerings on their own websites.
“DOT will be looking into whether that kind of restriction
is an unfair practice that makes it harder for travelers to find the most
affordable and convenient flights that match their needs,” the department said.
The various regulatory changes, completed and potential,
drew a quick rebuke from the trade group Airlines for America (A4A), which said
that reregulating the airline industry could lead to higher ticket prices. The
average domestic fare fell an inflation-adjusted 40% between 1979, when the U.S
government deregulated the industry, and 2015, A4A said.
“Airlines have different business models and must be allowed
to continue offering optional services in a manner that makes sense for both
their customers and their business,” A4A CEO Nick Calio said in a prepared
statement. “Efforts designed to reregulate how airlines distribute their
products and services are bad for airline customers, employees, the communities
we serve and our overall U.S. economy.”
Among the final rules that the DOT is issuing today are:
• A requirement that OTAs disclose
when they bias search results for airfares based upon contractual or
sponsorship agreements they have with specific carriers.
• A measure requiring airlines to
include domestic codeshare partners in reports to the DOT about on-time
percentage. The move means that Delta, United, Alaska and American will have to
include regional flights operated by contracted carriers in their on-time
• A directive that requires carriers
generating at least 0.5% of total domestic scheduled passenger revenue to
report on-time and mishandled baggage data. Currently, carriers generating at
least 1% of total domestic scheduled passenger revenue have to file such
reports. According to 2015 revenue, the move would increase from 12 to 19 the
number of airlines that must file that information.
• A measure requiring airlines to
report the total number of bags it mishandles instead of the number of
passengers whose bags were mishandled.
• A requirement that airlines report
how often they damage or mishandle wheelchairs.
The DOT said the rule related to undisclosed biasing would
take effect within 60 days.
New operational reporting rules are to go into effect on
Jan. 1, 2018.