Obama Administration Unveils New Airline Consumer Protection Rules

This morning the US Department of Transportation released a new set of rules designed to encourage competition and protect airline consumers.  Some of these rules are enhancements to previous regulations, others are completely new.

american airlines 787

Tail sign and cargo bay

Checked Baggage Fee Refunds and Delay Reporting

US Transportation Secretary Anthony Foxx said, “”If you pay the baggage fee and your bags are not returned to you in a timely manner, you’ve essentially paid for a service you’re not getting.”  Previously, airlines had to refund checked baggage fees if they completely lost your luggage.  The DOT is now ruling that airlines must reimburse checked baggage fees if there is a “substantial delay” in getting your bag back to you.  The only remaining item to determine is what constitutes a “substantial delay” and will likely be different for domestic flights and international flights.  Regardless, this is a substantial new rule that should give customers a bit of comfort after being asked to pay so much for checked baggage.  This rule is scheduled to go into effect soon, after the definition of “substantial” is determined, not only from a baggage delay standpoint but also in determining how quickly airlines will be required to refund consumers.

The DOT is also changing how airlines report the mishandling of baggage.  The new metric will be a more simple calculation, the number of bags delayed/lost over the number of bags checked.  Previously the metrics were gathered based on consumer complaints, but this new rule should give consumers more data when it comes to choosing an airline when they need to check a bag.

Airline On-time Performance Reporting Changes

The DOT has also expanded the scope of on-time performance reporting to include more airlines and include domestic codeshare flights in the on-time performance numbers released monthly by the DOT (the October release is here, if you’ve never seen one of the reports).  Previously only airlines who accounted for more than 1% of the overall market revenue had to report these numbers, that threshold has been rolled back to .5%, meaning the number of airlines who will report on-time performance will jump from 12 to 19.  Among the new airlines who will be required to report are Mesa Airlines, Republic, Envoy, Air Wisconsin, Allegiant, and Shuttle America.  If none of those names ring a bell, many of them operate flights marketed by American Eagle and the other regional subsidiaries of the mainline carriers.  This rule goes into effect 1 January 2018 to give the new airlines time to figure out how to report and for all airlines to start including their domestic codeshare flights in their metrics.

Airfare Search Engine Results Disclosure

Whenever a consumer goes to an online travel agency like Expedia or Travelocity, the DOT says that they must receive completely neutral search results.  If a search engine has an incentive payment plan in place with a particular airline, that relationship must be disclosed to the consumer so they are aware of how their search results may have been affected.  Additionally, search engines must do a better job of showing the apples-to-apples comparison of airfares.  Ever since airlines have “unbundled” airfares (e.g. separated the checked baggage from the price of the ticket) it has been harder for consumers to see the variety of fees which may apply to them, especially when booking on low-cost carriers like Spirit Airlines.  The DOT did not say exactly how the new comparison requirements would work but they emphasized the need for consumer choice.

So what’s the impact for consumers?

Without getting involved in the politics of the situation, I think the new rules are good for consumers.  I rarely check a bag, and even more rarely pay for doing so (due to my status with American Airlines), so the checked baggage fee refund doesn’t move the email for me, but the example given during the conference call was a family of four traveling to Disney World, I can see how they would benefit greatly from the new policy.  The airlines had to wince when they heard the new policy since it means they’ll likely need to put in new systems for the refunding of checked baggage fees and likely will have to do it more quickly than the typical 8-10 business days which is normal business practice right now.

The reporting changes are wonderful, although they will not be implemented for quite a while, which is understandable since it will require airlines to enhance or change their reporting systems.  I will admit, though, that I rarely check the on-time performance numbers for a specific flight when I’m booking it, although I guess this means I probably should more often.

The search engine results ruling was interesting to me.  While I’m glad that any financial relationships must be disclosed, I wonder what this does to websites like Google Flights, who use logic to determine what the “best” flight is even if it’s not the cheapest (due to things like travel time, layovers, etc.)?  Hopefully this will not require all search engines to blindly report from the cheapest to the most expensive flights, I like the logic Google Flights uses and have seldom run into issues using their site.

 

What do you think of the new rules?  Government overreach or smart regulation?

 

1 Comment

  1. Considering the recent consumer-unfriendly trends in air travel of late, this is a breath of fresh air. Also, having recently fallen victim to an airline losing my luggage, and seeing how much of a Priority it absolutely was not for the airline to resolve it, it’s nice to see any step forward there.

    Keep up the good work, Traveling Andy! I’ve really enjoyed your time on the Boarding Area this week!

    Reply

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