Deceptive airline pricing — time for DOT to act

U.S. Airlines have become, with the notable exception of Southwest, a quagmire of pricing options. One of the most effective ways to obscure the true cost of a product is to offer so many variations that consumers are confused. Airlines have moved in that direction and further. They also are seeking to make the ability to compare prices across airlines next to impossible.

Withholding prices that reflect on the true nature of the airline product is misleading and deceptive. When airlines refuse to disclose the cost of the product they are selling they are being deceptive. When they only release pricing in drips and drabs on some sales platforms, but refuse to disclose the same prices on other sales platforms they are being deceptive and misleading.

The back and forth between consumers and airlines has been going on for more than three years; actually five years. Ever since American Airlines, in 2008, decided to start charging for the first checked bag and “unbundled” that cost, airline consumers have not been able to compare full air travel prices across airlines. Because, when AA removed the cost of a checked bag (that was once part of the airline ticket) they removed it from travel agent screens as well. It was a conscious airline decision to make figuring the full price of travel more difficult.

When the Department of Transportation (DOT) didn’t respond with a firm reprimand to AA about being deceptive and misleading, other airlines began to unbundle everything that was not tied to the airplane. And so, today, we are faced with more than half of the traveling public getting misleading and deceptive airline prices whenever they purchase through a travel agency.

Of course, airlines immediately claim that prices are available on their own websites, but for consumers purchasing their travel through agencies selected by the airlines themselves, in many cases more than half of the specific cost of their travel is not disclosed to these soon-to-be passengers prior to purchase.

In a filing to DOT, the International Air Transport Association (IATA) agrees with the fact that airline passengers cannot know what they are buying without including the ever-growing selection of ancillary fees. These fees, according to IATA are what allow the airlines to differentiate their products from each other.

In the Application for Approval of an Agreement (Resolution 787) by the International Air Transport Association, filed with DOT on 11 March 2012, pages 4-5, the association makes an astounding admission.

Price transparency is no longer enough to make an informed choice — true transparency means disclosing price along with the corresponding product information.

They admit, in an application to DOT that their current sales model is deception and misleading. The airlines admit that, “The marketplace pressure for true price and product transparency is irrefutable.”

Why are they still failing to disclose ancillary fee pricing data that would allow travel agencies, software developers and price comparison engines to develop systems to provide the traveling public a full product price and full comparison shopping across airlines?

With this admission by IATA, DOT should be able to simply mandate that all pricing data needed for consumers to make, in IATA’s words, “an informed choice,” be made available at all venues where the airlines choose to sell their products.

The only impediment to systems that can provide consumers true price transparency is the continued refusal of airlines to disclose their ancillary price data and allow consumers to purchase the entire product in one place. Once this pricing data is released, software developers can begin to change the current airline world of deceptive and misleading pricing and allow the free market to operate once again.

The industry does not need a new technology language requested in the IATA application, there are already standards-setting organizations that work fine. Plus, specific computer language and information technology should certainly not be mandated by industry groups because it will curtail innovation and slow online development.

It is time for DOT to stop pussyfooting around this issue. The airlines have admitted that their current product cannot be properly understood without full disclosure of “corresponding product information.”

DOT should immediately spike this latest application to create an airline controlled online marketplace and mandate that airlines disclose pricing data so that consumers, in IATA’s own words, can “make an informed choice.” And, so that unfettered technological innovation can begin again in the airline world.

Already, this issue has been studied for three years. When both business and leisure consumers complain vociferously that they can no longer compare prices across airlines, nor easily figure out the full cost of travel; and airlines admit that they are withholding passenger-specific pricing data required to make informed choices, it is time for DOT to act decisively.

A requirement for airlines to release full pricing data to all airline ticket buyers is the kind of dramatic mandate that Secretary of Transportation LaHood can make to cement his pro-consumer position and slay the serpent of misleading and deceptive pricing that has slithered into our airline world.

Photo: Server Farm, Flickr Creative Commons, IntelFreePress