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Amy Klobuchar is trying to make air travel pricing more transparent — but could that end up hurting consumers?

REUTERS/Mike Blake
Sen. Amy Klobuchar introduced an amendment to the Senate’s bill to fund the Federal Aviation Administration that would require third-party airfare sites to display accurate and comprehensive fee, fare, and scheduling information, just like the airlines do.

These days, finding the cheapest way to fly is easier and quicker than ever: thanks to aggregators like Google Flights and one-stop shop bookers like Expedia, a traveler can review different itineraries from different airlines, comparing prices side-by-side, and book a ticket based on that.

But, then come the fees, and there are a lot of them: airlines are increasingly “unbundling” their services, adding charges for previously-included things like luggage, rebooking, and even choosing your seat. Airlines have to disclose these fees on their own websites, but third-party travel sites like Google Flights and Expedia aren’t required to tell consumers about them. Since airlines refuse to disclose their most up-to-date information on fees to third parties, online travel sites couldn’t include accurate information up front, even if they wanted to.

Sen. Amy Klobuchar wants to change that: she’s introduced an amendment to the Senate’s bill to fund the Federal Aviation Administration that would require third-party sites to display accurate and comprehensive fee, fare, and scheduling information, just like the airlines do.

Sounds good, right? Maybe not: consumer advocates, and representatives of online travel sites, worry that there’s nothing in Klobuchar’s amendment, or the underlying FAA bill, that would make the airlines actually share the information. That could put the third-party sites in an impossible bind: forced to share information to consumers that they don’t have — and subjecting them to fines if they don’t comply.

Backers of the amendment argue it’s a viable path to improving the travel marketplace, but to the burgeoning online travel industry, the amendment looks like another tactic in the airlines’ ongoing quest to marginalize them as much as possible. And to consumer advocates, it represents a missed opportunity to advance legislation that would actually make the system work better for travelers.

Adopting new standards

Klobuchar’s amendment on the FAA bill is short — about two pages — and straightforward. It directs the U.S. Secretary of Transportation to, within 90 days of the bill’s passage, to “issue a final rule to require large ticket agents to adopt minimum customer service standards.”

The amendment defines a “large ticket agent” as an intermediary who is involved in “the sale of air transportation directly or indirectly to consumers” and makes at least $100,000,000 in annual revenue that is “in any way” related to the sale of airline tickets.

Under that definition, the biggest names in online travel make the cut — like Expedia, which made some $10 billion in revenue in 2017 — as well as smaller competitors, like the website CheapOAir. Google Flights, which is not a booking service but provides a platform for comparing prices, would likely have to comply with any new rule.

While the amendment defines who would have to comply with new rules, it does not specify exactly what those new rules would be. It simply says that the U.S. Department of Transportation should ensure — “to the maximum extent practicable” — a consistent level of consumer protection regardless of where someone buys a plane ticket.

It’s that “maximum extent practicable” clause that is key: in some instances, imposing consumer requirements on third-party sites might make sense and improve consumers’ experience; in other instances, they could be unworkable and undermine the system.

The main example that the amendment’s backers use is requiring third-party sites to show all fees associated with a fare up-front. On a site like Google Flights, a round-trip fare from Minneapolis-St. Paul to Las Vegas shows up as nearly $200 cheaper on budget carrier Spirit than on Delta — even though Spirit, a pioneer of the unbundling model, charges hefty fees for checked luggage and even carry-on bags. (If you click on the Spirit itinerary, Google lays out “estimated costs” that are not included in the main sticker price.)

In a statement, Klobuchar said that “No matter where consumers shop for flights online, they shouldn't be saddled with unexpected seat changes, outdated or incorrect travel itineraries, or hundreds of dollars in unknown fees that can mean the difference between a family trip being affordable or unaffordable. Increasing transparency will help consumers make more informed travel decisions up front."

Protecting consumers … or airlines?

Critics in consumer advocacy organizations and in the online travel industry counter that the Klobuchar amendment won’t help third parties to better provide travel information, but saddle them with meeting a task that would be, at present, impossible.

John Breyault, vice president for public policy at the National Consumers League, said the amendment is a step in the right direction, and that the structure of the current marketplace is bad for travelers and harms competitiveness in an industry that has undergone remarkable consolidation in the past two decades.

“Most of us see a fare that looks good only to see find there’s a baggage fee, a seat reservation fee, a legroom fee,” he said. “It’s really ridiculous… The fare you see when you’re comparing different flights is increasingly unreliable.”

However, Breyault argued that neither this legislation nor the underlying FAA bill have proper language to ensure that airlines share the information the third-party sites need to comply with the new rules being proposed.

“The Klobuchar language, on its face, should protect consumers: it says online travel agencies have to provide information to consumers, and there are penalties if they don’t,” he says. “But what if they’re not getting the information to begin with? They’re being put in an impossible situation.”

According to Susan Grant, director of consumer protection and privacy at the Consumer Federation of America, a consumer advocacy nonprofit based in Washington, the Klobuchar amendment would exacerbate what she called the “anti-competitive behavior of the airline industry.”

“I believe that Sen. Klobuchar would like to sincerely help consumers with some of the problems they face with airline fees,” Grant says. “I don’t think this amendment would accomplish that… [it] doesn’t really set forth what the Department of Transportation needs to do to truly look after the interests of consumers and make sure they have the information they need about what the total cost of their airfare is going to be.”

Aides involved with the process say the goal is not to impose an unsolvable dilemma upon third-party sites. They point to a section of the FAA bill that they say would compel airlines to better share information with third-party sites, helping them to meet any new obligations to provide more information to consumers about the total cost of a ticket.

The legislation requires that any site that shows ticket information, from a carrier’s website to a third-party agent, to “disclose to a consumer the baggage fee, cancellation fee, change fee, ticketing fee, and seat selection fee of that covered air carrier in a standardized format.”

But the existing language isn’t strong enough, Breyault argues: he says it doesn’t require airlines to disclose key information that third-party sites could be fined for failing to show consumers.

“So maybe they’re required to disclose fees, but what if the airline decides not to provide fare information, or when and where they’re going to fly? That’s a concern to us.”

Tensions in the travel business

Trade groups that represent online travel agents and search companies, like the Air Travel Fairness Coalition, have been most forcefully opposed to Congress’ efforts to impose new rules. Kurt Ebenhoch, the executive director of the Air Travel Fairness Coalition, framed the amendment as a ploy — possibly orchestrated by the airlines — to pull the rug out from under online search companies.

“One of the ways carriers are trying to make more money is reducing the ability of consumers to comparison shop,” he said. “What they want to go to is a world where each traveler on their own has to research which airlines fly between two city pairs, go to each carrier’s website, look at fares, manually write that down, and make a decision about who they want to fly with. Carriers know people will be exhausted by that.”

Through a spokesperson, Delta declined to comment on the record for this story. Sun Country Airlines, based in Mendota Heights, did not respond to request for comment. Airlines for America, an industry group that represents United, American, and Southwest Airlines, is backing Klobuchar’s amendment.

Though boosters of the third-party travel industry are saying Klobuchar’s amendment is, as Ebenhoch put it, a solution in search of a problem, it is addressing a serious consumer concern, according to Seth Kaplan, editor-in-chief of the industry publication Aviation Weekly.

“There definitely have been issues of people feeling misled because they’ve seen a deal somewhere that they later found out wasn’t what they thought it was,” Kaplan told MinnPost. “As airlines have unbundled their product — consumers might call that nickel-and-diming — as they have made changes with fees, airlines have found that consumers who have felt the most misled have often booked via third parties.”

Kaplan says airlines may be motivated to support the amendment to avoid angry customers who feel ripped-off. But he adds there are commercial realities that make the calculus “more fuzzy.”

“Airlines want to work with certain third-party sites, and don’t want to work with others,” he said, citing Delta’s cooperation with major bookers like Expedia at the expense of smaller bookers. (In 2013 and 2014, Delta removed its flights from roughly 30 smaller third-party travel sites.)

“They sort of made their peace with them,” Kaplan said of the airlines and major third-party sites. “Then there are other sites they’ve felt, there’s no reason for us to let them sell our tickets, because maybe they’re taking money in a way that we should be able to get ourselves.”

Trump administration making skies friendlier for airlines

Supporters of the amendment say that proposals to compel third-party sites and airlines to be more up-front with information during the booking process originated in the Obama administration, and that consumer groups supported those efforts then.

However, the Trump administration has grounded, or is moving to ground, many of the new regulations governing air travel that were initiated by Obama. (The Los Angeles Times reports that Obama’s DoT adopted or proposed 80 new regulations around air travel, incensing the industry.)

Last year, the major airlines sent the DoT a lengthy wish list of requests related to regulation — which included asking to repeal rules requiring airlines make additional information about fees public. In December, the DoT announced it was withdrawing two Obama rules, from 2011 and 2017, that aimed to give travelers more information about a host of airline fees and services, from luggage and transfer charges to in-flight entertainment and food costs.

That underscores a central concern that critics have about Klobuchar's amendment: that the DoT, under Trump, has proven more sympathetic to airlines than to consumers. (The DoT did not return requests for comment for this story.)

The Consumer Federation’s Grant said that the amendment would “instruct the DoT to do these regulations at a time when I am very concerned about whether the DoT is willing to fulfill its obligation to be protecting consumers in aviation, or whether it is just going to act as an advocate for the airlines.”

“Our faith in the DoT to actually follow through on this, to put regulations with any teeth, is pretty low,” Breyault said.

The ideal scenario for consumers, he explained, is a one-stop shop where a traveler could plug in where and when they want to travel, how many bags they will bring, and what other amenities they want, and then being shown comprehensive, accurate information from different airlines that are tailored to those plans.

That dream may be some ways away. Until then, Breyault and other consumer advocates stress that any changes need to focus squarely on how they will benefit travelers in a changing regulatory and business environment.

“At the end of the day, we need to step back and say, what’s the consumer benefit going to be?” he asked. “Not whether this is good or bad for the online travel agencies or for the airlines — is this going to actually improve consumer welfare?”

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Comments (5)

More fearless leadership?

When was the last time Klobuchar took a position that entailed some political risk? I can't recall a single instance. It's a shame she hasn't been challenged from the left in this election cycle. Perhaps we'd elect someone who isn't owned by corporate Minnesota, most notably the medical device industry.

Actually

I'm surprised Sen. Klobs. took a position this controversial. And in an election year no less.

Simple fix

Require airlines to disclose and maintain current their fee schedules for aggregators to use. If airlines mislead the consolidator and the customer, the airline pays the penalty.

Just a quick note...

Nothing Klobuchar is doing about pricing transparency could possibly "harm" anyone, consumers or otherwise. It may raise the ticket prices somehow, but that's not actually harming anyone. We should keep in mind when applying consumer mentalities that fluctuating prices on services for the affluent don't actually hurt anyone.

But yeah...

New rules, if any, should be directed at the Airlines, not the travel sights. Make the airlines disclose those costs so the travel sights can include them, not the other way around... kinda duh?

I would say though that for airline tickets I long ago stopped trying to buy from travel sites, I've been buying direct from the airline sights for a while now. If you want to fly "cheap", you have fly red-eye no matter who you go through.

I must say however that this unbundling strategy is probably a bad idea in the end because it just creates accounting hassles and encourages people to fly light, bring their own food, carry-on luggage, etc. By the time people get done compensating for all the attempts to charge them for stuff I'm not sure the airlines are actually squeezing that many more nickels out of their customer base. Half the time when you have to re-book it's because the airline screwed up somehow, so they can't charge you for that anyways.