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Bill McGee

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What's the Real Price of an Airline Ticket?

Posted: 01/25/2012 5:26 pm

This week consumers are getting some new protections when they buy an airline ticket. And Consumers Union, the policy and advocacy division of Consumer Reports, is plenty supportive. Thanks to a new rule by the U.S. Department of Transportation, consumers will now be able to clearly see how much they are paying for mandatory fees and taxes at the point of sale.

We are all for more transparency. Several years back, my colleagues and I at Consumer Reports became immersed in an extensive project to test and analyze travel Web sites. I personally spent the better part of three years repeatedly searching for airfares on Expedia, Orbitz, Priceline, Travelocity, and dozens of other travel sites. And in the end, two irrefutable truths about how airline tickets are sold online emerged: 1) airlines and other travel companies may pay for better placement in the listings on third-party travel sites, what we termed "disturbing evidence of bias," and 2) we found time and again that no single site continually offers the best flight and fare options, so to quote Smokey Robinson: you'd better shop around.

Other problems came to light as well. For example, we heavily criticized travel sites for what we termed "fare jumping" -- you know, when that price you've just located is suddenly replaced with a screen page advising you it is suddenly not available. But the "shopping around" advice became our mantra, because in the commoditized world of airline seats, we found it's critical that consumers have the ability to comparison shop in an apples-to-apples fashion. After a few years, the shopping process slowly began to improve for armchair travel agents.

Then the airlines completely changed the game, and completely muddied online pricing. The industry terms it "ancillary revenue," but you probably know it better as nickel-and-diming, those add-on fees for everything not previously charged for, from checking a bag to changing a reservation to ordering an in-flight pillow. Domestic carriers collected nearly $5.7 billion in baggage and change fees alone in 2010, and those numbers keep soaring. In short, such fees can have a tremendous effect on your budget, particularly when you can't determine the total cost of the ticket. Little wonder that last year, in an extensive survey of nearly 15,000 passengers, Consumer Reports found 40% cited they're flying less because of increased fees.

Thankfully, the new rules from the Department of Transportation (DOT) that take effect this week offer more protections for passengers when booking flights online. Now mandatory taxes and surcharges must be included in all published airfares.

Transportation Secretary Raymond LaHood calls the new rules "a continuation of our effort to help air travelers receive the respect they deserve." In recent years the Department has imposed stiff penalties on airlines over extended tarmac delays, increased compensation when passengers are involuntarily bumped from flights, and strengthened truth-in-advertising regulations. We think many of these regulations should become permanent law, and we hope that Congress gets around to doing that soon as part of a pending Federal Aviation Administration reauthorization bill.

While transparency around fees is a major step forward in helping consumers know what they are paying for when they buy a ticket, we also think the system for comparison shopping of airline tickets needs improvement. DOT has new provisions on this too that would allow for comparison shopping of fares and fees among multiple airlines, but it has delayed the rule's consideration, almost certainly into 2013.

Unfortunately, infighting between airlines and the travel distribution network has led to airlines not sharing all fare and fee data with global distribution systems, travel agents, and other sellers of travel, even though experts believe airlines currently have the resources to do so.

Consumers Union urges the airlines and the DOT to facilitate comparison shopping through all booking sites, without delay or postponement. Starting this week, new information about mandatory fees and taxes will now be available to you when you buy an airline ticket. We also think that policymakers and the industry should go one step further and ensure that consumers can also shop around for the best price.