If you're an airline, Jan. 26, 2012, is a day that will go down in infamy. That's the day when airlines could no longer e-mail you with a subject line reading "Europe sale from $169!" or place an ad in your local newspaper with a headline like "Worldwide sale from $59!"
Advertised airline prices must include all mandatory taxes and fees.
Thanks to new U.S. Department of Transportation rules, airlines now have to include "all mandatory taxes and fees in the advertised fare." So what does this mean to consumers?
Instead of that $169 "come on" price that's really just the one-way fare before taxes, government fees, and fuel surcharges kick in on a ticket that actually requires a round-trip purchase, you'll now see a price more like $900 -- the full round-trip fare including taxes, fuel surcharges, and government fees. (Theoretically, if a fare can be purchased just one-way, you'll see the one-way price including those extras.)
And to make things even more interesting, you may see a range of tax-included fares on the same route, although how this will work is still up in the air. For instance, a nonstop flight from New York to Los Angeles will have a different tax than one connecting in Dallas or one stopping in Salt Lake City. That's because every time a plane lands and takes off, airports add their own fees, which vary from airport to airport.
Only mandatory fees will be included in ads.
Advertised prices will not list all possible non-mandatory fees, such as checked bag fees. This makes sense since you might not be liable for paying these fees at all (if you're not checking bags, for instance, or have premier status in your frequent-flier program).
And while it would be great if airline and online travel agency booking sites allowed you to calculate what your final cost might be if you did check bags, imagine what that process would look like. The site would have to ask you to weigh your bag (how's that bathroom scale working these days?) since a bag weighing under 50 pounds would cost less than one weighing 52 pounds. And you'd have to tell the site whether you have an airline credit card that waives your first checked bag fee or what your frequent-flier status is. Accomplishing this will keep the airlines' computer programmers busy for months.
But all airlines are now required to have a prominent link from their homepages to a page showing all their optional fees for things like checked bags and change fees.
Travelers can take advantage of a new 24-hour hold rule.
Consumers can now put a fare and a reservation on hold for 24 hours -- without paying for it. True, previously you could hold a fare for 24 hours on most airlines (except JetBlue), but you'd have to pay for it first.
Why don't airlines like this? Well, as a consumer, I can now theoretically book my New York to LA trip on 10 airlines, holding seats that other consumers won't be able to book. Will this play havoc with the airlines' reservation systems and perhaps mess with their yield management systems (the way they adjust fares as seats on a particular flight sell out?). Possibly. It may also require airlines to adjust the way they overbook flights to compensate for no-shows (JetBlue previously never allowed 24-hour holds so the airline didn't intentionally overbook flights).
Why the focus on airline pricing?
While the all-in fare advertising rule is a more honest approach, ads with higher fares may discourage consumers from shopping on airline websites. And airlines make the argument that cable TV providers (like Time Warner and Verizon) and cellphone carriers (such as AT&T Wireless) aren't required to show all the taxes and fees in their ads -- that cable bill for $99 per month, as we all know, really costs more like $139.50 or whatever when the monthly bill comes.
Why are you just picking on us, the airlines wonder. Why isn't Macy's required to include sales tax in their ads? How about those car dealerships? Well, don't be too surprised if the FCC and DOJ are watching over the DOT's shoulder.
George Hobica is a syndicated travel journalist and blogger whose website, www.airfarewatchdog.com, tracks unadvertised airfare wars and fare sales, including the most helpful and always updated Top 50 Airfares.
