Airline Sought Consumer Friendly Fees

In late 2016, the U.S. Department of Transportation (DOT) began a regulatory proceeding in which it sought public comment on whether the government should require airlines to provide their proprietary airfare and availability data to for-profit online travel agencies (OTAs). Advocates for the government’s request framed the proposition as pro-consumer — e.g., “one-stop shopping.” A domestic airline with a unique direct-to-consumer sales model sought to counter this narrative and head off any potential regulatory or legislative action.

The PSW team led advocacy efforts with House and Senate Democrats on Capitol Hill to prevent the regulatory proceeding from moving forward. We tailored clear and compelling arguments that, despite lawmakers’ best intentions, the proceeding would lead to bad public policy. Our core message to Democratic offices was simple: direct-to-consumer sales help keep fares low by providing consumers a choice with no hidden fees. Congressional offices came to understand that, while OTAs could be a useful tool for some consumers, they were incentivizing many airlines to “unbundle the ticket” — i.e., offer low base airfares while charging more in fees – as OTA websites generally show consumers the base price. We also argued that leisure travelers are particularly susceptible to this type of practice, as well as to “display bias,” a system that favors airlines that pay for premium placement on travel sites even though their flight offerings may not be the lowest priced option for the consumer.

We drove home the key point that direct-to-consumer companies in other industries are not required to sell their products or services on specific websites or at specific stores. No legal authority or rational basis exists for the federal government to compel an airline to do business with an OTA or any other for-profit company. These messages were ultimately cemented in a bipartisan letter of support for our position, which was delivered to Transportation Secretary Chao in March 2017, as well as in separate legislation.

Through both the FAA reauthorization bill and the annual appropriations process, there were numerous attempts to insert a legislative requirement that all airlines must do businesses with online travel agencies. PSW worked hand-in-hand with our client to visit over 60 Democratic offices in the House and the Senate over a period of several months. We were able to reframe the proposal from one that helped leisure travelers to one that could harm them, and were ultimately successful in preventing the proceeding from moving forward.