Full airfare disclosure: Canadian airlines take the lead

CANADIAN carriers have taken the lead to disclose full airfare to make it easier for their customers to arrive at the full cost of flying – ahead of the government’s intention to make it mandatory, following in the footsteps of the European Union and United States.

Westjet Airlines was first to advertise fares that show the final cost payable, including all taxes and surcharges such as fuel surcharge, insurance and air security charges and airport improvement fee. This was followed by Air Canada occasioned by a seat sale to mark its 75th anniversary.

Canada’s third carrier Porter Airlines, which operates regional flights from its base at Toronto City Centre airport, said it would follow suit.

Credit to these airlines for not making an undue fuss over what can only be a fair and sensible move in their passengers’ interest. They now have every reason to demand that other airlines operating to and from Canada be not exempt when the rule comes into effect.


Full-fare disclosure gains momentum

JUST as the United States kicks in a new regulation on January 24 requiring airlines to publish the full fare including taxes and surcharges in their sale pitch, Australia is taking Malaysian budget carrier AirAsia to court for misleading advertisements.

According to the Australian Competition and Consumer Commission, AirAsia’s website did not show the full disclosure fares for some routes out of Melbourne, Perth and the Gold Coast. The commission said: “Businesses that choose to advertise a part of the price of a particular product or service must also prominently specify a single total price.” As a consequence, AirAsia may be fined.

The new rule introduced by the US Department of Transportation (DOT) has already been in force within the European Union (EU) although there, it applies only to EU carriers. Now Canada is working on a similar implementation which Canadian carriers have argued is unfair because foreign carriers are excluded. Quite rightly so, why should any airline targeting the same market be exempt?

More disturbing is how all these arguments actually lend weight to the new rule to protect the right of the consumer. Indeed, are there no ethical considerations in the business of making money?

After the EU, North America and Australia, it should be expected that the rule should gain momentum in other regions, especially if it applies to all carriers. The absence of universal applications is apt to raise concerns about unfair competition. So, recalling all that fuss about not leaving the carbon emissions issue to the International Civil Aviation Organization (ICAO) to come up with a global procedure (instead of the EU going ahead on its own to introduce the carbon emissions trading scheme in this specific case), this may be an opportunity for international aviation agencies to not later regret being sidelined.

US Department of Transportation introduces new passenger protection rules

UPHOLDING the air traveller’s rights is a tricky matter. The European Union (EU) has introduced laws that bind airlines to compensate their customers for service lapses such as flight delays and cancellations. Canada has also introduced a passenger bill of rights that spells out specific passenger entitlements.

Come Jan 24, it will be illegal for airlines in the United States to advertise the fare without including all taxes and surcharges. Until now, airlines publish only the base fare, which watchdog consumer protection organisations say is deceptive.

One would think that the rule is fair and reasonable, yet it has met with opposition with some operators claiming it to be violating an airline’s right to free speech and contradicting the spirit of the Airline Deregulations Act. It’s all fluff. No airline has the right to mislead its customers by withholding information. The present practice makes comparative shopping difficult and does not help consumers make an informed decision.

In some countries including the US, it is normal for retailers not to include taxes in the prices of their goods and consumers must expect the additional cost. But there is a noticeable difference here. Add-ons vary from airline to airline not only in amount such as the fuel surcharge but also in the range of fees such as weekend surcharge. There is no knowing for sure how much more you would have to pay on top of the base fare.

The airlines have also argued that showing the full cost of the ticket may give the impression that prices have gone up. It only goes to show how selective information can shape the perception, whether well-intended or otherwise.

Nevertheless, despite the protest from airlines, travel agencies and other aviation bodies which are petitioning to defer implementation of the new rule, the US Department of Transportation (DOT) looks set to push ahead with it along with other measures “to enhance the air travel environment for consumers.”

In fact, this is an extension of a rule that is already applicable to online advertising. In Aug, DOT fined Air Canada US$50,000 for deceptive price advertising online. The Canadian flag carrier failed to disclose the amount of taxes and fees that passengers would have to pay in addition to the advertised fare. US Transportation Secretary Roy LaHood said: `When passengers buy an airline ticket, they have a right to know how much they will have to pay.”

The new rules will also apply to foreign carriers, and the International Air Transport Association (IATA) claims they are an infringement of extraterritorial rights. Considering the context of their application, IATA will have to do better than citing the same argument that it had used against the European Union’s carbon emissions trading scheme.

Other measures to be introduced by DOT include:

• full disclosure of baggage fees and allowances for carry-on and checked baggage;
• adoption of a tarmac contingency plan to allow passengers the opportunity to deplane if the plane is grounded for more than three hours (domestic flight) or four hours (international flight), and the relay of information every thirty minutes to include the reason for the delay, if known’
• an increase in the minimum compensation for denied boarding.

Of these, airlines are most concerned that increasing the compensation for involuntary offloading may discourage voluntary offloading – a common practice in the US when a flight is oversold – unless higher incentives are being offered.

Airlines seem concerned that the new rules would adversely affect their bottom-line. Apart from the costs of revamping procedures, systems and advertising materials to accommodate new requirements, they are perhaps more concerned about how the competition may be affected by better informed passengers.