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A4A Urges DOT to Abandon Regulatory Overreach, Put Consumers First

October 2, 2014 Association No Comments Email Email

Airlines for America (A4A), the industry trade organization for the leading U.S. airlines, today urged the Department of Transportation (DOT) to put consumers first by letting the market work and not distorting it, and avoiding the unintended consequences of the agency’s proposed new rule.

DOT’s proposed rule dictating how airlines distribute their products and services, and when and how prices for optional services are disclosed in the booking process, would have the perverse effect of diminishing competition and technical innovation, which in the long run is bad for consumers. The practical effect of DOT’s rule, a throw-back to the kind of prescriptive regulation Congress rejected when it deregulated the industry, would be to enhance the market power of the two Global Distribution Systems (GDS) in the United States, insulating them from competition and increasing costs for consumers. Even the DOT’s cost-benefit analysis of this new proposed rule demonstrates that the costs outweigh the benefits.

“Airlines are fully transparent, all pricing information is already readily available to travelers at the click of a button, and customers always know the full price of their ticket before purchase,” said A4A Senior Vice President and General Counsel David Berg, who also serves on the Advisory Committee on Consumer Protection. “Airlines have different business models and offer a wide range of choices to customize the travel experience. They must be allowed to continue offering optional services in a manner that makes sense for both customers and the industry.”

The government does not prescriptively tell other industries (hotels, computer makers, rental car companies) how they should sell their products, and airlines believe consumers are best served when the companies they do business with are able to tailor products and services to meet their individual needs.

Berg noted that DOT action is not needed because the marketplace is working, as several airlines have already reached agreements with GDSs to distribute optional services.

“DOT’s proposed rule does not recognize how the market has changed in the last two years,” said Berg. “Innovation and competition are critically important forces to enhancing the overall travel experience for airline customers. DOT’s proposed rule is a solution in search of a problem, which will only serve to stifle the technological innovation that connects consumers with the information they expect, need and deserve.”

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