New DOT Rules Take Effect Today

By | August 23, 2011

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The U.S. Department of Transportation rules announced back in April are set to take effect today. However, many of the aspects of the ruling have been postponed at the request of the airlines, due implementation issues. The following come into effect today:

  • Refund of Bag Fees is your Bag is Lost….not if your bag is delayed
  • Involuntary denied boarding entitled you to cash compensation of four times the value of your ticket up to $1300. Emphasize cash…most airlines try to get you to take a travel voucher.
  • Prominent disclosure of ancillary fees on the airline website.
  • Four Hour Tarmac Delay rule on International Fights, extended to foreign carriers as well.

The other provisions delayed until January 24th include:

  • Promptly notify passengers of cancellations or delays of more than 30 minutes
  • 24 Hour Hold or Cancellation for reservations made at least a week in advance
  • Include all government taxes in advertised fares, which currently exclude them.
  • Locking in of airfares after purchase, unless it is a result of government taxes and fees agreed to by the passenger

There are legitimate infrastructure issues in setting up the holding of reservations and the quoting of taxes in an advertised fare, namely because the taxes, especially on international flights, are subject to change and may change, especially with the lead time on preparing an advertisement for distribution. There is no reason their websites cannot do it in realtime though. The DOT intends to regulate these rules very closely, which means levying fines if airlines are in noncompliance.

Will these regulations help consumers? We believe nothing is harmed by requiring any company to be clear and upfront about its prices and rules(perhaps someone can go after the banking and credit card industries on that a bit more). The locked-in nonrefundable nature of tickets means a grace period is also a good consumer benefit. But despite all this, we must be skeptical on the consumer side. Just because the rules are prominently displayed and easily located does not mean people will read them. Online, how many people accept the Terms and Conditions of some website without reading them…See Richard Dreyfus’ dramatic reading of the Apple End User License Agreement as an example.

While you can require upfront disclosure, and should, human nature means that people will still be confused. But you can’t regulate based on that.