Enhancing Airline Passenger Protections Notice of Proposed Rulemaking (NPRM) U.S. Department of Transportation [Docket No. DOT OST ]

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1 Enhancing Airline Passenger Protections Notice of Proposed Rulemaking (NPRM) U.S. Department of Transportation [Docket No. DOT OST ] Comments from Consumers Union INTRODUCTION Consumers Union thanks and commends Transportation Secretary Raymond LaHood and his staff for being such strong advocates for airline passengers both in the U.S. and abroad and for strengthening the DOT s oversight of consumer issues. The implementation of new airline tarmac delay rules in April, coupled with these proposals for Enhancing Airline Passenger Protection, have sent a strong message to the airline industry that the rights of consumers are no longer being ignored. When Secretary LaHood announced these proposed consumer protections, he stated: Airline passengers have rights and should be able to expect fair and reasonable treatment when they fly. With this rulemaking, we re proposing to strengthen the consumer protections enacted last month and raise the bar for airlines when it comes to treating passengers fairly. Consumers Union agrees, and is providing these comments in support of the NPRM proposals. However, we also are putting forth additional recommendations of our own, to expand and strengthen the DOT s proposed rules. It should be noted that many of Consumers Union s proposals also have been submitted to Secretary LaHood s Future of Aviation Advisory Committee, through William J. McGee, a consultant to Consumers Union on travel and aviation issues and a member of the FAAC. (Consumers Union also has submitted proposals to the FAAC in the areas of Safety and

2 The Environment.) The relevant Competition/Passenger proposals are listed below. CONSUMERS UNION PROPOSALS TO THE FUTURE OF AVIATION ADVISORY COMMITTEE, COMPETITION SUBCOMMITTEE PROPOSAL: DOT SHOULD IMPLEMENT A UNIFIED PASSENGER BILL OF RIGHTS. Since 2005, the European Union has enforced a single, straightforward, comprehensive set of rules for passengers flying within Europe (a summary is attached). These regulations have proved to be quite effective and can easily be interpreted by passengers and airlines alike; subsequently they have led to an increase in customer satisfaction and clarity for airlines. For years the DOT has enforced a single set of standards for mishandled baggage, a regulation the DOT strengthened earlier this month while also strengthening compensation for passengers involuntarily denied boarding. Now the DOT needs to implement clear and inclusive regulations on other key issues for all passengers flying within the U.S., including: * transparency in airline pricing, including ancillary fees * transparency in flight operations, such as code-sharing and commuter operations * compensation for lengthy flight delays * compensation for flight cancellations Further, the DOT needs to strengthen its Aviation Consumer Protection and Enforcement division by establishing an Airline Passenger Rights Ombudsman, who would be an intrinsic component in shaping DOT and FAA commercial aviation policies. PROPOSAL: DOT SHOULD EXAMINE AND ENFORCE COMPETITION. In February, Representative James Oberstar, Chairman of the House Transportation and Infrastructure Committee, announced legislation to examine reduced levels of competition resulting from antitrust immunity for airline alliances and consolidation. Through its Office of Inspector

3 General, and in consultation with the Department of Justice, the DOT should examine such issues as well, to ensure competition remains robust and consumers are well served. Because of federal preemption in the airline industry, many voices are not heard; therefore the DOT should consult with the consumer protection divisions of state attorneys general offices to broaden its understanding in how best to enforce competition. PROPOSAL: DOT SHOULD SUPPORT THE ESSENTIAL AIR SERVICE PROGRAM. As noted in the FAAC charter, some aspects of the Essential Air Service program have not been revised since deregulation took effect in However, the need for the EAS program is greater than ever, as legacy airlines continue to consolidate and low cost carriers continue to be quite selective about where they expand their route maps because of their business models. The DOT should reexamine the criteria for inclusion in the EAS program based on current data, and continue to support EAS, since a vigorous commercial air service network is essential to America's economy, infrastructure, and security. Incentives to smaller and low cost carriers may be one method to explore. A NOTE ON AIRLINE CODE-SHARING PRACTICES There is one overriding concern that applies to several of the Consumers Union proposals detailed below. In key ways, the methods by which the Department of Transportation and the Federal Aviation Administration oversee and regulate the domestic airline industry have rather quickly become outdated. Specifically, this is because long-standing policies and procedures have been superseded by the dramatic growth in marketing code-sharing agreements, whether they take the form of bilateral airline deals, international alliances, or the most common form regional airline partnerships. Many American consumers undoubtedly do not realize just how

4 ubiquitous regional airline service has become in recent years, as commuter partners of major carriers have assumed a much greater role. In 2008, regional airlines carried 159 million U.S. passengers, almost twice as many as the 82 million transported in They now operate 50% of all domestic flights and carry 25% of all passengers and those percentages continue to grow. The DOT estimates regional airlines now operate 13,000 domestic flights every day and carry more than 160 million passengers. This means that every month millions of consumers are unaware they are buying tickets on Airline A, yet will be transported on Airline B (and perhaps Airline C and Airline D as well). Unfortunately, among code-sharing partners there can be tremendous differences in service, amenities, seat pitch, ontime performance, baggage handling, and many other criteria. An even more critical issue is safety, since the FAA compiles safety statistics and ranks incidents and accidents of regional carriers separately from their major carrier partners. Thus in recent years we have seen several fatal regional airline accidents even as the industry states there have been no major fatal accidents over the same span. Currently the Office of the Inspector General of the U.S. Department of Transportation, the National Transportation Safety Board, and the House Aviation Subcommittee are examining such issues. Consumers Union urges greater transparency in how airline tickets are marketed and sold, so that all consumers fully understand the implications of the flights they book and are clear which carrier(s) will operate those flights. We believe there should be one standard of safety for all partners of Part 121 carriers, even if those carriers operate under separate FAA standards. Therefore Consumers Union urges the FAA to

5 reexamine how it oversees and compiles statistics on regional airline partners of major carriers. In addition, Consumers Union urges the DOT to reassess how it collects data and ranks carriers in its monthly Air Travel Consumer Reports. These reports have long been of tremendous value to airline passengers, but unfortunately that value has diminished in recent years. That is because, as noted, half of all domestic flights are operated by regional airline partners now and these regional airlines are not assessed in conjunction with the major airlines. Therefore, it does not help a consumer to know that Major Airline A ranks high in on-time performance if a given flight is operated by Regional Airline B. Further complicating this process is that many regional airlines operate on behalf of multiple major carrier partners, so the performance statistics are muddied beyond comprehension. Consumers Union suggests regional airline partners many of which are not among the largest reporting carriers be required to report monthly data specifically for each of their major airline partners, and that the DOT compile and rank these data together. What follows are Consumers Union s comments on each of the proposals put forth by the DOT. TARMAC DELAY CONTINGENCY PLANS Consumers Union supports these proposals and recommends they should be adopted (with additional comments below): * Expand the pool of carriers that are required to adopt and adhere to tarmac delay contingency plans to include foreign air carriers operating to and from the U.S. with at least one aircraft with 30 or more passenger seats. * Expand the airports at which airlines must adhere to the contingency plan s terms to include small hub and non-hub airports, including diversion airports.

6 * Require notification regarding the status of the tarmac delay (i.e., notify passengers every 30 minutes of reasons for tarmac delay). * Require coordination of plans with Transportation Security Administration (TSA) and U.S. Customs and Border Protection at any U.S. airport that is regularly used for that carrier s international flights, including diversion airports. Early results clearly indicate the tarmac delay policies implemented by the DOT have been quite successful. Since their introduction in April, tarmac delays have been reduced dramatically, and there has not been an increase in flight cancellations (as some predicted). The DOT should be commended for this policy, and it should be expanded to provide greater coverage for consumers. As noted above, Consumers Union believes these provisions also should apply to major carrier regional airline partners in all cases. TARMAC DELAY DATA Consumers Union supports these proposals and recommends they should be adopted (with additional comments below): * Require the 18 largest U.S. carriers (i.e., reporting carriers) that are already required to provide tarmac delay data for their domestic scheduled flights to provide such data for their public charter service and international flights. * Expand the pool of carriers that must file information with the Department regarding tarmac delays from just the 18 largest U.S. carriers to U.S. carriers and foreign carriers that operate any aircraft with 30 or more passenger seats. These requirements are particularly important, because they will expand the reach of these policies to provide coverage for many airline passengers currently not protected.

7 CUSTOMER SERVICE PLANS/CONTRACTS OF CARRIAGE The DOT s proposals for customer service plans are as follows: * Expand the pool of carriers that are required to adopt, follow and audit customer service plans to include foreign air carriers operating to and from the U.S. with at least one aircraft with 30 or more passenger seats. Foreign carriers are not currently covered by the rule. * Establish standards for the subjects carriers must cover in customer service plans (e.g., allowing reservations to be held at the quoted fare without payment, or cancelled without penalty, for at least twenty-four hours after the reservation is made). The DOT s proposals for contracts of carriage are as follows: * Require carriers (U.S. and foreign) to include their contingency plans and customer service plans in their contracts of carriage. * Require foreign carriers to post contracts of carriage on their websites which is already required of U.S. carriers. While Consumers Union agrees with the spirit of these proposals, we feel they need to be strengthened. Earlier this year Consumers Union conducted an examination of the customer service plans and contracts of carriage posted by the largest domestic carriers, and we found the following: * Many contracts of carriage and customer service plans are very difficult to locate on the airlines own branded sites, and some are difficult to find even using the sites internal search functions. * There is no uniformity from airline to airline even when it comes to defining the causes of delayed and cancelled flights, and each airline interprets force majeure and act of God events differently. * There is no uniformity from airline to airline in stating the provisions offered to passengers for oversold, delayed, and cancelled flights even among airline code-sharing partners.

8 * By comparing current contracts of carriage with contracts of carriage examined by Consumers Union in years past, it is clear that the contracts have become not only more confusing, but more vague as well. Specifically, terms such as the carrier shall or the carrier will have been replaced by terms such as the carrier may. * In many cases, those provisions that are stated are wholly inadequate as compensation for oversold, delayed, and cancelled flights. It is apparent the average passenger will experience difficulty 1) in finding the contract of carriage; 2) in finding the appropriate passage; and 3) interpreting the legalese imbedded in these documents. Furthermore, in a real-world scenario it often has become impossible for a passenger to determine the specific cause of a delayed or cancelled flight, either online, by telephone, or in person at an airport, where often staffing has been both downsized and outsourced. Even the savviest of passengers experience an informational vacuum and are unsure how to proceed. Therefore asserting their rights has become impractical for millions of passengers every year. For all these reasons, Consumers Union urges the DOT to adopt and implement a comprehensive Unified Passenger Bill of Rights, based on the European Union model, as stated above. RESPONSE TO CONSUMER PROBLEMS Consumers Union supports this proposal and recommends it should be adopted: * Expand the pool of carriers that must respond to consumer problems to include foreign air carriers operating to and from the U.S. with at least one aircraft with 30 or more passenger seats (i.e., monitor the effects of irregular flights on consumers; inform consumers how to file a complaint with the carrier, and provide substantives responses to consumer

9 complaints within 60 days). Foreign carriers are not now covered. OVERSALES Consumers Union supports these proposals and recommends they should be adopted: * Increase the minimum denied boarding compensation (DBC) limits to $650/$1,300 to account for actual CPI increase since (The last increase about 2 years ago only doubled the 1978 limits of $200/$400 to $400/$800.) * Implement an automatic inflation adjuster for minimum DBC limits every 2 years. * Clarify that DBC must be offered to zero fare ticket holders (e.g., frequent flyer award tickets) who are involuntarily bumped (fare paid by passengers with zero fare ticket for calculating DBC is the lowest cash, check, or credit card payment charged for a comparable class of ticket on the same flight). * Require that a carrier verbally offer cash/check DBC if the carrier verbally offers a travel voucher as DBC to passengers who are involuntarily bumped. * Require that a carrier inform passengers solicited to volunteer for denied boarding about its principal boarding priority rules applicable to the specific flight and all material restrictions on the use of transportation vouchers in lieu of cash. FULL FARE ADVERTISING Consumers Union supports these proposals and recommends they should be adopted (with additional comments below): * Enforce the full fare advertising rule as written (i.e., ads which state a price must state the full price to be paid). Carriers currently may exclude government taxes/fees imposed on a per-passenger basis. * Clarify the rule s applicability to ticket agents.

10 * Prohibit carriers and ticket agents from advertising fares that are not the full fare and impose stringent notice requirements in connection with the advertisement of each-way fares available for purchase only on a roundtrip basis. * Prohibit opt-out provisions in ads for air transportation. The DOT should make clear that clarifying this rule for ticket agents includes ALL conceivable ticket agents, including online sellers of travel. Furthermore, the DOT should continue to enforce these rules and, where applicable, punish carriers that violate them. (One domestic airline has been cited repeatedly by the DOT in recent years for its wrongful interpretations of these rules.) BAGGAGE AND OTHER FEES AND RELATED CODE-SHARE ISSUES Consumers Union supports these proposals and recommends they should be adopted (with additional comments below): * Require U.S. and foreign air carriers that maintain a website accessible to the general public to prominently disclose on the homepage of such website any increase in the fee for checked or carry-on baggage or any change in the free baggage allowance for checked or carry-on bags. * Require U.S. and foreign air carriers that issue e-ticket confirmations to passengers to include information regarding their free baggage allowance and/or the applicable fee for a carry-on bag and the first and second checked bag on the e- ticket confirmation. * Require U.S. and foreign air carriers that have a website accessible to the general public to disclose all optional services that have fees to consumers through a prominent link on their homepage that leads directly to a listing of those fees. * Request comment on requiring carriers to provide up-to-date information on all ancillary fees to global distribution systems

11 to make sure the information is available to both Internet and brick and mortar travel agencies. The topic of ancillary airline fees has become a hot-button issue for American consumers, particularly when it comes to baggage. This year the DOT reported that domestic airlines generated $7.8 billion in revenues from passenger fees in 2009, an increase of 42% over 2008 and those numbers continue to increase in Much of this revenue is generated by services that were built into the price of tickets to consumers for decades, such as checking baggage, carrying on baggage, booking through toll-free reservations lines, and ordering soft drinks, snacks, pillows, and audio headsets onboard. Other revenue is being collected for services that do not cost the airlines at all, such as selecting preferred seats. Some domestic carriers even charge for online bookings. In the June 2010 issue of CONSUMER REPORTS, Consumers Union published a recent survey of 2,000 Americans about their satisfaction with airlines, hotels, and rental car companies. When consumer gripes were scored, annoyance over baggage fees (8.4 on a 10-point scale) and added airline fees (8.1 on a 10-point scale) outscored all other complaints in a total of 24 categories. Such anger is on full display at the MadAsHellAboutHiddenFees.com site, a joint undertaking from the American Society of Travel Agents, Business Travel Coalition, and Consumer Travel Alliance. Secretary LaHood himself has expressed displeasure with such fees. And as Sen. Charles Schumer has noted, by shifting once-essential services such as checked baggage to a fee-based system, airlines are avoiding paying taxes on such revenue, thereby harming consumers. Furthermore, according to the Interactive Travel Services Association, nearly two-thirds of the nation s domestic airline

12 passenger revenue was processed through agency channels in 2008, so it is imperative that the interests of these consumers whether they are traveling for business or pleasure are protected in the same way as those who book directly with airlines. Previously the DOT has required full disclosure with respect to code sharing and change of gauge, and Consumers Union believes the same requirements should apply to fee information. POST-PURCHASE PRICE INCREASES Consumers Union supports this proposal and recommends it should be adopted (with additional comments below): * Ban the practice of post-purchase price increases. Airline pricing, with its many arcane and ever-shifting rules, has long confounded the flying public. Eliminating price increases that occur after a consumer has purchased a ticket is a necessary and long-overdue measure and it should be implemented immediately. In addition, the DOT should examine additional airline pricing rules, such as back-to-back ticketing, hidden-city ticketing, stayover requirements, and purchase requirements to determine if such rules are legal and in the best interests of consumers. FLIGHT STATUS CHANGES The DOT s proposals for flight status changes are as follows: * Require reporting carriers to promptly notify passengers in the boarding gate area that is open for that flight of changes to their domestic scheduled flights as a result of delays or cancellations (notification method may be by a verbal announcement, display board, etc.).

13 * Require reporting carriers to promptly update all domestic scheduled flight information under their control at airports regarding changes to the status of particular flights as a result of delays or cancellations. * Require reporting carriers to promptly update flight status details available on their websites and through their telephone reservation systems. * Require a ticket or gate agent of reporting carriers to provide, upon request, up-to-date information on changes to a carrier s scheduled flights as a result of delays or cancellations. Consumers Union supports these proposals and recommends they should be adopted. However, the language should be strengthened to include the following: * Domestic carriers operating public charter service and international flights; * Foreign air carriers operating to and from the United States; * All code-sharing and regional airline partners of major domestic carriers. CHOICE-OF-FORUM PROVISIONS Consumers Union supports this proposal and recommends it should be adopted (with additional comments below): * Prohibit U.S. and foreign air carriers from limiting a passenger s forum to a particular inconvenient venue. (Specifically permit consumers to file suit wherever a carrier does business, which generally includes where the consumer lives/bought the ticket.) Because the U.S. airline industry has long operated under federal preemption, state and local governments have been prohibited from legislating any commercial aviation policies. This was vividly demonstrated in 2008, when the Airline Passenger Bill of Rights signed into law in New York State was promptly struck down by a federal court, despite noting the measure was laudable in its intent. In addition, because of

14 federal preemption U.S. consumers have been unable to redress grievances against airlines in state and local courts. Consumers Union recognizes the intent of federal preemption, which was instituted to prevent a maze of complex and perhaps even contradictory state and local laws for an industry that by its very nature embodies interstate commerce. However, U.S. air carriers also operate overseas in dozens of foreign countries, and are forced to adhere to local laws in those nations. Consumers Union urges the DOT to examine the issue of federal preemption, and discern in what ways state and local courts in the United States can be given greater power to adjudicate consumer issues when passengers file grievances against airlines based in distant cities. PEANUT ALLERGIES The DOT s proposals for peanut allergies are as follows: * Solicit comment on three options to providing greater access to air travel for persons with peanut allergies: 1) Banning the serving of peanuts and all peanut products by both U.S. and foreign carriers on flights covered by DOT s disability rule; 2) Banning the serving of peanuts and all peanut products on all such flights where a passenger with a peanut allergy is on board and has requested a peanut-free flight in advance; 3) Requiring a peanut-free buffer zone in the immediate area of a passenger with a medically-documented severe allergy to peanuts if passenger has requested a peanut-free flight in advance. * Solicit comment on whether it is preferable to maintain the current practice of allowing carriers to serve peanuts on aircraft without any restriction.

15 Consumers Union has long been involved in diagnosing and reporting on peanut allergies, particularly through updates on its Health Blog such as this: (blogs.consumerreports.org/health/2009/02/peanutproblems-in-a-nutshell.html). Given the life-or-death consequences of exposing those who suffer from this allergy to peanuts (particularly in the tight confines of a pressurized aircraft with limited fresh air circulation), it is apparent there is no margin for error. Furthermore, the modern commercial air travel system is not adaptable to isolating particular passengers within specified buffer zones of an aircraft. Recently the industry has posted record-high load factors, leaving many flights with little flexibility for moving and/or isolating passengers. It is also common practice for passengers at their own request or involuntarily by decree from an airline or airlines to be shifted from one flight to another on short notice, thereby changing the complexion of an allergen-free flight at the final moment. Currently airline passengers are issued seat assignments in myriad ways and from multiple sources, including outside sellers of travel, both offline and online, so implementing such procedures will complicate already complicated booking channels. In addition, some domestic carriers, most notably Southwest Airlines, allow passengers to select their own seats, making buffer zones nearly impossible to implement. What s more, the potential for communication errors between airlines and their code-sharing and regional commuter partners only exacerbates this issue. Finally, flight attendants always the last line of defense in the implementation of such policies would be forced to expand upon their already overtaxed list of duties, diverting their energies from critical safety issues. In short, isolating allergic passengers will not work, and maintaining the current practice is not acceptable.

16 Therefore Consumers Union urges the DOT to implement the first option: Ban the serving of peanuts and all peanut products by both U.S. and foreign carriers on flights covered by DOT s disability rule. ABOUT CONSUMERS UNON Consumers Union of United States, Inc., publisher of Consumer Reports, is a nonprofit membership organization chartered in 1936 to provide consumers with information, education, and counsel about goods, services, health and personal finance. Consumers Union's publications and services have a combined paid circulation of approximately 8.3 million. These publications regularly carry articles on Consumers Union's own product testing; on health, product safety, and marketplace economics; and on legislative, judicial, and regulatory actions that affect consumer welfare. Consumers Union's income is solely derived from the sale of Consumer Reports, its other publications and services, fees, noncommercial contributions and grants. Consumers Union's publications and services carry no outside advertising and receive no commercial support. Consumers Union 101 Truman Avenue Yonkers, New York September 2010