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Ancillary fee rule delayed until 2012

19-May-2011

Much to the disappointment of consumer advocates, the Department of Transportation said it would not tackle the new ancillary fee disclosure rule until next year. It punted the issue in its recently published consumer rule-making but said it wanted more information on costs and benefits along with consequences for US and foreign carriers for providing information to global distribution systems.

The delay makes little difference because GDSs are woefully behind in developing the technology to display such fees which have been in existence since at least 2006. In addition, GDSs are at the centre of a pitched battle with airlines.

Airlines want access to the customer information now held by GDSs. They also want to be able to market directly to those customers using profiles to bundle products together that suit the customer in a move to increase revenues. Finally, they want to deal directly with the customer and American is pushing its Direct Connect programme, also used by other carriers.

American and US Airways have filed lawsuits against Sabre, charging GDSs violate US antitrust laws. In the meantime, they have cut new deals with online travel agency Expedia for the OTA to use Direct Connect when booking their flights. Even so, Expedia must still develop the technology for ancillary fees to be included.

Business Travel News reported the earliest the rule could come out is next January, with a six-month comment period for a proposed rule that would develop policies for disclosing fees in global distribution systems and on airline websites. In the meantime, the new consumer rule mandated disclosure of fees on airline websites, something they already do.

DOT is worried that rushing development of the rule will lead to unintended consequences. It probably also wants to see what develops from the current law suits and airline-GDS negotiations. But it already has a ton of comments provided during the comment period for the consumer rule. The department will take the summer to develop a proposal on fee disclosure and it should be on DOT Secretary Ray LaHood’s desk by the end of August, according to BTN. It then must go for vetting to the Office of Management and Budget which often takes months.


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