Airlines are going to have to start being up front and honest about their real airfare costs. Under new rules that got the approval by the U.S. Court of Appeals, airlines must prominently advertise honest plane ticket prices that include taxes and fees in the cost.
The mandate is being set so that airlines are truthful when telling customers how much a plane ticket is by displayng the real price that includes taxes and fees, which customers don't get to see until the end of the booking process in many cases. The rules require that airlines must show the real total price of a ticket in the largest type size and it must be the most prominent price in the ad of on the website.
Airlines, obviously angry by the new rules which could hurt business tried to challenge the order in U.S. appeals court. However the requests by Allegiant Travel Co, Southwest Airlines Co and Spirit Airlines Inc, were turned down. Airline companies tried to argue that their way of advertising base fares is not misleading and that under the First Amendment, they should have the freedom to choose how prominently taxes and additional fees are displayed. Many airlines include the original ticket price and mention the additional fees and taxes in the hard to see fine print in the bottom of ads.
The court sided with the government in a 2-1 decision. Judge David Tatel of the U.S. Court of Appeals for the District of Columbia Circuit cited evidence which "sufficiently supports the intuitive conclusion that customers are likely to be deceived by price quotes significantly lower than the actual cost of travel," according to Reuters.
According to the rules, finalized by the U.S. Transportation Department in 2011, airlines must show "the entire price to be paid by the customer," in their ticket price advertisements and the department has the right to regulate the prices that are shown, according to CBS.
For customers, the rules that require the total costs to be posted will be beneficial as taxes and government fees can make up close to 20 percent of a ticket's full price. Customers agree with the move, but they have hopes that it is taken even further. They want airlines to display common costs such as baggage fees as well.
Kate Hanni, director of flyers' rights for FlyersRights.org, said that advertising the real price should have been mandatory all along. "It's just completely deceptive not to tell people what the full cost of their ticket is," she said as quoted by Reuters
In addition to showing the total price that includes fees in advertisements, airline can give a separate breakdown of taxes and other costs which must be not be displayed prominently, meaning the breakdown of the additional costs can be included in small print.
Judge Raymond Randolph, the dissenting judge disagreed with the total price being shown in a larger print than the taxes and fees. He wrote that "only a fool would confuse or misunderstand" the difference between a total price and the additional taxes and fees as long as they're labeled, so there's no real benefit in printing the total price larger. He agreed with the airlines and believes that the regulation restricts the airlines' political speech.
Airlines are clearly disappointed in the decision, but the new approval has no effect on them as many have already put this up front ticket price practice into place since the Department of Transportation finalized it in 2011. For instance, Southwest Airlines has been following the rules since January. "So while we're disappointed in the court's decision, it has no further impact on us," said Southwest spokesman Chris Mainz.
Spirit Airlines has also been following the rules, but spokesman Misty Pinson believes that American travelers will wind up paying even more for air travel as the airline industry is "already over-regulated and over-taxed." Spirit airlines has already decided to start charging $100 for carry-on luggage on round-trip flights to offset airline taxes and spending.
The court also upheld two other rule changes that Allegiant and Spirit challenged. The rule requires passengers to have the ability to cancel a ticket without a penalty within 24 hour of purchase if the tickets were bought more than a week in advance. The other rule is a a prohibition against raising costs like baggage fees after a customer has bought tickets.