[Federal Register Volume 82, Number 12 (Thursday, January 19, 2017)]
[Proposed Rules]
[Pages 7536-7560]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00904]



[[Page 7535]]

Vol. 82

Thursday,

No. 12

January 19, 2017

Part XVI





Department of Transportation





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14 CFR Part 399





Transparency of Airline Ancillary Service Fees; Proposed Rule

  Federal Register / Vol. 82 , No. 12 / Thursday, January 19, 2017 / 
Proposed Rules  

[[Page 7536]]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 399

[Docket No. DOT-OST-2017-0007]
RIN 2105-AE56


Transparency of Airline Ancillary Service Fees

AGENCY: Office of the Secretary (OST), Department of Transportation 
(DOT).

ACTION: Supplemental Notice of Proposed Rulemaking (SNPRM).

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SUMMARY: This SNPRM proposes to require air carriers, foreign air 
carriers, and ticket agents to clearly disclose to consumers at all 
points of sale customer-specific fee information, or itinerary-specific 
information if a customer elects not to provide customer-specific 
information, for a first checked bag, a second checked bag, and one 
carry-on bag wherever fare and schedule information is provided to 
consumers. This SNPRM further proposes to require each covered carrier 
to provide useable, current, and accurate (but not transactable) 
baggage fee information to all ticket agents that receive and 
distribute the carrier's fare and schedule information, including 
Global Distribution Systems and metasearch entities. On covered carrier 
and ticket agent Web sites, the SNPRM would require the baggage fee 
information to be disclosed at the first point in a search process 
where a fare is listed in connection with a specific flight itinerary, 
adjacent to the fare. The SNPRM would permit carriers and ticket agents 
to allow customers to opt-out of receiving the baggage fee information 
when using their Web sites.

DATES: Comments must be received by March 20, 2017. Comments received 
after this date will be considered to the extent practicable.

ADDRESSES: You may file comments identified by the docket number DOT-
OST-2017-0007 by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and follow the online instructions for submitting 
comments.
     Mail: Docket Management Facility, U.S. Department of 
Transportation, 1200 New Jersey Ave. SE., Room W12-140, Washington, DC 
20590-0001.
     Hand Delivery or Courier: The Docket Management Facility 
is located on the West Building, Ground Floor, of the U.S. Department 
of Transportation,1200 New Jersey Ave. SE., Room W12-140, between 9 
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
     Fax: 202-493-2251.
    Instructions: You must include the agency name and the Docket 
Number DOT-OST-2017-0007 or the Regulatory Identification Number (RIN) 
for the rulemaking at the beginning of your comment. All comments 
received will be posted without change to http://www.regulations.gov, 
including any personal information provided.
    Privacy Act: Anyone is able to search the electronic form of all 
comments received in any of our dockets by the name of the individual 
submitting the comment (or signing the comment if submitted on behalf 
of an association, a business, a labor union, etc.). You may review 
DOT's complete Privacy Act statement in the Federal Register published 
on April 11, 2000 (65 FR 19477-78), or you may visit http://DocketsInfo.dot.gov.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov or to the street 
address listed above. Follow the online instructions for accessing the 
docket.

FOR FURTHER INFORMATION CONTACT: Kimberly Graber or Blane A. Workie, 
Office of the Assistant General Counsel for Aviation Enforcement and 
Proceedings, U.S. Department of Transportation, 1200 New Jersey Ave. 
SE., Washington, DC 20590, 202-366-9342 (phone), 
[email protected] or [email protected] (email).

SUPPLEMENTARY INFORMATION: 

Background

    The Notice of Proposed Rulemaking, titled Transparency of Airline 
Ancillary Service Fees and Other Consumer Protection Issues, Docket No. 
DOT-OST-2014-0056, 79 FR 29970, May 23, 2014 (Consumer Protection 
NPRM), contained a number of proposals to enhance consumer protections, 
including a proposal to require the disclosure of certain airline 
ancillary service fees. This proposed disclosure requirement was one of 
the more controversial provisions of the rulemaking and generated 
significant comments from consumers, airlines, ticket agents and other 
interested parties. In light of the comments on this issue, the 
Department is issuing this SNPRM, which focuses solely on the issue of 
transparency of certain ancillary service fees. The other issues in the 
2014 NPRM are being addressed separately. See RIN 2105-AE11, Enhancing 
Airline Passenger Protections III; and RIN 2105-AE57, Enhancing Airline 
Passenger Protections IV.
    In this SNPRM, the Department proposes to require disclosure at all 
points of sale of the customer-specific fees for first and second 
checked bag and carry-on bag but does not propose to require disclosure 
of the fee for advance seat assignment. In addition, the Department 
proposes to require carriers to provide certain baggage fee information 
to ticket agents so that both carriers and ticket agents would be able 
to provide customer-specific baggage fee information to consumers. We 
invite all interested parties to comment on the proposals set forth in 
this notice. Our final action will be based on comments and supporting 
evidence from the public filed in this docket, and on our own analysis 
and regulatory evaluation.

A. Need for Rulemaking and Legal Authority

    The NPRM: In the NPRM, the Department described the problem 
identified by consumers and consumer advocacy groups of the lack of 
transparency of ancillary service fees in air transportation pricing. 
That is, not being able to determine the true cost of travel due to the 
lack of information regarding certain ancillary service fees. This lack 
of transparency of fees for unbundled services (i.e., services that 
historically had been included in the air fare but for which many 
carriers now charge a separate fee is particularly notable when 
consumers are attempting to purchase air transportation through a 
ticket agent rather than directly from the carrier but it occurs at 
both ticket agent and airline outlets. Corporate travel agents have 
also complained about the lack of access to ancillary service fee 
information.
    Online travel agencies (OTAs), metasearch sites, ``traditional'' 
travel agencies, and travel management companies generally obtain most 
of their information regarding air transportation options indirectly 
through Global Distribution Systems (GDSs). GDSs essentially facilitate 
the purchase of tickets between airlines and consumers through third 
parties but do not have complete information regarding ancillary 
service fees. As a result, when researching air transportation options 
and making decisions on whether to purchase air transportation, 
consumers continue to have difficulty determining the total cost of 
travel because the fees for basic ancillary services are not available 
through all sales channels. Consumers also experience difficulty on 
carrier Web sites because fees are provided on lengthy static lists, 
and many ancillary service fees are listed as a range, so consumers do 
not necessarily know the

[[Page 7537]]

specific fees that apply to their travel when purchasing air 
transportation. With respect to baggage, the existing disclosure 
requirements mandate specific information if a carrier or a ticket 
agent has a Web site accessible for ticket purchases by the general 
public in the United States, but passengers must frequently review 
lengthy and complex charts to determine the exact baggage fees that 
apply to their air transportation particularly for interline or 
international itineraries.
    The Department's goal is to protect consumers from hidden and 
deceptive fees and enable them to determine the true cost of travel in 
an effective manner when they price shop for air transportation. The 
problem of hidden fees has been brought to our attention by consumer 
complaints, comments on the second Enhancing Airline Passenger 
Protections rulemaking, and comments to the docket for the Advisory 
Committee for Aviation Consumer Protection. We also note that members 
of Congress representing constituents have expressed support for full, 
more specific, disclosure of ancillary service fees.
    In the 2014 NPRM, we provided an overview of the airline 
distribution system based on information gathered from representatives 
of carriers, GDSs, consumer advocacy organizations, and trade 
associations, as well as other interested entities, including third-
party technology developers. We noted that approximately 50% of tickets 
are sold by airlines directly to consumers, and the remainder is sold 
through ticket agents. Further, in the United States, three GDSs 
(Sabre, Travelport and Amadeus) control the distribution of the airline 
product for the ticket agent channel and most airlines use the GDSs to 
distribute their products to ticket agents, including corporate travel 
agents that sell the higher revenue tickets. The NPRM noted that 
airlines state they have made some efforts to reduce their reliance on 
GDSs and transition to direct connections between airline reservation 
systems and ticket agent systems but contractual arrangements make that 
difficult. As stated in the NPRM, carriers and carrier associations 
have expressed concern that a Department requirement to distribute 
information through a GDS would reinforce the existing distribution 
patterns and stifle innovation. Some stakeholders have alleged that if 
existing distribution patterns are reinforced, carriers will no longer 
have sufficient incentive to invest in new distribution technologies, 
which might ultimately provide more information to the benefit of 
consumers. In connection with new distribution technologies, the 2014 
NPRM also mentioned that the International Air Transport Association 
(IATA) applied to the Department of Transportation for approval of its 
agreement establishing the framework for the IATA New Distribution 
Capability (NDC). That application was pending at the time of NPRM 
publication but has since been approved. NDC is essentially an XML-
based technical standard for use in airline distribution, including 
direct connect services, that has been developed by IATA in cooperation 
with air transportation stakeholders. The goal appears to be to change 
how airlines sell their products today by using the enhanced platform 
to quickly generate dynamic, personalized offers. For more information, 
see docket DOT-OST-2013-0048. The NDC standard is available to any 
party and has been implemented by some entities since the 2014 NPRM was 
published.
    Our discussion in the 2014 NPRM explained that although airlines 
generally distribute fare, schedule, and availability information 
through GDSs, they generally do not distribute ancillary service fee 
information in the same manner. The NPRM also outlined some of the 
technological and competitive concerns raised by air transportation 
industry stakeholders. We also noted that in contrast to airlines, GDSs 
assert that any transition to direct connect services will succeed or 
fail based on whether the services meet the needs of travel agencies 
and the consumers they serve, regardless of existing contracts. As 
noted in the NPRM, GDSs disputed the position that there is no need for 
a Department requirement, stating that airlines and ticket agents have 
not been able to come to agreements that would allow airlines to 
provide ancillary service fee information to ticket agents so they 
could in turn provide such information to consumers.
    The 2014 NPRM explained that our decision to initiate a rulemaking 
regarding distribution of ancillary service fee information rested on 
the conclusion that consumers are continuing to have difficulty finding 
ancillary service fee information, which limits consumers' ability to 
determine the true cost of travel. We also recognized in the NPRM that 
carriers and GDSs state they share our goal of transparency of 
ancillary service fee information. In the NPRM we made clear that the 
Department is working to find the most beneficial disclosure rule for 
consumers while avoiding any adverse impact on innovations in the air 
transportation marketplace, contract negotiations between carriers and 
their distribution partners, or a carrier's ability to set prices for 
its services in response to its own commercial strategy and market 
forces. As the NPRM stated, consumers need to be protected from hidden 
and deceptive fees that prevent them from effectively price shopping--
that is, determining while shopping and before purchasing, the total 
costs of air transportation. The NPRM explained that failing to 
disclose basic ancillary service fees in an accurate and up-to-date 
manner before a consumer purchases air transportation is an unfair and 
deceptive practice. We identified a number of questions regarding the 
need for rulemaking on which we requested comment, including questions 
regarding the difficulty consumers have finding fee information, what 
fee information consumers wanted to have prior to purchase, and whether 
either of the Department's proposals would make fees easier to find. We 
also explained the alternatives that we had considered.
    Comments: Consumer comments in this rulemaking overwhelmingly 
supported Department action on disclosure of ancillary service fees. 
Over 600 consumers commented on transparency issues generally, which 
for many consumers encompasses disclosure of ancillary service fees as 
well as the full airfare, including taxes and fees. Over 450 consumers 
clearly supported additional requirements relating to disclosure of 
ancillary service fees while fewer than ten commented in opposition to 
additional disclosure requirements. Consumer advocacy groups Travelers 
United and National Consumers League also commented in support of the 
need for a rulemaking, stating that airlines publish what are in effect 
partial prices and that the full cost of travel is masked at the 
initial purchase and only revealed in a secondary buying process. 
Consumers Union and the U.S. Public Interest Research Group (U.S. PIRG) 
also supported Department action in this area, stating that the 
Department should require disclosure at every point of sale, early in 
the purchasing process. They went on to state that too many U.S. 
carriers have made ancillary service fee information difficult or 
impossible to obtain until close to or at the point of actual purchase 
or, in some channels, not available at all. FlyersRights also supported 
the rulemaking on disclosure of ancillary service fees, stating that 
unbundling is rapidly making price shopping difficult to impossible for 
consumers. It further stated that baggage fee information often is 
buried on a carrier's Web site and can be confusing

[[Page 7538]]

and complex. To illustrate its point, FlyersRights identified one 
legacy carrier that charges up to nine different fees for baggage 
depending on weight, size, and number of bags.
    Open Allies, which described itself as a coalition of more than 400 
independent distributors and sellers of air travel, corporate travel 
departments, travel trade associations and consumer organizations, 
commented in favor of Department action in this area. According to Open 
Allies, the rule is needed because ancillary service fees are not 
accessible and that identifying total travel cost is complex, 
confusing, and needlessly time consuming. According to Open Allies, the 
market is not reacting quickly or completely enough to address the 
issue. Open Allies pointed to a survey it conducted of over 1,000 
adults in the United States, indicating that 55 percent of respondents 
said that they were surprised by additional fees after purchasing a 
ticket; 88 percent said that Department action is important; 81 percent 
believe that current airline practices are ``unfair and deceptive;'' 
and 47 percent said that it was hard to search and find the lowest 
price for travel.
    Open Allies argued that the Department should not rely on 
competition because fees are still hidden, despite existing Department 
requirements, which results in consumers making sub-optimal purchasing 
decisions. Open Allies relied on consumer comments in the docket, 
saying that they show that consumers feel deceived and confused and do 
not understand the true, full cost of travel. According to Open Allies, 
consumers generally give two key reasons for supporting increased 
disclosure of ancillary service fees: (1) It would allow them to 
compare prices across various airlines; and (2) it would prevent 
airlines from surprising them with fees after they have purchased their 
airfare. Open Allies commented that there are many benefits to enhanced 
disclosure of price information such as ancillary service fees, 
including that it lowers prices, enhances competition, and promotes 
informed buyers. According to Open Allies, airlines lack a commercial 
incentive to provide ancillary service fee information to the 
``neutral'' travel agency channel because airlines have an interest in 
not allowing ticket agents to show the full cost of travel at the 
shopping stage because if travel appears less expensive, consumers will 
be more likely to complete a purchase. Open Allies further pointed out 
that an airline is unlikely to voluntarily display ancillary service 
fees on a travel agent display because it would make the airline's 
fares appear more expensive when compared to the fares of other 
airlines that do not disclose ancillary service fee information.
    In support of its position, Open Allies cited a 2010 GAO Report and 
a follow-on 2014 report, describing the problem of ancillary service 
fee disclosure as a continuing problem. Open Allies pointed out that 
while some individual airlines and individual GDSs have announced 
agreements regarding distribution of certain ancillary service fees, 
those agreements are generally limited to premium seating on some of 
the individual airline's flights and do not provide all ticket agents 
access to that information. Therefore, consumers are still unable to 
discover all basic ancillary service fees when searching for flights. 
According to Open Allies, the Department has substantial evidence to 
support its rulemaking as well as ample authority under Sec.  41712 
(unfair or deceptive practices). Open Allies compared the Department's 
authority to that of the FTC and stated that analogous FTC precedent on 
unfair or deceptive practices establishes that the Department has the 
legal authority to proceed with this rulemaking.
    The three GDSs--Amadeus, Sabre, and Travelport--all supported the 
rulemaking, stating that consumers that use ticket agents to shop for 
air transportation do not have access to all ancillary service fee 
information. According to Sabre, for consumers to ``know the full price 
of travel before they are locked into a purchase'' the Department must 
act. The GDSs also stated that airlines will not share ancillary 
service fee information with ticket agents, except on a limited basis, 
unless the Department requires the information to be shared. Travelport 
stated that airlines are motivated to increase revenues by driving 
consumer costs up through ``obfuscation of the true cost of flying.'' 
Amadeus points to airline opposition to disclosure requirements, 
particularly opposition by U.S. airlines, as evidence that the market 
will not resolve the problem. Travel Technology Association (Travel 
Tech), a trade association for major OTAs, GDSs, and some entities 
operating metasearch engines focused on travel, also stated that a 
problem remains for consumers trying to uncover charges for additional 
services and stated that consumers must search to discover the true 
cost of their air travel.
    Several travel agents and travel agent associations also stated 
there is a need for Department action in this area. The American 
Society of Travel Agents (ASTA) joined in the comments of Open Allies 
and stated that the Department's proposals do not go far enough to 
address widespread confusion among consumers. A number of travel agents 
submitted comments stating that their customers could not calculate the 
true cost of airfare with certainty and that the travel agents 
themselves could not provide a quote with certainty because of the 
complexity of and variation in ancillary service fees charged from 
airline to airline. Those travel agents supported mandating that 
airlines disclose the costs of bag fees and seat assignments. The 
United States Tour Operators Association (USTOA) opposed being subject 
to disclosure regulations but commented that consumers have expressed 
strong support for early disclosure of information on ancillary service 
fees. USTOA pointed to a survey that shows that 45 percent of 
respondents reported difficulty in budgeting for air travel due to the 
proliferation of fees and difficulty in determining the costs of 
flying. Survey respondents also indicated that total cost of travel is 
very important to purchasing decisions. Corporate travel agents also 
commented that they were concerned about disclosure. Global Business 
Travel Association stated that there is a need for disclosure 
requirements because despite investing resources, acquiring 
technologies, and changing travel policies, its members are still 
facing challenges finding basic ancillary fee information for baggage 
and seat assignments. Business Travel Coalition (BTC) commented in 
support of requiring disclosure of fees, stating that airlines are 
``masking the all-in price of air travel.''
    Computer and Communications Industry Association (CCIA), advocating 
for metasearch entities, commented in favor of Department action to 
make sure consumers have the information needed to determine the full 
cost of travel. TripAdvisor and Skyscanner, which both operate flight 
search tools, also commented in favor of Department action requiring 
airlines to disclose ancillary service fee information to ensure 
transparency for the benefit of consumers. Of airline commenters, only 
Southwest supported the Department requiring greater fee disclosure, 
noting that consumers will ``be better able to arrive at the true cost 
of air transportation.'' Finally, several commenters, including ASTA, 
BTC, FlyersRights, and Travel Tech also noted that airlines are not 
subject to State and local consumer protection laws due to Federal 
preemption, and

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therefore, only the Department can take action to protect consumers in 
this area.
    The Department also received many comments that opposed any further 
requirement pertaining to disclosure of ancillary service fees as 
specific charges. A4A (Airlines for America, the trade association of 
the larger U.S. airlines) argued that there is no need for any proposal 
regarding ancillary service fee information because the industry has 
already provided that information in response to existing Department 
regulatory requirements and market pressure and no consumer harm is 
occurring. A4A further argued that the Department does not have the 
authority to require airlines to disclose certain ancillary service 
fees in displays of fare search results because the failure to provide 
that information at the time fare information is presented to consumers 
does not amount to an unfair or deceptive practice. A4A also pointed 
out that on some occasions when discussing the ancillary service fee 
disclosure issue, the Department has described it in terms of the 
ability of consumers to engage in comparison shopping. A4A argued that 
the Department does not have regulatory authority to dictate the terms 
of carrier distribution or ancillary service fee disclosure to enhance 
comparison shopping.
    In addition to stating there is no need for any ancillary service 
fee proposals, A4A opposed any ancillary service fee disclosure 
requirement on competitive grounds, alleging that the rulemaking would 
effectively require airline distribution through GDSs, which would put 
airlines at a competitive disadvantage. According to A4A, the 
Department recognized the powerful market position of GDSs in a 2004 
rulemaking \1\ and still determined not to regulate those entities. A4A 
stated that GDSs still have significant market power and to be 
competitive most airlines have to distribute fare information through 
all three GDSs; meanwhile, GDSs prevent their client ticket agents from 
directly connecting to an airline. A4A stated that in contrast to 
fares, carriers are not dependent on GDSs for distribution of ancillary 
service information and this places airlines in a better position to 
negotiate with GDSs, to the benefit of consumers. For example, 
according to A4A, GDSs agreed to develop new distribution technologies 
as part of negotiations over ancillary services. A4A stated that the 
proposed regulation would strengthen the negotiating position of GDSs 
at the expense of the airlines if adopted.
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    \1\ Dep't of Transp., Computer Reservation System (CRS) 
Regulations, Final Rule, 69 FR 976, 996 (Jan. 7, 2004) (``CRS 
Rulemaking'')
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    Meanwhile, according to airline associations, the market is 
working. A4A commented that existing Department regulations combined 
with market forces have led to ``enhanced fee disclosure practices,'' 
and that carriers want to sell ancillary services, especially to 
business travelers who constitute a large segment of their repeat 
customers and revenue producers. A4A went on to explain that carriers 
are already incentivized to distribute information about ancillary 
products and fees and to facilitate the sale of ancillary services 
through multiple channels, including travel agencies, if they can do so 
on commercially reasonable terms. According to A4A, carriers and GDSs 
have already developed the ability (using the ATPCO filing system) to 
disclose information such as first and second checked bag fees to 
travel agents. A4A further noted that some airlines have made it 
possible for some agents to purchase certain ancillary services for 
consumers and some GDSs have developed mechanisms for ticket agents to 
buy services directly from carrier Web sites. A4A also pointed to tools 
on carrier Web sites that allow consumers to obtain customer-specific 
information through an airline Web site after providing information 
from the purchased ticket, and third-party Web sites that provide 
ancillary service fee information as the ``beneficial result of the 
existing environment.'' A4A also criticized Open Allies' reliance on 
survey results, stating that the survey was flawed for a number of 
methodological reasons and ``it should not be relied upon to arrive at 
conclusions concerning perceptions and attitudes about ancillary 
services held by people who fly on commercial airlines in the United 
States.'' According to A4A, GDSs are trying to obtain the commercial 
benefit of access to ancillary service fee information through 
regulation instead of through negotiations, even though negotiated 
agreements are possible. A4A also stated that GDSs have made 
concessions on pricing and technology through commercial agreements. 
A4A concluded that regulation will result in higher GDS fees which will 
in turn be passed on to consumers through higher ticket prices, to the 
detriment of the public.
    In supplemental comments, A4A stated that the three GDSs engaged in 
pilot projects to ``begin adapting to'' the NDC initiative and many 
airlines have invested in technology solutions. In addition, a variety 
of technology service companies are building solutions in the area. 
According to A4A, these marketplace developments prove that regulation 
is unneeded. A4A provided a number of examples of agreements between 
airlines and GDSs that it says show that carriers are sharing ancillary 
service fee information with GDSs. A4A went on to say that it is more 
and more common for carriers to sell bundled fares on their own sites, 
which A4A stated often results in discounts and is a consumer-friendly 
method of display. A4A further stated that mandating disclosures on the 
first page that displays fares interferes with airline efforts to 
differentiate their products and compete on service and price, as well 
as ``squandering'' the investment made by carriers on bundled pricing 
initiatives and technology to display those prices. A4A concluded in 
its supplemental comments that marketplace solutions that compel all 
parties to negotiate and use the most efficient data-sharing and latest 
technology will lead to time savings for consumers.
    IATA commented that the market has fundamentally changed since the 
Department first considered requiring carriers to disclose ancillary 
service fees and consumers now have ``more than ample'' access to 
information about ancillary services and fees prior to making purchase 
decisions. According to IATA, there is no lack of information about 
ancillary service fees causing harm to consumers. Further the 
Department has not demonstrated there is any unfair or deceptive 
practice that will be prevented by further regulating the disclosure of 
ancillary service fees, therefore, they argued, the Department does not 
have the authority to regulate in this area.
    IATA further argued that marketplace solutions are already making 
any rulemaking regarding ancillary service fees unnecessary as the 
rapid changes in distribution are working to the benefit of consumers 
and any Departmental intervention in this rapidly changing market will 
interfere and result in suboptimal solutions. IATA argued that airline 
Web sites already offer comprehensive and accurate information about 
ancillary services and fees. IATA acknowledged that airlines provide 
fee information as a range of fees in a static format but stated that 
this is not evidence of fraud or deception, merely ``evidence of the 
complexity of capturing the wide variety of factors that are considered 
when dynamically setting the price for a specific ancillary service for 
a specific customer.'' IATA went on to state that carriers are coming 
to agreements to provide ancillary service fee information to GDSs for 
distribution directly to agents rather

[[Page 7540]]

than through outdated fare filing systems. IATA also stated that the 
adoption of the NDC standard will provide transparency and efficiency. 
According to IATA, the Department should not intervene in distribution 
and should rely on the market to resolve any disclosure issues. Air 
Transport Association of Canada also opposed the Department rulemaking 
regarding disclosure of ancillary service fees, stating that the market 
is addressing the issue and the Department does not have the legal 
authority to intervene in the deregulated airline industry and dictate 
how airlines distribute their products and services.
    Several airlines also commented in opposition to the rulemaking. 
American Airlines joined in the comments of A4A and further stated that 
the Department's proposals do not address specific instances of 
demonstrated harm to consumers that cannot reasonably be avoided and 
the rulemaking is ``beyond the recognized limits of the Department's 
regulatory powers.'' American alleged that the Department based its 
reasoning on a need for comparison shopping, which American said is an 
unreasonable and inadequate basis for rulemaking. Frontier Airlines 
opposed any disclosure requirements, stating it ``believes that 
competitive market forces and the Department's existing regulations are 
more than adequate to inform and protect consumers.'' JetBlue also 
endorsed the comments of both A4A and IATA and stated that the 
Department should rely on market forces. According to JetBlue, the 
Department assumes a problem regarding consumers not knowing the true 
cost of travel and the NPRM does not provide a foundation for that 
assumption. United also endorsed the comments of A4A and stated that 
the market is already addressing many of the Department's concerns so 
the Department should refrain from issuing regulations regarding 
ancillary service fee disclosure. United further stated that the 
Department does not have evidence that supports the need for the 
proposed rulemaking. Spirit Airlines similarly opposed any rulemaking 
on disclosure of ancillary service fees, stating that it is not 
necessary and not in the public interest. According to Spirit, the 
Department should defer to the market place which is rapidly developing 
and ``progressively improving reasonable consumers' ability to 
determine the total cost of their travel before purchase.''
    Several foreign air carriers endorsed IATA's comments and opposed 
any Department regulation of disclosure of ancillary service fees. 
Aerov[iacute]as de M[eacute]xico, S.A. de C.V., (Aeromexico) and Air 
Transat endorsed the comments submitted by IATA regarding disclosure of 
ancillary service fees, and stated that the market is already 
addressing the issues raised by the Department. Further, any 
intervention by the Department will likely have a negative impact on 
consumers. In comments filed on behalf of the Avianca carrier group, 
Avianca endorsed IATA's comments, stating that the marketplace already 
is addressing the Department's concerns regarding disclosure of 
ancillary service fees, and any regulatory intervention likely will 
have a negative impact on both consumers and carriers. Air New Zealand 
supported the comments of IATA and stated that the current disclosure 
requirements are adequate to protect the consumer. 
Compa[ntilde][iacute]a Paname[ntilde]a de Aviaci[oacute]n, S.A. (Copa 
Airlines) opposed Department rules regarding ancillary service fee 
disclosure, stating such rules may have ``unintended adverse 
consequences that would significantly diminish any such benefits by 
making its implementation financially and technologically cumbersome 
for carriers.'' Qatar Airways (Qatar) also endorsed the comments of 
IATA and added that the market is working. Qatar went on to state that 
Department intervention will have a negative impact on consumers. 
Scandinavian Airlines System also endorsed IATA's comments and stated 
the rulemaking will have a negative impact on consumers. Virgin 
Atlantic Airways (Virgin Atlantic) commented that the market is 
evolving to meet customer preferences and the Department's current fee 
disclosure requirements are adequate. Further, requiring carriers to 
provide ancillary service fee information to ticket agents deprives 
carriers of their right to decide how to market their ancillary 
services and to distribute such information in a way that is most cost-
effective for them.
    The Arab Air Carriers Organization (AACO) commented that market 
developments since the Department began to address ancillary services 
in rulemakings have resulted in market action that is heading towards 
developing a data transmission standard that would make the flow of 
information between the airlines and agents more efficient. AACO went 
on to state that the Department should not specify how airlines display 
information. AACO also stated that a requirement to distribute through 
the GDSs would have a negative effect on future innovation in the 
distribution and display of ancillary services and fees as well as give 
GDSs the upper hand in contract negotiations with airlines.
    AAA, a leisure travel agent trade organization, commented that it 
supports transparency but specific mandates in this area may be 
premature at this time. AAA stated it was concerned about stifling 
innovation and wanted airlines to work with GDSs on agreements to 
distribute full ancillary fee information. Momondo Group, an online 
travel media and technology company that operates a flight search tool, 
commented that it supports transparency as its primary objective. 
However, it stated that it would be extremely costly to provide 
accurate information and avoid consumer confusion. It recommended that 
the Department conduct a more detailed examination of the problem 
before implementing a regulation that will impact a variety of 
entities, including operators of metasearch engines.
    DOT Response: The sheer number, length, and variety of comments on 
this issue, as well as the strongly held positions on all sides, 
illustrate the presence of a problem and the complexity of addressing 
it. Airlines and their associations stated that the Department has not 
demonstrated the harm to consumers that the Department's rulemaking is 
intended to address. For example, in support of its position that 
information is available and the market is providing solutions, A4A 
observed that some airline Web sites provide an option for consumers to 
identify themselves to determine fees for some ancillary services and 
potentially receive special offers after they have already purchased a 
ticket. Meanwhile, IATA noted that ``experienced travelers'' know that 
airlines charge bag fees and advance seat assignment fees and also know 
how to navigate multiple Web sites to obtain this information and that 
the Department should not impose costly regulations to benefit the 
relatively few travelers that care about this information but do not 
know how to locate it. In late-filed comments, Travel Tech noted that 
some airlines have begun to provide some information on ancillary 
services to ticket agents, but the progress has been far from 
universal.
    For the average consumer looking for the total cost of travel, he 
or she must frequently review a complex chart to determine his or her 
baggage fees particularly for interline itineraries and guess what an 
assigned seat fee might cost. We disagree with airlines and airline 
associations that these facts do not reflect consumer harm as we 
believe the additional time spent searching to find the total cost of 
travel and the additional funds spent on air transportation that might 
have been

[[Page 7541]]

avoided if the consumer had been able to determine the true cost of 
travel up front are the harms suffered by consumers when basic 
ancillary service fees are not adequately disclosed.
    The Department agrees with commenters that supported a need for 
rulemaking to allow consumers to have complete access to certain basic 
ancillary service fees in a manner that permits them to quickly and 
effectively determine their true cost of travel, although as explained 
further below, the Department has changed its view on what constitutes 
a basic ancillary service. Further, until all airlines and ticket 
agents are required to display certain basic ancillary service fees, 
and carriers are required to transmit fees for basic ancillary services 
to ticket agents, there is a strong incentive for carriers to obfuscate 
those fees. That is because if all competing carriers do not make 
similar disclosures, any airline that disclosed the cost of ancillary 
services, such as baggage fees, would appear to charge more for air 
transportation than the airlines that did not clearly provide fee 
information for those ancillary services. Therefore, even carriers that 
believe it is appropriate and consumer-friendly to provide the 
information in a clear fashion have a strong marketplace disincentive 
to disclose the cost of ancillary services. The Department notes that 
even the comments by airlines and airline associations that argued that 
the market is resolving the issue described the changes as ongoing and 
recognized that it will take time for airlines and ticket agents to 
come to agreement and implement new methods of disclosure. Although 
airline associations point to the number of agreements being reached 
between airlines and GDSs regarding GDS access to bundled fare packages 
that include an advance seat assignment, those agreements are bilateral 
agreements addressing limited services, primarily enhanced seating 
options, in limited markets and are not widely available to the general 
public.
    Meanwhile, airlines are capable of disclosing some ancillary 
service fees in search results on their own Web site search result 
displays today, yet choose not to do so. The Department is not 
persuaded by airline arguments that the complexity of factors 
considered when setting fees is a sufficient justification for leaving 
it to the airlines to decide how much disclosure to provide regarding 
basic ancillary service fees. To the contrary, any argument that fees 
are difficult to explain or quantify militates for greater disclosure 
requirements of fees for basic ancillary services intrinsic to air 
transportation. The mere fact that airlines are unbundling fares and 
have implemented ancillary service fee policies that even the airlines 
acknowledge are complex justifies efforts by the Department to ensure 
that consumers are able to discern the true cost of travel that 
includes basic ancillary service fees. Moreover, the existence of 
complex fee calculations that take into account a variety of factors 
does not explain why airlines do not provide better disclosure of 
baggage fee information that they already provide as a specific amount 
on a static list. Although there are complexities involved in 
displaying baggage fees, the comments demonstrate there is no technical 
impediment to displaying baggage fees with search results on carrier 
Web sites, yet that information is still not displayed.
    In support of its argument that the Department has not demonstrated 
a problem that it has authority to regulate, A4A provided two examples 
(from the NPRM and a docket record of an A4A meeting with Department 
staff) \2\ in which the Department referred to consumers' ability to 
``comparison shop'' as well as a reference in the NPRM to allowing 
consumers to ``price shop'' and a reference to complaints by business 
travel representatives regarding the difficulty of advising ``clients 
on the best and most cost effective flights.'' According to A4A, it is 
not within the Department's authority to require further disclosure of 
fees because we are taking the action to ensure consumers have the 
opportunity to comparison shop, which is not sufficient justification 
for the action. We acknowledge that the Department has at times used 
terms such as ``comparison shopping'' in connection with ancillary 
service fee disclosure. However, we disagree that the rationale of our 
proposed rule is to enhance consumers' ability to comparison shop. The 
Department's view is that consumers should be able to determine if the 
price provided is the total cost they will incur, whether purchasing 
through an airline or a ticket agent outlet, and our rulemaking is 
based on addressing that issue. The Department's position, as set forth 
in both the NPRM and the responses to A4A's questions, is that the 
proposals on ancillary service fees address the concerns regarding 
ensuring that consumers are aware of the total cost of travel.\3\ The 
Department's concern addressed by this rulemaking is that if airlines 
and ticket agents do not provide reasonable disclosure of ancillary 
service fees intrinsic to air transportation at the point that 
consumers are researching the total cost of travel and making a 
purchasing decision then consumers are not able to make an informed 
decision based on the true cost of air transportation. Although the 
disclosures mandated in the previous rulemaking improved consumer 
access to airline ancillary service fee information by requiring those 
fees to be displayed somewhere, airlines continue to disclose fees in a 
static format in complex charts that can be confusing to consumers. 
Further, in connection with complex itineraries, interline tickets, and 
even some code-share flights, consumers are still reporting confusion 
regarding the total cost of baggage fees. There is a close connection 
between comparison shopping to determine the best value and knowing the 
total or true cost of travel because consumers must know the total cost 
of travel to shop effectively for the best price. However, the concern 
we are proposing to address is whether consumers are able to ascertain 
the total cost of air transportation without confusion before they make 
a purchase, whether the consumer engages in comparison shopping or not. 
In this SNPRM, we are seeking comments on a requirement that specific 
ancillary service fee information be provided to consumers at the same 
time fare information is provided to help them determine the true cost 
of travel prior to purchase.
---------------------------------------------------------------------------

    \2\ See DOT-OST-2014-0056-0624, Summary of Proceedings, DOT 
Meeting with Airlines for America (A4A) (posted September 15, 2014).
    \3\ NPRM at 29975 and DOT Meeting with A4A, page 4, question 9.
---------------------------------------------------------------------------

B. The Definition of Basic Ancillary Service Fees

    The NPRM: The NPRM set forth the Department's view that certain 
basic services are intrinsic to air transportation and that carriers 
used to include them in the cost of air transportation before the 
advent of unbundled fares. We further noted that the cost of those 
services is important to consumers when they choose among air 
transportation options. The NPRM identified basic ancillary services as 
the first and second checked bag, one carry-on item and advance seat 
selection. The NPRM requested comment on whether the Department's list 
of basic ancillary services should be expanded. We also asked whether 
current disclosure requirements are sufficient and whether there is any 
need to adopt additional fee disclosure requirements for basic 
ancillary services.
    Comments: The comments reflected a diversity of views on this 
issue. Most consumer comments generally favored more transparency 
regarding fees and

[[Page 7542]]

some identify categories of fee information about which they would like 
more information--and they would like it early in the process of 
selecting a fare. In addition to consumer comments stating they want 
more information about all the fees airlines charge, a few comments 
identified specific fees. The fees consumer commenters most commonly 
identified were baggage, seat assignments, and change or cancellation 
fees, and a few mentioned advance boarding fees. The comments of 
consumer advocacy organizations Consumers Union, U.S. PIRG, Travelers 
United, and NCL expressed support for greater disclosure of all 
ancillary service fees, going beyond the baggage and seat assignment 
fees specified in the NPRM. Travelers United and NCL contended that the 
Department should require airlines to release airfares and all 
ancillary fee data for any entity to use as it wishes. BTC stated that 
boarding fees and change or cancellation fees should be included, as 
well as bundles that include a basic ancillary service. Similarly, BCD 
Travel USA LLC (BCD), a corporate travel management company, also 
commented that advance boarding fees and bundles that include a basic 
ancillary service should be included. In addition to specified baggage 
and seat assignment fees, Travel Tech and Open Allies both commented 
that advance boarding, change, and cancellation fees are ``basic'' and 
further stated that any ancillary service ``package'' that includes a 
basic ancillary service should be disclosed. Open Allies stated that 
these services are all critical to booking decisions. Sabre agreed with 
the Open Allies comment on this issue. Amadeus also stated the 
Department should expand the definition to include boarding fees and 
change and cancellation fees as well as bundles that include basic 
ancillary services. TripAdvisor stated that limiting the list of fees 
that must be disclosed to ``basic'' fees is a mistake because carriers 
may unbundle some other ``essential'' service and absent another 
lengthy Department rulemaking, the information would not be disclosed 
to consumers. Southwest commented on baggage fees, stating that they 
are unique because transporting passenger baggage is intrinsic to air 
transportation.
    On the other hand, several commenters opposed defining basic 
ancillary services as intrinsic to air transportation or including seat 
assignment fees as a basic ancillary service. USTOA commented that the 
Department should not include a requirement that seat assignment fees 
be disclosed in an itinerary specific manner because sellers of package 
tours may not have access to seat assignments at the time the package 
is sold or, since seats are inventory-controlled, the cost is likely to 
change before a consumer is able to purchase them on an airline Web 
site. Spirit asserted that any advance seat assignment fee disclosure 
should be eliminated because all airlines provide a seat with the cost 
of air transportation so disclosing an advance seat assignment fee at 
the beginning of a booking process may induce someone to purchase it 
when there is no need to do so. A4A, AACO, and United commented that 
advance seat assignments have not been traditionally provided to 
consumers as part of the price of air transportation. Comments by A4A 
and United noted that fare purchases guarantee a seat in a particular 
cabin, such as first class or economy, but not a particular seat 
number. In addition, historically seats often were not assigned until 
30 days before a flight or at the gate on the day of flight. A4A and 
United further noted that Southwest does not provide seat assignments 
at all.
    ATPCO and Farelogix did not comment on whether baggage or seat 
assignment fees are intrinsic to air transportation, but rather on the 
difficulty of disclosing the information. ATPCO stated that it can 
already support the proposed requirement to disclose first and second 
checked bag fees, which is also supported by A4A's comments indicating 
that airlines have provided itinerary-specific checked baggage fees to 
ATPCO for distribution to other industry participants. ATPCO also 
stated that the industry is working to address disclosure of carry-on 
baggage and seat assignment fees. However, given the complex pricing 
structure for seats, and the variation in carry-on baggage allowances 
depending on the aircraft, disclosure of this information is a complex 
undertaking that will take significant time to achieve. Farelogix 
stated that the industry is working towards distribution of seat 
assignment fees but that due to dynamic pricing of seats, and the need 
to determine availability at the time the price is displayed, it is not 
currently practicable to display dynamic seat assignment fees at the 
shopping stage. According to Farelogix, a requirement by the Department 
to provide seat assignment fees at the shopping stage would effectively 
force industry participants to provide static fees. Such a requirement 
would redirect industry efforts to implementing a static system rather 
than continuing to work toward modernizing distribution systems and 
ultimately would not be in the interests of consumers.
    DOT Response: We take note of the comments focused on technical 
issues and stating that due to technological limitations, the 
Department should not require disclosure of such fees. However, we note 
that many of the comments pointed to the progress in technology and in 
commercial agreements. That progress is allowing GDSs to provide 
advance seat assignment information to ticket agents and allowing 
ticket agents that sell to consumers to provide that information to 
consumers and transact those fees. It appears from the comments that 
the ability to display dynamic seat assignment fees and sell such 
services is progressing rapidly and with sufficient implementation 
time, such fees could be disclosed. In addition, we are unpersuaded by 
the argument that seat assignment fees are dynamic and therefore should 
not be considered a basic ancillary service fee. The dynamic and 
changing nature of seat assignment fees tends to support a requirement 
that such fees be not only disclosed but transactable. However, we are 
convinced by carrier arguments that advance seat assignments were not 
universally provided to consumers as part of the price of air 
transportation even before the unbundling of fares. As noted by A4A and 
United, fare purchases always did and still do guarantee a seat in a 
particular cabin, such as first class or economy, but not a particular 
seat number. In addition, we acknowledge seats often were not assigned 
until a few weeks before the flight or even on the day of flight. Now, 
in an era of unbundled fares, some carriers offer few advance seat 
assignments for free but those carriers assign a seat without charge on 
or close to the day of travel. In addition, at least one U.S. carrier, 
Southwest, does not provide seat assignments at all. Meanwhile, we note 
that it would be a violation of the full fare rule and an unfair and 
deceptive practice if a carrier required a consumer to pay an 
additional fee beyond airfare to obtain any seat at all. Carriers must 
provide a seat in the class of service that was sold to the consumer 
regardless of whether a seat is assigned in advance or not. 
Accordingly, we have tentatively concluded that advance seat 
assignments should not be considered intrinsic to air transportation. 
In addition, although we appreciate that advance boarding options and 
related fees are important to many consumers that would like to 
purchase that service, it is not a service that historically has

[[Page 7543]]

been included in the cost of air transportation.
    Turning to change and cancellation fees, we are aware that such 
fees are important information and in fact are significant restrictions 
that must be disclosed to consumers because it would be an unfair and 
deceptive practice not to disclose such fees. Further, carriers are 
required to provide direct notice with the ticket (14 CFR 253.7) of 
terms such as restrictions on refunds, and information regarding 
cancellation fees in their customer service commitments. We encourage 
carriers to make change and cancellation fee information as transparent 
and clear to consumers as possible. We also solicit comment on whether 
the Department should require airlines and ticket agents, prior to an 
online transaction being completed, to provide consumers a link to the 
airline Web sites where the change and cancellation information is 
available or if an agent prefers to its own site that displays 
airlines' change and cancellation information. However,, we are not 
convinced that change and cancellation fees are a cost that is 
intrinsic to air transportation and must be disclosed at the same point 
that itinerary information is disclosed. Like seat assignments, many 
consumers avail themselves of air transportation without making changes 
or canceling reservations.
    Regarding bundled fares that include the fees that the Department 
initially considered basic ancillary service fees (e.g., advance seat 
assignment or certain baggage fees), our position is that consumers 
need to be able to ascertain the true cost of travel including basic 
ancillary service fees so to the extent that a carrier wanted to 
provide a bundled fare in addition to an unbundled fare and basic 
ancillary service fees, a carrier would be free to do so. However, if 
the carrier is disclosing basic ancillary service fees at the same 
point fare information is disclosed, then under this proposal 
additional options such as bundled fares are not something a carrier 
would have to disclose to ensure the consumer was aware of the true 
cost of travel.
    With regard to baggage fees, the comments did not offer any reason 
to change our view that a carry-on bag and first and second checked bag 
were traditionally included in the cost of transportation. We remain of 
the view that a carry-on bag and first and second checked bag are 
intrinsic to air transportation and it is reasonable to require 
carriers and ticket agents to disclose those baggage fees to consumers 
at the same point that fare and schedule information is disclosed. 
Therefore our revised proposal in this SNPRM includes a requirement 
that carriers disclose to ticket agents the fees for one carry-on item 
and a first and second checked bag. The proposal would also require 
ticket agents and carriers to provide those fees to consumers whenever 
fare and schedule information is provided as described in Section F 
below. We seek comment on the revised proposal.
    Although we have tentatively concluded that only certain baggage 
fees should be included in our disclosure requirement, we note that 
some members of Congress have expressed the view that in addition to 
baggage fees, advance seat assignment fees, change and cancellation 
fees, priority boarding fees, and ticket fees should all be disclosed 
where fares are displayed. See, for example, HR 636 (as passed in the 
Senate in April 2016). In the event future similar legislation is 
enacted to require the Department to address whether advance seat 
assignment fees, change and cancellation fees, priority boarding fees, 
and ticket fees should all be disclosed where fares are displayed, we 
seek comment on such a disclosure requirement. What are possible 
benefits to consumers from a requirement to disclose baggage fees, 
advance seat assignment fees, change and cancellation fees, priority 
boarding fees, and ticket fees along with fares? What are the costs and 
potential challenges to implementing such a requirement? Comments that 
are most useful provide information regarding the reasons why 
additional disclosures should be required or should not be required. In 
addition, comments describing specific costs and benefits would be 
helpful.

C. Disclosure by Carriers to Ticket Agents of Fees for Basic Ancillary 
Services

    The NPRM: The NPRM put forth two co-proposals. Under both 
proposals, each carrier would have been required to distribute its 
basic ancillary service fee information to certain ticket agents that 
the carrier permits to distribute its fare, schedule, and availability 
information. Under the first proposal, option A, carriers would have 
been required to distribute the information to all ticket agents, 
including GDSs, that the carrier provides fare, schedule, and 
availability information for distribution. Under the second proposal, 
option B, carriers would not have been required to distribute ancillary 
service fee information to GDSs or other intermediaries that do not 
sell the carrier's tickets directly to consumers. The option B proposal 
included an assumption that GDSs and similar intermediaries would not 
be subject to any direct consumer notification requirements. This means 
that, in addition to GDSs and similar business-to-business 
intermediaries, entities that operate flight search tools but do not 
transact sales to consumers would not have been subject to direct 
consumer notification requirements. Neither proposal required carriers 
to distribute ancillary service fee information to any GDS or other 
ticket agent to whom the carrier does not choose to distribute its 
fare, schedule, and availability information. In connection with 
transactability, neither of the proposals required transactability (the 
ability for ticket agents to sell/transact an airline ancillary service 
to consumers). The options proposed merely required carriers to provide 
``usable, current and accurate'' information on fees for basic 
ancillary services to all ticket agents so this information may be 
disclosed to consumers wherever fare, schedule, and availability 
information is provided.
    Under both of the proposals, U.S. and foreign air carriers would 
have been required to distribute to certain ticket agents the standard 
fees for basic ancillary services. However, carriers would not have 
been required to provide information to ticket agents about individual 
customers, such as their frequent flyer status, though these factors 
may impact the fee for an ancillary service. Under both proposals, 
specific charges, not a range of fees, would have to have been 
disclosed to consumers for basic ancillary service fees. Neither of the 
Department's alternative proposals dictated the method that carriers 
must use to distribute the information, rather, the NPRM cautioned that 
carriers would have to be mindful that whatever distribution method is 
used would have to provide usable, accurate, and current information so 
the information would be accessible in real-time. Further, ticket 
agents would have had to work in good faith with carriers to come to 
agreement on the method used to transmit the ancillary service fee 
information.
    Comments: In response to the NPRM, many commenters suggested that 
the Department go further than either option A or option B in terms of 
disclosure by carriers to ticket agents. For example, Open Allies, 
Travelers United, NCL, CCIA, TripAdvisor, and Skyscanner recommended 
that the Department require airlines to share all flight content 
information with any interested entity. According to CCIA, that would 
provide consumers with accurate ancillary fee information in the most 
direct manner with the least

[[Page 7544]]

regulatory cost. TripAdvisor commented that the Department should 
require airlines to make all flight-specific information, including 
fares and fees, available to all information providers, because open 
exchange of information is the best way to protect consumers. 
Skyscanner also argued that transparency for consumers can only be 
achieved if the Department requires airlines to disclose fee 
information to all entities involved in the travel booking process, 
including metasearch sites. TripAdvisor further commented that if the 
Department chooses from the proposed options, it should adopt option A, 
requiring disclosure of basic ancillary service fees to all entities 
with which the carrier shares fare information, as that is the 
practical and efficient way for ticket agents to receive and display 
the fee information and comply with Department requirements. Meanwhile, 
to the extent the Department adopts one of the two proposed options, 
Travelers United and NCL supported option A. According to Travelers 
United and NCL, option B is not feasible because the existing air 
travel distribution system relies on GDSs, the current marketplace 
would be extremely limited by exclusion of GDSs, and there is no 
alternative distribution network currently in place.
    Open Allies also supported option A. According to Open Allies, 
option B, which would not require distribution to GDSs, discriminates 
against ticket agents and is not a good solution. Open Allies stated 
that agents and airlines need GDS involvement for the potential 
benefits of the regulation to be put into place in a workable manner 
and that including GDSs is the lowest cost, most efficient way of 
achieving the Department's disclosure goal. The organization also 
argued that there is no valid reason to exclude intermediaries from 
disclosure requirements when to do so will make fee dissemination more 
challenging and costly.
    Travel Tech also commented in support of option A, stating that it 
is the only option that will achieve the Department's goals. According 
to Travel Tech, 90 percent of ARC-approved ticket agents use GDSs and, 
although that may change over time, as a practical matter, many ticket 
agents currently rely on GDSs for data today. It is an efficient way 
for ticket agents to receive fee information, is currently in use for 
many charges that airlines already impose, and will facilitate display 
of the information. According to Travel Tech, option B raises a 
``nightmare'' prospect for many travel agents, including OTAs, of not 
being able to rely on their established data source. Travel Tech noted 
the Department's desire to minimize government interference and 
encourage innovation but stated that not requiring disclosure to GDSs 
will be a disservice to consumers. Travel Tech stated that it is not a 
new concept and analogizes to existing Department requirements, such as 
the requirement that carriers provide GDSs code-share and change-of-
gauge information when providing flight information to GDSs. Travel 
Tech went on to state that GDSs are technically capable of displaying 
ancillary services and fees as carriers want them displayed. Meanwhile, 
carriers can continue to develop alternative distribution arrangements 
for future use while allowing ticket agents to provide the disclosure 
to consumers as contemplated by the Department.
    Sabre, in support of option A, stated that its services make 
sharing price information accurate and efficient as well as cost 
effective for ticket agents. Sabre further stated that if travel agents 
that rely on GDSs were forced to use an alternative, they would incur 
costs that would ultimately be passed on to consumers. Travelport 
commented in support of option A, noting the Department's statement 
that 50 percent of tickets are sold via a travel agent and virtually 
all of those agents rely on a GDS as an efficient data conduit. Amadeus 
offered similar reasons in support of option A, noting that ticket 
agents already rely on GDSs as an efficient source of data. Amadeus 
also pointed out that many travel agents are small businesses that rely 
on GDSs for airline data and if data were not provided through GDSs, 
they would not have a financially feasible way to obtain and distribute 
the information. Such agencies could not afford or manage the technical 
complexity of, for example, direct connects with multiple airlines, to 
obtain and disclose ancillary service fee information.
    ASTA and several travel agents also commented that GDSs have the 
technology to allow travel agents to book ancillary services. ASTA also 
noted that travel agents rely on GDSs for a variety of business 
functions in addition to booking, and accordingly ASTA stated that 
option A, excluding GDSs, would harm travel agents. ASTA also stated 
that option B does not provide sufficient protection for consumers. 
Therefore, according to ASTA, the Department should not adopt either 
option A or B and instead should require transactability.
    Corporate travel agents American Express Global Business Travel, 
Carlson Wagonlit Travel (CWT), and BCD supported option A. CWT 
commented that ticket agents cannot provide ancillary service fee 
information unless the information is first provided by carriers to 
ticket agents via GDSs; otherwise, ticket agents would be required to 
obtain the information from each carrier. BCD commented that ticket 
agents must have access to information about ancillary services through 
GDSs, the ``normal and customary distribution channels'' that are time-
tested and functional. Without the requirement that GDSs have the 
information, BCD stated it will incur material costs in obtaining the 
ancillary service information from every airline and will not be able 
to ensure it has accurate and complete information. Travelers United 
and NCL supported option A as the best of the options proposed. BTC 
supported option A, commenting that there is no usable, workable 
mechanism for airlines to distribute ancillary service fee information 
to tens of thousands of individual travel agents, most of whom already 
rely on GDSs. Skyscanner noted that if the Department chooses option B 
over option A, consumers who conduct searches on metasearch Web sites 
that do not sell the ticket will not receive the same ancillary fee 
information that is disclosed on traditional travel agent or carrier 
Web sites.
    A4A opposed the disclosure requirement on the grounds that it will 
place airlines at a disadvantage to GDSs in contract negotiations and 
also opposed it on technology grounds. A4A argued that GDSs have 
historically been in a stronger negotiating position than airlines and 
that GDSs were only willing to develop new technologies for accessing 
and distributing airline fare and flight information because the GDSs 
did not have contract provisions requiring airlines to provide 
ancillary services information. The ancillary services information, in 
addition to motivating GDS investments in technology, enabled airlines 
to negotiate lower GDSs booking fees. According to A4A, GDS concessions 
on pricing and technology resulted because airlines did not have the 
obligation to provide the ancillary service fee information to GDSs, 
and if the Department requires airlines to provide such information, it 
will restore GDSs to a stronger negotiating position over airlines. A4A 
stated this will be the case whether the Department adopts option A, 
expressly requiring airlines to provide the information to GDSs, or 
option B, requiring airlines to give the information to GDSs as a 
practical matter. A4A also objected to the proposal on the grounds that 
distribution channels would all have to offer the same functionality 
and not

[[Page 7545]]

every channel has the more developed functionality needed to distribute 
dynamic fees. The effect would be to impose a system of static fees, 
according to A4A. AACO also commented that a requirement to distribute 
ancillary service fee information through GDSs would essentially 
require carriers to distribute static fees to ticket agents instead of 
the dynamic fees currently available on carrier Web sites. This would 
force airlines to use static fees on their Web sites for the sake of 
consistency and would limit innovation and could lead to higher charges 
for consumers. IATA also opposed the disclosure requirement, arguing 
that the changing marketplace is making information more readily 
available to consumers because airlines are motivated to disclose the 
information and consumers are used to unbundled fares and know how to 
search and find such information. IATA stated that airline Web sites 
offer consumers and ticket agents comprehensive and accurate ancillary 
service fee information. However, according to IATA, a Department rule 
mandating disclosure will harm consumers, because it could shift 
current marketplace momentum from implementing new internet-based 
technologies that offer dynamic solutions back to inferior solutions 
offered on legacy infrastructure.
    Most airline comments objected to any ancillary service fee 
disclosure requirement, with several indicating that any Department 
involvement would unduly influence contract negotiations and 
distribution innovations. In contrast to ticket agents and their 
representatives, some carriers stated that any requirement to 
distribute fees will effectively require them to distribute to GDSs, 
which would unfairly disadvantage them in negotiations with GDSs as 
well as lock them into a distribution model that relies on static fees, 
which will create obstacles to innovation. However, some commented that 
to the extent that the Department adopts one of the proposals, some 
carriers supported Option B, requiring disclosure of ancillary service 
fee information to ticket agents that sell transportation only, 
excluding GDSs and other intermediaries. For example, Delta stated that 
the Department should refrain from any regulation of airline 
distribution channels, but option B would have less impact on 
negotiations between carriers and GDSs. United commented that option B 
would better allow for development of alternative systems for airlines 
to provide information directly to travel agents. United also notes 
that ATPCO (relied on by GDSs) does not have the technological 
capability to process constantly changing ancillary service prices, 
which makes this issue more complex than addressing baggage fees. Like 
AACO, Delta and United seem to indicate that a requirement to 
distribute ancillary service fee information through GDSs would 
essentially require carriers to distribute static fees to ticket 
agents.
    China Eastern stated that option B would present fewer technical 
and development hurdles. Spirit commented that option B is less 
intrusive and that a requirement to distribute ancillary service fee 
information to all travel intermediaries as described in option A may 
cause Spirit to withdraw from one or more GDSs altogether due to 
increased distribution costs. Insel, a Caribbean carrier, commented 
that consumers must be informed of the total cost associated with their 
travel; however, requiring disclosure through GDSs would increase 
airlines' costs, and those costs would likely be passed on to 
consumers. Virgin Atlantic is concerned about the burden of ensuring 
ticket agents that have Virgin Atlantic's fare, schedule, and 
availability information also have ancillary service fee information 
and stated that if a carrier has shared information with ATPCO or a 
direct connect, that should be sufficient.
    DOT Response: We have carefully considered the comments regarding 
whether to require carriers to distribute ancillary service fee 
information to all ticket agents that a carrier provides with its fare, 
schedule, and availability information, including GDSs, or only to 
require carriers to distribute the information to those ticket agents 
that sell its tickets. We recognize that both options potentially 
impact relationships among commercial entities and we do not take 
Department involvement in carrier distribution channels lightly. We 
recognize that airlines have concerns that being required to provide 
certain ancillary fee information to GDSs will put airlines at a 
disadvantage when negotiating contract terms with GDSs. We also 
understand that airlines have concerns about being required to rely on 
GDS infrastructure and GDS ability to market dynamic fees as carriers 
do on their own Web sites. However, airline complaints about the 
technical deficits of GDSs appear to be focused on dynamic fees. 
Airlines already rely on the GDSs to distribute baggage fee information 
and carriers do not provide a strong argument against using GDSs to 
distribute this information. Meanwhile, ATPCO notes that there are some 
technical issues to be worked out to distribute information on fees for 
carry-on items but ATPCO is already working with certain carriers and 
ticket agents, including GDSs, to distribute and even transact checked 
bag fees. Further, the proposals in the 2014 NPRM reflect our view that 
basic ancillary fee information should be shared with all consumers at 
all outlets. IATA acknowledges that more work needs to be done by the 
industry in that area. We agree with the comments of Skyscanner that 
our consumer protection goals would be undermined if we did not require 
disclosure to intermediaries in arranging for air transportation, such 
as metasearch entities that operate flight search tools, as those 
entities would not necessarily have basic ancillary service fee 
information to provide to consumers. Regarding the ability of GDSs to 
distribute the information, all three GDSs serving the U.S. market 
assert they have the technical ability to distribute baggage fee 
information. In addition, we find persuasive some ticket agent comments 
that they rely on receiving information through the GDS channel, that 
alternative distribution methods would be practically disruptive and 
technically difficult if not impossible to implement, and would cause 
them to incur significant costs. We recognize that with either option 
some time would be needed to develop the process for disclosure, 
particularly in connection with carry-on bags, as ATPCO noted. The 
proposed implementation period is discussed below in section G.
    In connection with the requirement that the distribution method 
used would have to provide usable, accurate, and current ancillary 
service fee information so the information would be accessible in real-
time, some entities comment that the 2014 NPRM does not define with 
sufficient specificity what constitutes usable, accurate, and current. 
Farelogix commented that distribution through GDSs would effectively 
halt or limit dynamic pricing because according to Farelogix, GDSs are 
only able to provide static pricing. However, the comments opposing use 
of GDSs to transmit fee information were focused on the technical 
limitations of GDSs in the area of dynamic fees (which GDSs dispute); 
there were no comments indicating that any entity thought that baggage 
fee information transmitted through GDSs would not be usable, accurate, 
and current. A4A's comment indicates that the fee information for 
checked baggage is already available in the GDS systems via ATPCO 
filings. We note that the proposed requirement to provide

[[Page 7546]]

information to GDSs only applies if the carrier is using the GDSs to 
distribute its fare, and schedule information. We do not believe such a 
requirement would be unduly burdensome on carriers as it appears that 
the primary objection of carriers from a technical standpoint relates 
to limited availability services subject to dynamic pricing, such as 
seat assignment fees, and seat assignment fee information is no longer 
included in the proposed requirement. In response to some comments that 
by imposing disclosure requirements on checked baggage fees the 
Department would be effectively prohibiting carriers from offering 
discounts through dynamic pricing, we disagree. Carriers are free under 
Department rules to offer discounts, whether though dynamic pricing or 
other methods, if the pricing is properly disclosed. \4\ Further, some 
carriers are already working with GDSs to offer premium seats, so we 
are not convinced that they could not do the same with baggage fees. 
The remaining objection, being placed in a disadvantageous position in 
contract discussions, would be addressed by a prohibition on unilateral 
contract provisions related to distribution, as discussed more fully 
below.
---------------------------------------------------------------------------

    \4\ In response to A4A's comment that the requirement to 
distribute static baggage fees through GDSs to comply with previous 
rule has prevented airlines from offering dynamic baggage fee 
pricing, we note that is the result of airline pricing decisions and 
GDS contract restrictions and not a Department requirement. Airlines 
are free to offer static or dynamic fees under Department rules, as 
long as the prices are properly disclosed.
---------------------------------------------------------------------------

    After carefully considering all of the comments submitted, the 
Department has decided to propose requiring carriers to provide 
information on fees for one carry-on item and first and second checked 
bag to all ticket agents to which it provides fare and schedule 
information, including GDSs and other intermediaries in the air 
transportation marketplace. This option provides for wide distribution 
with the least disruption to existing business models and the shortest 
implementation time. We acknowledge that almost any distribution and 
disclosure requirement will involve Department intervention into 
business and contractual arrangements. However, the Department is 
counter-balancing these concerns by including in its proposal a 
prohibition on unilateral cost increases by GDSs on airlines as 
discussed in Section E. When the proposed requirement to provide 
information to GDSs is considered in conjunction with the Department's 
proposed restriction on certain contract provisions, we believe the 
Department's regulatory involvement in business arrangements is minimal 
and justifiable.
    We note that in this SNPRM we are proposing to require carriers to 
provide certain ancillary service fee information to all ticket agents 
to which it provides fare and schedule information. This would ensure 
consumers receive key baggage fee information at the same time that 
they are identifying flight options so that they have enough 
information to determine the true cost of travel. We believe that 
furnishing availability information to ticket agents should not be a 
determining factor in whether the agent receives the ancillary service 
fee information in question. Requiring carriers to provide required 
ancillary service fee information to all ticket agents to which they 
provide fare and schedule information should ensure that all relevant 
ticket agents are provided with the ancillary service fee information 
without imposing an overly broad requirement. We seek comment on the 
substance of the proposal and whether the description of ticket agents 
that should receive basic ancillary service fee information is 
sufficiently broad.

D. Transactability

    The NPRM: In the NPRM, the Department requested comment on the 
issue of requiring that basic ancillary services be made transactable 
(i.e., to require that airlines permit online travel agencies to sell 
these ancillary services). The Department recognized that 
transactability is a very important business issue for both carriers 
and ticket agents and noted that we want to avoid causing a negative 
impact on innovation or unnecessarily intruding into business and 
commercial arrangements. We further noted that carriers and 
stakeholders have assured the Department that they share our goal of 
transparency and assume that the various stakeholders would negotiate 
regarding the ability of ticket agents to sell a carrier's ancillary 
services and the price at which those services would be sold. However, 
we left open the possibility of requiring transactability and requested 
comments on the issue.
    Comments: Consumer advocacy organizations' comments generally 
favored transactability. Consumers Union and U.S. PIRG stated that 
ancillary services should be transactable through ticket agents or, at 
a minimum, customer-specific quotes with ancillary service fees should 
be provided and guaranteed to be available once the ticket has been 
purchased. Travelers United and NCL commented that the Department 
should not concern itself with how the data is used but rather should 
require airlines to release all ancillary service data and let market 
innovations determine how it is provided to consumers. Open Allies 
commented that the Department should require airlines to provide basic 
ancillary service fee information to ticket agents in a format that 
allows ticket agents not only to disclose the information to consumers 
but also to sell the services.
    Open Allies stated it believes that the lack of transactability is 
unlikely to be resolved by carriers absent a rule. The organization 
commented that ticket agents should be able to sell services because 
consumers support transactability. It pointed to a survey it conducted 
which showed 72 percent of survey respondents believe transparency 
includes transactability. Open Allies also noted that requiring 
transactability would save time and be more efficient for consumers. If 
transactability is not required, it contended, consumers will have to 
go to airline Web sites to find and purchase a service found on a 
ticket agent Web site and, unless fees are unchangeable, the service 
may no longer be available, or available at the quoted price, at that 
time. According to Open Allies, airlines are the only entities that 
``disaggregate'' pricing and as a consequence the Department should 
regulate ``pricing transparency'' which is only possible with 
transactability. Open Allies disagreed with the carrier position that 
GDSs have greater bargaining power than airlines in contract 
negotiations, noting the reduced GDS fees airlines have negotiated 
since GDS deregulation. Open Allies also said the decreased number of 
legacy carriers in the United States has increased airline negotiating 
power. The organization argued that transactibility is necessary 
because, if the Department relied on requiring the carriers to lock in 
prices for ancillary services at the time consumers purchased tickets, 
it would be difficult to enforce and costly and time consuming to 
develop systems that would enable fees to be locked for individual 
consumers. Meanwhile, consumers would still face the inconvenience of 
having to go to airline sites to purchase the ancillary service, which 
would increase their transaction costs.
    Several travel agents filed similar comments favoring 
transactability, stating that disclosure alone is not sufficient. 
According to those travel agents, add-on fees are complex and change 
from airline to airline, preventing travel agents from providing 
completely accurate quotes to customers. Although requiring

[[Page 7547]]

disclosure of the cost of bags and seat assignments would help, 
according to these commenters, consumers would still be surprised 
because the price of services may go up before they buy them. They also 
stated that GDSs have the ability to provide transactabilty and 
airlines would benefit from increased sales of ancillary services, 
creating a ``win-win'' for the entire value chain. ASTA commented that 
the only option the Department should consider is transactability. 
According to ASTA, airlines, U.S. airlines in particular, have proven 
unresponsive to market influences to sell ancillary services through 
ticket agents and without requiring transactability. ASTA asserted that 
the Department will effectively be forcing agents to send customers to 
a competitor if it does not require transactability.
    Travel Tech commented in support of transactability, stating that 
the existing GDS infrastructure already permits transaction of various 
airline service fees, such as baggage, in some cases, and also allows 
seat assignments for certain carriers' inventory. According to Travel 
Tech, the only question is whether airlines will allow ticket agents to 
transact the services once the airline makes the information available 
through GDSs. Travel Tech also commented that consumers should be able 
to purchase ancillary services at their preferred outlet to avoid the 
increased search and transaction costs of not having ancillary services 
available for purchase through ticket agents.
    Amadeus, Sabre and Travelport also commented that consumers using 
ticket agent outlets experience increased transaction time without 
transactability. They stated that they are ready to implement 
transactability and point to their own technological developments and 
existing agreements with carriers on distribution of ancillary 
services. Sabre provided information regarding 23 carriers for which it 
both displays and transacts at least one ancillary service. Travelport 
stated ancillary services can be transacted using older technology but 
that it has introduced a new platform to allow airlines to 
differentiate their products from competing airlines. Amadeus stated 
that requiring transactability is the only way the Department can meet 
the goal of transparency. Amadeus commented that disclosure without 
transactability will confuse consumers. Amadeus stated that it already 
has a product that will enable transactability and that 58 airlines are 
already using this product, but concludes that the Department cannot 
rely on the market to move towards transactability because the factors 
that have inhibited widespread implementation are still present, 
particularly in the case of U.S. airlines.
    Orbitz stated it is a member of Travel Tech and commented to 
elaborate on Travel Tech's comments. Orbitz stated that if the 
Department imposes disclosure requirements on ticket agents without 
transactability, consumers will only be more confused. Orbitz pointed 
to the static nature of some fees and dynamic nature of others, which 
will increase the confusion. Meanwhile, according to Orbitz, the 
Department should not assume that airlines will negotiate to allow 
ticket agents to transact ancillary services. The outcome of the rule 
may be that ticket agents that compete with airlines and offer 
consumers choices that they might not otherwise have been aware of, are 
left with an inferior product and asymmetrical disclosure requirements 
that disadvantage ticket agents and lead to consumer harm.
    Corporate travel agents also supported transactability. BCD 
commented that the Department should require transactability through 
GDSs and if the information is not transactable, corporate travel 
agents should not be required to disclose those ancillary service fees. 
BCD stated customers will be frustrated if it is not able to book the 
services that it has just disclosed to its customers. BCD also stated 
its customers depend on having all of the costs of travel tracked 
through its systems so if it cannot book all services the customer 
wants, its travel cost data will not be accurate. CWT commented that to 
provide consumer benefit, the Department must require that ancillary 
services be transactable through GDSs or agents will be unduly burdened 
and the existing distribution system will be undermined. BTC commented 
that for consumers transparency and transactability are ``interlocked'' 
and without transactability, the booking process for consumers and 
travel agents involves multiple steps and is more confusing and time 
consuming as a result. BTC also commented on the risk of increased 
costs or lost opportunities to purchase certain ancillary services if 
they are not purchased at the time the ticket is purchased. 
International Airline Passengers Association also commented in favor of 
transactability and supported BTC's comments.
    A4A opposed transactability, reiterating its view that there is no 
consumer harm to address. A4A also identifies practical considerations, 
including that some carriers do not allow for payment of baggage fees 
at time of ticketing even when travel is purchased directly from the 
carrier and many consumers do not know at time of ticketing whether or 
how many bags the consumer will want transported. Several carrier 
comments reflect agreement with the Department's tentative decision not 
to require transactability, including those of Delta and United. 
Frontier also opposed transactability, stating that it would increase 
airline costs which would in turn be passed on to consumers. Virgin 
Atlantic opposed a transactability requirement because it would 
undermine carrier ability to control its distribution scope and costs 
and essentially mandates the commercial relationship between a carrier 
and its agents solely to the benefit of agents.
    DOT Response: We have carefully considered all of the comments 
supporting and opposing transactability. We note that the Department 
has already prohibited post-purchase price increases on transporting 
baggage. The Department's Enforcement Office has also indicated that it 
intends to pursue enforcement action against carriers that increase 
fees for baggage not provided with the ticket but traditionally 
included in the price of the ticket (i.e., carry-on bag, 1st and 2nd 
checked bag). Therefore, the Department's existing rule regarding 
baggage fee price increases has already addressed the concern that 
ticket agents will provide consumers information on baggage fees that 
will be inaccurate or the price will increase before the consumer has 
the opportunity to purchase baggage transportation services. Regarding 
seat assignment fees, since the Department has tentatively concluded 
that advance seat assignments are not truly intrinsic to air 
transportation, and consequently determined not to propose a 
requirement that ticket agents disclose fees for seat assignments, 
consumers will not be presented with seat assignment options that they 
cannot purchase immediately. This means consumers will not be confused 
by being presented a seat assignment that they cannot obtain, or risk 
being unable to purchase their chosen option at the advertised price.
    We recognize that requiring airlines to make both baggage and seat 
assignments transactable services through ticket agents would 
potentially increase consumer satisfaction and decrease transaction 
costs of time spent on shopping and booking when using ticket agent Web 
sites to book travel. We are also aware of the importance of 
transactability as a business matter to ticket agents that must provide 
the services consumers want and expect or risk losing business. We 
recognize that comments by some stakeholders,

[[Page 7548]]

including ticket agents and consumer advocacy groups, indicate that 
airlines are not motivated to enter into agreements to allow 
transactability. In addition, we recognize that many consumers do not 
purchase baggage transportation at the same time they purchase travel, 
so there may be limited incentive for either ticket agents or carriers 
to negotiate agreements on transactability in this area. However, we 
are encouraged by the progress reported to date by both carriers and 
ticket agents in reaching some agreements that permit ticket agents to 
sell select carrier ancillary services. We also note that both ticket 
agents and airlines have stated that airlines have a strong incentive 
to make airline ancillary services more widely available to consumers 
in order to sell more of those services. Accordingly, we believe that 
carriers and ticket agents may be able to reach agreements to transact 
various ancillary services if there is sufficient benefit to all 
commercial entities in the transaction. We also recognize that 
corporate travel agents have additional concerns specific to their 
business model regarding customer frustration with a travel agent's 
inability to transact certain services as well as business concerns 
regarding tracking costs for corporate travel clients. However, we feel 
the benefits of having the information available for consumers 
outweighs any frustration caused by the inability to purchase through a 
ticket agent, particularly since the only fees that must be disclosed 
under the current rulemaking are baggage fees, which are not permitted 
to be increased. Regarding tracking the costs of travel for business 
purposes, the same problem exists if a consumer does not decide to 
check a bag until the date of travel and pays at the airport. At least 
under the disclosure requirement, corporate travel agents can include 
the amount of bag fees that potentially may be incurred in a travel 
record for purposes of record keeping. Ultimately we believe there are 
even greater incentives for both carriers and ticket agents to come to 
agreements regarding transacting ancillary services in the corporate 
travel arena than in connection with leisure travel.
    Finally, in connection with technical issues related to 
transactability, we note that some stakeholders alleged that a 
requirement to distribute ancillary service fees through GDSs would 
essentially require carriers to distribute static fees to ticket agents 
instead of the dynamic fees currently available on carrier Web sites. 
ATPCO's comments support that view to some extent based on its 
description of the current capability for entities to transact checked 
bag fees using ATPCO codes and the complexity of carry on and seat 
assignment fees, which would require more development by ATPCO. 
However, we also note that GDSs comment that they have been developing 
technology solutions and the technology already exists for ancillary 
services to be transactable through GDSs. Meanwhile, although carriers 
object to undue intrusion into their businesses, they also point to 
agreements carriers have reached on transacting ancillary services to 
support the position that the market is solving the disclosure problem. 
This leads us to conclude that technical obstacles to transactability 
are not insurmountable and would not require disclosure of only static 
baggage fees. Meanwhile, we remain of the view that the Department 
should limit its intervention concerning commercial negotiations in 
this area at this time and continue to rely on market forces to a large 
extent. Therefore, we are proposing a revised disclosure option that we 
believe offers the maximum consumer disclosure benefit while stopping 
short of requiring transactability. At this time, the Department is 
relying on competition and market forces but will continue to monitor 
the issue. If the Department identifies evidence of consumer harm 
resulting from a lack of transactability and a market failure 
preventing resolution of the problem, we will revisit the issue in a 
future rulemaking. At this time, however, we are not proposing a 
transactability requirement.

E. Contract Provisions Among Carriers, GDSs, and Other Ticket Agents

    The NPRM: In the NPRM, we noted that if we adopted a provision 
requiring carriers to disclose ancillary service fee information to 
ticket agents and ticket agents to disclose it to consumers, it would 
be unlawful to provide fare information that did not include the fees 
for basic ancillary services. Accordingly, we stated that to the extent 
that carriers have existing contractual relationships with ticket 
agents acting as intermediaries, such as GDSs, to distribute fare 
information, those ticket agents acting as intermediaries would be 
prohibited from imposing charges for the distribution of required 
ancillary service fee information. We also noted that we would expect 
GDSs to work in good faith with carriers and other ticket agents that 
are able to agree on alternative distribution methods that do not 
include the GDSs to allow integration of information obtained through 
other sources and information obtained through GDSs.
    Comments: Travel Tech commented that the ban on GDSs charging 
additional fees should only apply to existing contracts and that the 
language of the rule should be changed to clarify this. Travel Tech 
also argued that if a requirement for carriers to provide basic 
ancillary fee information only to ticket agents that sell a carrier's 
tickets directly to consumers is adopted, it should be changed to make 
it clear that the contract limitation only applies to those ticket 
agents. Travel Tech also argued that carriers should be required to 
provide the same fees for ancillary services that carriers display on 
their own sites and not higher service fees, otherwise ticket agents 
would effectively be prohibited from negotiating with carriers 
regarding the ancillary service fees the ticket agent must disclose and 
ticket agents that display fees to consumers would be limited in the 
fees they could display to consumers. Amadeus commented that the 
Department should clarify that the prohibition against imposing 
additional charges on carriers for distributing ancillary service fee 
information expires at the termination of an existing contract. Amadeus 
also argued that, during the existing contract period, the carrier 
should provide the same fee information to the GDSs that is available 
on the carrier's Web site. In contrast, Travelport opposed the 
contractual provision and stated it is confusing and that the 
Department should not interfere with contractual negotiations.
    Open Allies commented that it is acceptable to ban the imposition 
of additional charges on carriers, but only for the length of the 
existing contract. Open Allies also argued that carriers should be 
required to provide the same fees for ancillary services, not higher 
fees, to ticket agents during the term of the existing contracts. ASTA 
opposed the contract provision, stating that it is outside the scope of 
Department authority. It also asserted that, as the provision is 
drafted, it is unclear about which ticket agents are covered. According 
to ASTA, most travel agents receive airline flight information through 
GDSs and their contracts with airlines are through the Airlines 
Reporting Corporation (ARC) and can be unilaterally amended by the 
airlines but not travel agents. Further, as a practical matter, travel 
agents are not in a position to unilaterally impose charges on 
airlines. ASTA commented that it would be inappropriate for the 
Department to prohibit travel agents from imposing charges on 
consumers, but it appears the Department meant to only cover ticket 
agents acting as

[[Page 7549]]

intermediaries and prevent charges to carriers. However, according to 
ASTA, that is not clear from the proposed rule text. AACO commented 
that even if the Department prohibited GDSs from imposing an explicit 
fee in connection with the requirement to disclose certain ancillary 
service fee information, GDSs could still introduce adjustments in 
other service charges to compensate for the requirement.
    DOT Response: The Department has considered the comments regarding 
a contract provision prohibiting ticket agent intermediaries from 
imposing additional charges on carriers in connection with distributing 
ancillary service fee information along with fare information. We 
recognize that some ticket agents oppose any Department involvement in 
contractual arrangements between private entities, and we are similarly 
reluctant to insert the Department into such arrangements. However, 
since the Department is proposing to impose a new legal requirement on 
carriers and the ticket agents that distribute carrier fares and 
certain ancillary service fees, we believe it is appropriate to put in 
place a short term restriction on unilateral changes to contract 
arrangements.
    We recognize that distribution of ancillary service fees has been 
very controversial, in particular in GDS dealings with carriers, and in 
order to prevent business disputes from interfering with the 
implementation of a new Department requirement we have determined it is 
appropriate to implement a regulation with limited scope that covers 
only existing contracts that were negotiated based on a different 
regulatory background. The proposed restriction is only intended to 
cover contract provisions regarding charges imposed on airlines by 
ticket agent intermediaries for distributing certain ancillary fee 
information that the rule requires to be distributed along with fare 
information. The proposed restriction would only impact contracts for 
their current term at the time a final rule is issued in order to 
reflect the changed regulatory environment; future negotiations will 
enable all parties to negotiate based on the regulatory changes.
    We believe that in practice the proposed disclosure requirement 
will not require significant investment in new technology by GDSs since 
GDSs already have a significant amount of baggage information through 
ATPCO filings. Accordingly, we would expect GDSs to work with carriers 
in good faith and not attempt to circumvent the restriction on 
additional charges by adding charges in other areas to evade the 
restriction. To the extent that a GDS engaged in such tactics, the 
Department would consider it a violation of the provision preventing 
such charges. The restriction only limits unilateral imposition of new 
charges on airlines by intermediary ticket agents. It is not intended 
to prevent good faith negotiations to revise existing contracts or to 
carry over to any new contracts negotiated after issuance of this final 
rule. We agree with some commenters that the rule text should be 
clarified to make clear it covers only existing contracts and have made 
the appropriate changes in the proposed rule text. We have also revised 
the proposed rule text in connection with ASTA's comment that the 
provision could be read to apply to travel agents that do not receive 
information directly from carriers. We do not intend for the proposed 
restriction to cover such contracts.
    In connection with comments that carriers should be required to 
provide the same fees for ancillary services that carriers display on 
their own sites and not higher service fees, we have decided not to 
propose such a restriction. It is not the Department's position that 
the same ancillary service fees must be charged at all outlets, merely 
that consumers should be informed of the basic ancillary service fees 
so they can determine the true cost of air transportation and make an 
informed decision before making a purchase. Therefore, we tentatively 
believe it is appropriate to leave it to carriers and ticket agents to 
determine the ancillary service fees that will be charged through 
ticket agents. Although we recognize that this means a carrier would 
not be prohibited from implementing different fees for baggage, 
depending on the outlet from which the consumer chooses to purchase air 
transportation, as a practical matter, we believe it would be 
challenging for carriers to implement varying charges in the current 
technological environment. Therefore, under the proposed provision, 
carriers and ticket agents will have the opportunity to come to 
agreement on this issue as new contracts are negotiated and new 
commercial and technological arrangements are put in place.

F. Customer-Specific or Itinerary-Specific Fee Information

    The NPRM: The NPRM recognized that requiring carriers to disclose 
basic ancillary service fee information to ticket agents is not helpful 
to consumers if it is not displayed to them. Further, to address the 
issue of consumer difficulty in finding basic ancillary service fee 
information, the information must be displayed by both carriers and 
ticket agents in specific amounts, not a range of fees. The NPRM 
proposed to require carriers to provide customer-specific information 
if a consumer provides identifying information and itinerary-specific 
information if identifying information is not provided. The NPRM 
further proposed to require ticket agents to provide itinerary-specific 
information. In the NPRM, we stated that ``customer-specific'' refers 
to variations in fees that depend on, for example, the passenger type 
(e.g., military), frequent flyer status, method of payment, geography, 
travel dates, cabin (e.g., first class, economy), ticketed fare (e.g., 
full fare ticket -Y class). By contrast, ``itinerary-specific'' fee 
information does not include variations in fees that depend on the 
attributes of the passengers such as the passenger type (e.g., 
military), frequent flyer status, or method of payment. For itinerary-
specific information, the NPRM proposed that both carriers and ticket 
agents would be required to take into account variations in fees that 
are related to the itinerary such as travel dates, geography, ticketed 
fare and cabin.
    In addition to providing itinerary-specific fees for a first 
checked bag, a second checked bag, a carry-on bag and an advance seat 
assignment, when displaying itinerary-specific information, the NPRM 
stated that ticket agents would also be required to clearly and 
prominently disclose that these fees may be reduced or waived based on 
the passenger's frequent flyer status, method of payment or other 
characteristic. In either case, whether customer or itinerary-specific 
fee information is displayed, both airlines and ticket agents that have 
Web sites marketed towards U.S. consumers would have to disclose, or at 
a minimum display by a link or rollover, the fees for these basic 
ancillary services on the first page on which a fare is displayed in 
response to a search for a specific flight itinerary.
    During the comment period, an important clarification was made 
regarding the NPRM. A4A pointed out that the NPRM stated ``Carriers 
would, of course, be required to provide ticket agents the fee rules 
for particular passenger types (e.g. military, frequent flyers, or 
credit card holders)'' Notice at 29977. A4A observed that this is 
customer-specific information that ticket agents would not need to meet 
the requirement to provide ``itinerary specific'' fee information. In 
response to the A4A inquiry, Department staff confirmed that the NPRM 
statement was

[[Page 7550]]

an error.\5\ Nevertheless, as the NPRM stated, ticket agents may come 
to agreements with airlines that would enable the ticket agent to 
provide customer-specific ancillary service fee information.
---------------------------------------------------------------------------

    \5\ See DOT-OST-2014-0056-0624, Summary of Proceedings, DOT 
Meeting with Airlines for America (A4A) (posted September 15, 2014).
---------------------------------------------------------------------------

    Comments: We received extensive comments supporting greater 
disclosure. Of consumers favoring greater disclosure, several also 
comment in favor of a standardized display of some kind, whether a 
table or other format. In connection with innovative alternatives and 
solutions not considered, Travelers United and NCL commented that 
better display of information is needed but do not argue for or against 
the display requirements proposed, supporting instead a requirement 
that all data be made available so market innovation can improve how 
the information is provided to consumers. Open Allies supported greater 
disclosure of ancillary service fees and stated that the Department 
should require airlines to provide ticket agents information to provide 
customer-specific, transactable, quotes. Open Allies argued that if the 
Department does not require carriers to provide enough information for 
ticket agents to display customer-specific quotes, consumers will not 
have enough information in the ticket agent channel and may choose 
flight options that are more costly than the option they would have 
chosen if the ticket agent displayed more information. Travel Tech 
supported a disclosure requirement that is the same for carriers and 
ticket agents and stated the Department should require carriers to 
provide customer-specific quotes so that carriers and ticket agents are 
on equal footing. Amadeus generally supported the proposed display 
requirements for itinerary-specific fees and stated that the Department 
should also require carriers to provide customer-specific fee 
information to ticket agents so that ticket agents may provide 
customer-specific fee quotes when the ticket agent has sufficient 
information about the passenger. Amadeus argued that the Department 
should ensure that consumers dealing with the indirect ticket agent 
channel have access to the same ancillary fee data that is available 
from the airline channel.
    Southwest Airlines also supported a requirement to disclose 
ancillary service fees, stating that consumers are not necessarily able 
to determine the true cost of their own travel because they do not know 
how much bag fees will be for a particular flight option and as a 
result sometimes choose flights that they otherwise would not have 
chosen. Southwest also stated that requiring display of baggage fees 
will put downward pressure on those fees. Global Business Travel 
Association commented in favor of the proposed disclosure requirements, 
commenting that the Department should require both airlines and ticket 
agents to display certain ancillary service fees on the first page of 
search results.
    However, many commenters opposed proposed display requirements 
which would result in carriers providing customer-specific information 
to consumers that identified their customer category while ticket 
agents would only be required to provide itinerary-specific 
information. ASTA pointed out that if the Department adopts display 
requirements as proposed in the NPRM, carriers would be subject to 
different disclosure requirements to the extent that a consumer 
provides identity information to a carrier, which according to ASTA 
discriminates against and disadvantages ticket agents and defeats the 
stated regulatory intent. Orbitz also opposed proposed display 
requirements, stating that providing more information at the start of 
the booking process will overwhelm and confuse consumers. Further, 
according to BCD, display requirements will impose additional 
compliance costs on travel management companies like BCD without 
providing an opportunity to recoup those costs by offering enhanced 
services, and those costs will be passed on to BCD clients. CWT also 
argued that the Department should consider the differences between 
corporate and leisure travelers and stated that only those fees that 
can be booked in advance should have to be disclosed, and they should 
also be transactable or the requirement undermines the distribution 
system. Instead, CWT supported leaving the existing disclosure 
requirements unchanged.
    Many airlines and airline associations also opposed new display 
requirements. A4A commented that the proposal is not needed as the 
Department has already implemented fee disclosure requirements, 
including requirements for disclosures on carrier and ticket agent Web 
sites and in e-ticket confirmations. A4A argued that the Department 
should rely on market pressures to encourage carriers to provide any 
further disclosures to consumers regarding ancillary service fee 
information. According to A4A, there is no evidence of consumer injury 
to support additional display requirements, and the consumer comments 
and complaints regarding fees that the Department relies on are not 
specific enough to justify new display rules. In addition, A4A stated 
that a requirement that airlines and ticket agents provide itinerary-
specific display results that are not based on the identity of the 
customer will provide inaccurate information to consumers that may be 
eligible for ancillary service fee discounts based on factors such as 
frequent flyer membership or method of payment. Air New Zealand and 
Copa commented on the increased costs that airlines will incur to 
ensure that ticket agents have additional and correct information to 
provide to consumers.
    Google, Inc. (Google), Hipmunk, Inc. (Hipmunk), Kayak Software 
Corporation (Kayak), Skyscanner Limited (Skyscanner), Travelzoo, Inc. 
(Travelzoo), and TripAdvisor LLC (TripAdvisor), referring to themselves 
as the ``Metasearch Providers,'' filed joint comments summarizing their 
``consensus views on the nature of the services they provide and the 
Department's jurisdiction.'' The Metasearch Providers argued that they 
have a different role from other ticket agents and should not be 
subject to display requirements because it is unnecessary and could 
hamper a consumer's search and discourage overall innovation. The 
Metasearch Providers stated that display of baggage and seat assignment 
fees is not necessarily useful to consumers that are just exploring 
travel options. They also stated that disclosure requirements would 
impose significant costs for programming and may discourage entities 
operating flight search tools from displaying prices at all. CCIA 
commented that display requirements should not apply to entities 
operating metasearch tools because those entities have strong 
incentives to provide their users with accurate information and a 
requirement to show particular information for every flight search 
would dampen innovation in the flight search exploration process. 
According to CCIA, the Department should require airlines to provide 
dynamic ancillary fee data without imposing any ``rigid'' display 
requirements, particularly on metasearch entities. Finally, both 
TripAdvisor and Skyscanner argued that requirements to disclose 
information to consumers should not apply to them and instead it should 
be left to the metasearch entities to determine the best method of 
disclosure to consumers.
    DOT Response: After reviewing the comments and considering the 
options, the Department has determined that it would be more 
transparent and better serve consumers to have a uniform,

[[Page 7551]]

more specific, display requirement for consumers. Currently, the burden 
is on the consumer to research the airline's fees and policies to try 
to determine which baggage fees may apply to the consumer's air travel. 
However, we think it is reasonable for consumers to be able to obtain 
fee information that applies to specific categories of customers. We do 
not want to interfere with business agreements or impose additional 
complexity on airlines and ticket agents by requiring airlines to 
provide personal information regarding their customers to ticket 
agents. Therefore, we have not proposed to require carriers or ticket 
agents to provide information that is specific to individuals. Instead, 
this SNPRM would propose to require carriers to provide the fees for 
specific categories of customers to ticket agents. It would also 
require carriers and ticket agents to modify their Web pages to allow 
consumers the option to indicate any factors that may impact the fees 
that the consumer might pay to transport baggage. As some of the 
comments suggested, we agree that it should be optional for consumers 
to provide the information. Some consumers might prefer to search for 
flight options without providing that information. Other consumers 
might be searching for multiple passengers, each of whom might fall 
into a different customer category, in which case the consumer might 
need to search flight options more than once to determine what baggage 
fees applied to each passenger's air travel. However, we believe 
consumers should have those options rather than having only the option 
to review multiple static lists to try to determine which baggage fees 
apply. In the Department's view, the burden of identifying specific 
baggage fees more appropriately falls on the carrier and ticket agent 
rather than the consumer. Accordingly, we believe consumers should have 
the option to provide information to obtain more specific fee 
information if the consumer chooses to do so.
    We seek comment on whether the proposal in this SNPRM covers the 
appropriate categories of consumers that may be eligible for 
specialized baggage fees and should be included in the proposal. In the 
2014 NPRM, we identified the following categories: Military, credit 
card holders (method of payment), and frequent flyer members. We have 
included those same categories in this SNPRM. We seek comment on 
whether those categories of consumers are sufficient to provide most 
consumers with specific baggage fee information. In the alternative, 
should the Department include any additional customer categories in the 
requirement? We also seek comment on whether the Department should 
include in the requirement a general obligation to disclose that 
baggage fees may be reduced or waived based on other consumer 
characteristics to be specified by the carrier. In other words, if 
there are additional categories of consumers that may be eligible for 
specialized baggage fees on a particular airline but it is not a 
general category across airlines and is not identified in this 
rulemaking, should the airline be required to provide additional notice 
to consumers?
    Regarding method of payment, we are aware that there are many 
credit cards that may provide consumers with the benefit of free or 
reduced baggage fees. Should we identify specific credit cards that 
must be included in the list of options that consumers may select or 
simply require that all carrier-affiliated cards offering baggage fee 
benefits be included as options for consumers?
    Regarding frequent flyer programs, we recognize that there is 
variation in each carrier's program, for example, different levels of 
membership with different benefits depending on the consumer's status. 
Should we specify the levels of membership and status for which 
information must be provided or is it sufficient to state that each 
carrier should identify the levels of membership and provide relevant 
benefit information for all levels of membership (i.e., information on 
benefits pertaining to baggage fees) to all ticket agents?
    In addition, there are also carrier-alliance programs that confer 
their own benefits. Should we require airlines to provide information 
regarding carrier-alliance programs as well? If so, would it be 
necessary for each carrier to identify the levels of membership and 
provide relevant benefit information for all levels of membership 
(i.e., information on benefits pertaining to baggage fees) to all 
ticket agents?

G. Web Site and Mobile Application Displays; Consumer Opt-Out; and 
Implementation Period

    The NPRM: The 2014 NPRM made clear that to comply with the proposed 
ancillary service fee disclosure requirement, airlines and agents would 
have to modify their Web sites to display the basic ancillary service 
fees adjacent to the fare information on the first page that displays a 
requested itinerary with fare. The NPRM asked for comment about several 
aspects of the proposed disclosure options, including whether ancillary 
service fee information should be displayed only upon a consumer's 
request or always provided on the first page of search results and 
whether disclosure of basic ancillary service fee information should be 
required on limited availability sites, such as corporate travel Web 
sites. Both proposals would have required that carriers and ticket 
agents that have Web sites marketed towards U.S. consumers must 
disclose, or at a minimum display by a link or rollover, the fees for 
basic ancillary services on the first page on which a fare is displayed 
in response to a search for a specific flight itinerary. The NPRM made 
clear that to comply with the proposed disclosure requirement, airlines 
and agents would have to modify their Web sites to display these basic 
ancillary service fees adjacent to the fare information on the first 
page that displays a requested itinerary with fare. The NPRM also 
sought comment on whether the Department should require carriers and 
agents to provide information on standard fees for baggage or require a 
variety of baggage fees to be displayed, and if a variety of fees for 
each service, how such fees should be arranged in displays. We also 
asked for information on the technological feasibility and cost of 
requiring this information to be displayed. Finally, the NPRM also 
requested comment on whether we should leave the existing requirements 
on baggage disclosure in place instead of adopting either of the 
proposals. We also encouraged interested parties to provide comments 
regarding any innovative alternatives or solutions that the Department 
may not have considered but that would address the lack of disclosure 
of ancillary service fees in all sales channels.
    Comments: We received extensive comments in connection with these 
issues. In addition to consumer comments generally supporting greater 
disclosure, some consumers comment in support of specific display 
requirements, including over 20 supporting display of fees on the first 
page displaying fares and six supporting display later in the search 
process but before purchase. Several consumers also commented in favor 
of a standardized display of some kind, whether a table or other 
format. Consumer advocacy groups Consumers Union and U.S. PIRG 
supported a requirement to display ancillary service fee information 
automatically alongside the fares on the first page of search results 
displayed to consumers. They further commented that to the extent all 
ancillary service fee information is provided (i.e., beyond

[[Page 7552]]

baggage fees) and this would crowd the page, then a link should be 
provided along with clear and conspicuous notice that other fees may 
apply. In connection with innovative alternatives and solutions not 
considered, Travelers United and NCL commented that better display of 
information is needed but they do not argue for or against the display 
requirements proposed, supporting instead a requirement that all data 
be made available so market innovation can improve how the information 
is provided to consumers. In connection with how ancillary service fee 
information should be displayed, Open Allies urged the Department to 
allow carriers and ticket agents flexibility in how information is 
disclosed and expresses concern that too much information on a screen 
will make it hard for consumers to comprehend. Open Allies supported 
the proposal to permit the use of links or rollovers provided that a 
prominent notice adjacent to the advertised fare makes clear that 
ancillary service fees are disclosed via a link or rollover. Regarding 
an opt-out option, Open Allies stated it ``doubts that most consumers 
would select the opt-out option,'' but agreed providing that 
flexibility makes sense. Travel Tech supported a disclosure requirement 
that is the same for carriers and ticket agents. In connection with how 
the information is displayed, Travel Tech urged the Department to allow 
flexibility, including the use of links or roll-overs. It also urged 
the Department to extend that flexibility to mobile displays. Regarding 
opt-out, Travel Tech supported allowing the option of an opt-out that 
is not pre-selected and includes notice that ancillary service fees may 
apply. According to Amadeus, display of ancillary service fee 
information does not need to be provided on the first screen, it only 
needs to be provided before a booking decision is made.
    Orbitz opposed proposed display requirements, stating that 
providing more information at the start of the booking process will 
overwhelm and confuse consumers. Orbitz also commented that any display 
standard adopted will quickly become obsolete or hinder innovation as 
technology changes. Orbitz also opposed imposing display requirements 
on mobile platforms as it would be difficult to implement and would 
impair the user experience. In connection with corporate travel sites, 
Orbitz opposed any display requirements, noting that display content is 
typically negotiated by the businesses involved. BCD also opposed 
display requirements on corporate travel agent sites, arguing that if 
it is not able to transact ancillary service fees, it should not be 
required to display such fees. According to BCD, display requirements 
will impose additional compliance costs on BCD without providing an 
opportunity to recoup those costs by offering enhanced services and 
those costs will be passed on to BCD clients. CWT also argued that the 
Department should consider the differences between corporate and 
leisure travelers and stated that only those fees that can be booked in 
advance should have to be disclosed and they should also be 
transactable or the requirement undermines the distribution system. In 
connection with Section 399.85, CWT commented that it should not be 
changed.
    A4A argued that the proposed disclosure requirement will cause sub-
optimal displays, providing fee information that consumers may not be 
interested in and taking up screen space that could be used to provide 
additional flight options or other information. A4A noted that the fee 
information might vary for every segment of the itinerary and argues 
that the sheer volume of information displayed is likely to overwhelm 
rather than assist consumers. A4A also stated that the proposed display 
requirements are contrary to the current carrier trend to offer bundled 
pricing and differentiated seat products and limit carriers' ability to 
provide such offerings. In addition, A4A stated that a requirement that 
airlines and ticket agents provide itinerary-specific display results 
that are not based on the identity of the customer will provide 
inaccurate information to consumers that may be eligible for ancillary 
service fee discounts based on factors such as frequent flyer 
membership or method of payment. Regarding searches for multiple 
passengers, A4A stated the search results displayed might not reflect 
the discounts available to some members of the group. A4A also noted 
that if more information must be displayed, search results will likely 
take longer to display due to increased processing time.
    Regarding mobile applications, A4A commented that the problem of 
displacing information such as additional flight options on Web sites 
is particularly acute on mobile devices ``because first-screen space is 
limited and valuable,'' therefore the Department should not expand the 
display rules to mobile applications. Delta also opposed display 
requirements stating that it would have a negative impact on speed and 
performance of reservations systems and would be costly and time 
consuming to implement. United opposed a requirement to display basic 
ancillary service fees at the first point in a search process where a 
fare is listed, stating that it will waste time for consumers because 
search results will be slowed by additional processing time for the 
information, then consumers must review additional information they are 
not interested in or click on links or pop-ups to see the information. 
Meanwhile, fewer flight options will be displayed on each screen. 
United also argued that search results may display inaccurate 
information depending on whether the consumer is conducting an 
anonymous search but is entitled to reduced fees, or a consumer is 
searching for multiple passengers, and similar concerns.
    CCIA also commented that display of ancillary service fee 
information could result in screen clutter, which would be frustrating 
to users and that the proposed display requirements ``are not 
adequately designed to work on a mobile platform'' and may impede the 
consumer experience. TripAdvisor also commented that the Department 
should exempt mobile displays from display requirements or tailor 
requirements to a range of display sizes. Skyscanner commented that 
display of a large volume of information is unfeasible on a mobile 
device so, if implemented, displays would become less useful to users 
of mobile sites or mobile applications. Displays would be slower and 
include fewer options in a more cluttered presentation. USTOA opposed 
the proposed display requirements, stating that they will limit 
development of new business models, and questions how tour operators 
that sell bundled packages that may include airfare would comply with 
disclosure requirements.
DOT Response
Disclosure and Display Requirements
    We recognize that the comments reflect legitimate concerns about 
the fact that if more information must be displayed, more screen space 
is consumed and search results will likely take longer to display due 
to increased processing time. However, we also note that many of the 
comments on this issue focused on the amount of screen space and 
increased processing time required for the display of seat assignment 
fees, which are generally dynamically priced and therefore would 
require additional processing time. As noted earlier, we have decided 
not to include disclosure of seat assignment fees in this proposal. 
Regarding baggage fees, although displaying such fees may also require 
some additional processing time and

[[Page 7553]]

will use some additional screen space, it is a cost that carriers have 
chosen to state separately from airfare and is information that 
consumers and consumer advocates have repeatedly stated that consumers 
need in order to determine the true cost of travel.
    Nevertheless, we agree it is important to make the information as 
easy to provide and as useful to consumers as possible. Accordingly, we 
request comment on whether we should permit the baggage fee information 
to be displayed by links or roll-overs on all displays or on certain 
mobile displays.
    Regarding the comment by A4A and others that the fee information 
might vary for every segment of the itinerary and the volume of 
information displayed is likely to overwhelm rather than assist 
consumers, this concern does not apply to baggage fees since carriers 
must apply the baggage allowances and fees that apply at the beginning 
of a passenger's itinerary throughout his or her entire itinerary 
pursuant to 14 CFR 399.87.\6\
---------------------------------------------------------------------------

    \6\ We note that carriers always have the option of waiving a 
baggage fee or offering a lower baggage fee than advertised for any 
segment of an itinerary. As the Department's Office of Aviation 
Enforcement and Proceedings has stated regarding Section 399.87, it 
does not prevent a carrier from charging a lower fee as a courtesy. 
[Cite is FAQ 50]
---------------------------------------------------------------------------

    Some comments expressed concern that the Department's proposed 
display requirements are contrary to the current carrier trend to offer 
bundled pricing and customized pricing. The Department's consumer 
protection rules in this area are intended to protect consumers from 
being surprised by unexpected fees and to allow them to discern the 
true cost of air transportation before making a purchase. To the extent 
carriers or ticket agents choose to offer bundled fares that include 
baggage in addition to, or instead of, offering fares that do not 
include baggage fees, they would not be prohibited from doing so. Under 
this proposal the display of such fares would only be required to make 
clear that there is no additional baggage fee associated with that fare 
if that is the case.
    Regarding air-tour packages, we recognize that air transportation 
may be purchased in bulk by the seller of the tour package and the 
carrier may be unknown at the time of purchase which may make it 
difficult to provide specific baggage fee information. Accordingly, we 
have tentatively concluded not to require ticket agent sellers of air-
tour packages to provide disclosure of specific baggage fees in certain 
circumstances. Specifically, if air transportation is arranged at a 
later date and specific airline and baggage fee information is not 
known at the time of booking, ticket agents would not be required to 
display the baggage fee. However, when displaying such air-tour package 
prices, such ticket agent displays would be required to prominently 
disclose that baggage fees may apply if that is the case. In addition, 
ticket agents would be required to disclose in online displays and oral 
communications that baggage fees may apply and that those fees may be 
reduced or waived based on the passenger's frequent flyer status, 
method of payment or other consumer characteristic. This exception 
would not apply to air carriers or foreign air carriers selling air-
tour packages. We request comment on whether this exception for certain 
air-tour packages adequately addresses concerns of air-tour package 
sellers. We also request comment on whether such an exception 
adequately protects consumers.
Opt-Out
    Regarding the concern that consumers may not be interested in 
baggage fee information being displayed and it may take up screen space 
that could be used to provide additional flight options or other 
information, we recognize there may be reasons that consumers wish to 
opt-out of display of baggage fees, for example if the consumer will be 
traveling without checked baggage. We agree that it is reasonable to 
provide entities the flexibility to provide such an option. Most of the 
comments on this issue agreed that it was reasonable to provide an opt-
out option. In addition, if an entity anticipates that there will be a 
significant impact on the speed of search results or particular display 
options the entity provides, the option to provide an opt-out for 
baggage fees would address those concerns by providing carriers and 
ticket agents the option to provide consumers what may be a faster or 
more streamlined display of search results, if consumers choose such 
displays. We anticipate that basic baggage fee information will be 
useful to many, if not most, consumers, and that they will often choose 
displays that include such information. However, by providing an opt-
out option for baggage fee information, entities that display flight 
information would still have the flexibility to provide search results 
without that information if the consumer chooses a display option that 
does not include it. Accordingly, our proposal would permit carriers 
and ticket agents to provide various opt-out options. Opt-out options 
could include the choice to opt-out of seeing all baggage fee 
information that would otherwise be required to be displayed (first and 
second checked bag and carry-on bag) or to opt-out of seeing some of 
those fees. For example, a consumer might choose to see fees for carry-
on and first checked bag, but not second checked bag. Another option 
might be that a consumer could choose to see only carry-on bag. A third 
option could be to see first and second checked bag fees but not the 
carry-on bag fee. The opt-out options that may be provided would be up 
to the carrier or ticket agent and no opt-out would be required under 
the proposal.
    We seek comment on whether providing the flexibility to furnish a 
variety of opt-out options addresses some of the concerns of carriers 
and ticket agents regarding increased processing times and screen 
clutter. We also seek comment on whether providing opt-out options 
would adequately protect consumers.
Display of Search Results on Mobile Displays
    In connection with applicability to mobile applications (apps) and 
mobile Web sites, several commenters state that the Department should 
consider more limited requirements for mobile outlets because 
implementation of new rules in the mobile environment is technically 
more difficult and detailed disclosures may be difficult to incorporate 
and display, particularly considering the screen size of some mobile 
devices. We recognize some of the inherent limitations of displays 
designed for mobile outlets. Comments suggesting more limited 
disclosure requirements for mobile outlets focused on the complexity of 
potential disclosure requirements. The limitation of disclosure 
requirements to certain baggage fees will reduce the amount of screen 
space used for additional disclosures.
    In addition, some commenters stated concern that there would be 
technical difficulty in implementing increased disclosure requirements 
and increased processing time; however, we note that similar concerns 
apply to non-mobile internet displays. However, we have determined that 
the consumer benefit to having basic ancillary service fee information 
outweighs the potentially increased processing times. As some 
commenters noted, consumers in increasing numbers are using apps to 
book travel. Therefore, we believe it is important that the same 
consumer protections apply to apps as to other outlets directed to 
consumers. Accordingly, we have tentatively concluded that the 
disclosure requirements should be the same on apps as on Web sites or 
mobile Web

[[Page 7554]]

sites. We request comment on whether allowing disclosure via links or 
pop-ups would simplify the disclosure process and reduce technical 
issues and speed processing times for mobile outlets.
    We also note that the FTC has provided guidance regarding internet 
disclosures (See .com Disclosures: How to Make Effective Disclosures in 
Digital Advertising, available at https://www.ftc.gov/system/files/documents/plain-language/bus41-dot-com-disclosures-information-about-online-advertising.pdf). The FTC's guidance notes that using 
hyperlinks, rollovers, or pop-ups for price and certain other 
disclosures may be less effective. Consistent with DOT's position in 
this SNPRM, the guide states that ``consumers should not have to click 
on hyperlinks to understand the full amount they will pay.'' The guide 
therefore suggests that fee or cost information should be disclosed 
adjacent to the price claim, unless the information is very complex. 
Similarly, the guide notes that rollovers or mouseovers ``may not work 
on mobile devices that have no cursor to hover over a link.'' Finally, 
the guide cautions that pop-ups may be blocked by software or otherwise 
ignored by consumers.
    Accordingly, we request that commenters provide any consumer 
research or data that indicates whether hyperlinked or other 
disclosures not adjacent to the fare on a mobile site would or would 
not be effective.
Implementation Period
    In connection with the time to implement rule, the Department is 
tentatively of the view that a six month implementation period to 
display consumer-specific fee information for a first checked bag, a 
second checked bag and a carry-on bag to consumers whenever fare and 
schedule information is provided would be appropriate and should 
provide enough time for both carriers and ticket agents to update Web 
sites and apps. We recognize that in order to make technical changes 
and accommodate new information, individual ticket agents will need to 
know in detail how the information will be distributed from carriers to 
the ticket agent and have the information from carriers well before the 
display deadline. We anticipate carriers will work in good faith with 
ticket agents, including GDSs and other ticket agent intermediaries, to 
ensure that the distribution method and details are worked out well in 
advance of the display deadline. In this regard, we have tentatively 
concluded that carriers should ensure ticket agents have the 
information no later than three months before the display deadline. We 
note many of the comments state that a lengthy implementation period 
will be necessary to implement any disclosure requirement and some 
suggested several years. However, many of the reasons presented for the 
multi-year implementation period had to do with the complexity of 
disclosing multiple dynamic fees. Since the Department is limiting the 
requirement to disclosure of one carry-on item and a first and second 
checked bag, the Department believes a six month implementation period 
is appropriate.
    We request comment on whether this proposed implementation period 
is too lengthy or too short. If the proposed implementation period is 
either too lengthy or too short, how long of an implementation period 
would be appropriate?

H. Revised Baggage Fee Disclosure Requirements and 14 CFR 399.85(b) and 
(c)

    This proposed rule, if adopted, would require carriers and ticket 
agents to provide customer-specific baggage fee information for one 
carry-on item and a first and second checked bag if they provide fare 
information. We are tentatively of the view that there would no longer 
be a need for a requirement that airlines and ticket agents provide a 
general statement on the first screen on which the agent or carrier 
offers a fare quotation for a specific itinerary that additional 
airline fees for baggage may. We are proposing in this SNPRM to remove 
the requirement under 14 CFR 399.85(b) that displays of fare quotations 
must include a statement that fees for baggage may apply and where 
consumers can see these baggage fees. The requirement to provide the 
more general statement that baggage fees may apply would be limited to 
certain ticket agent displays related to air tour packages that are 
unable to provide customer-specific baggage fee information.
    In addition to eliminating rule text under 14 CFR 399.85(b), we are 
considering eliminating the requirement in 14 CFR 399.85(c) regarding 
disclosure of bag fee information on e-ticket confirmations as it may 
be of limited use.
    We seek comment on whether eliminating 14 CFR 399.85(b) would be 
appropriate if the proposed requirement to display customer-specific 
baggage fee information is adopted. We also seek comment on whether we 
should consider keeping the existing requirement 14 CFR 399.85(b) with 
revisions to reflect the proposed changes. If the 14 CFR 399.85(b) 
disclosure requirement should be kept but modified, what changes would 
be appropriate?
    Regarding 14 CFR 399.85(c), we request comment on whether the 
proposed revision would be appropriate and adequately inform consumers 
of the applicable baggage fees if the proposed requirement to display 
more specific baggage fee information is adopted. If not, what changes 
or additions would better ensure that consumers are provided with the 
specific baggage fee information that will be required if the proposal 
is adopted?

Regulatory Analyses and Notices

A. Executive Order 12866 (Regulatory Planning and Review) and DOT 
Regulatory Policies and Procedures

    This action has been determined to be significant under Executive 
Order 12866 and the Department of Transportation's Regulatory Policies 
and Procedures. It has been reviewed by the Office of Management and 
Budget under that Executive Order. This section contains a summary of 
costs and benefits associated with this SNPRM. More detail on the 
economic impact of this proposed rule can be found in the Regulatory 
Impact Analysis (RIA), which is available in the docket. Due to the 
lack of key pieces of data, the Department was unable to quantify the 
costs and the benefits of the rule proposed in this SNPRM.
    Under this SNPRM, the Department is proposing that all ticket 
agents and airlines that provide fare and schedule information to 
consumers while doing business in the United States be required to 
provide fee information to consumers for first and second checked bag, 
and one carry-on item adjacent to the fare. The information would 
include the necessary fee information to allow the display of these 
fees as either the standard fees charged by the carriers, or, at the 
consumer's choice, as the customer-specific charge if the consumer 
elects to provide his or her customer category information including, 
but not limited to, military/veteran status, frequently flier category, 
and method of payment. Airlines can potentially establish a large 
number of customer-specific factors that impact the fee that a consumer 
would pay for a carry-on and first and second checked bag. We solicit 
comment on whether the Department should limit the categories that have 
to be displayed on a ticket agent's Web site to the most commonly used 
categories. If the Department adopts such a limitation, how should

[[Page 7555]]

the most commonly used categories be determined?
    Carriers would be required to transmit this baggage fee information 
to all ticket agents to which they provide fare and schedule 
information, including GDSs and other intermediaries in the air 
transportation marketplace. Ticket agents and carriers would be 
required to be compliant with the rule within six months of its final 
publication date.
    Ticket agents would be allowed to design the presentation of these 
fees as best suits them as long as they are available at the time when 
fares are first presented. This fee information must be customer-
specific, i.e. specific to the individual and his/her any unique 
circumstances, unless the passenger opts out.
Costs of the SNPRM
1. Direct Costs to Carriers
    Carriers would incur costs related to preparing and transmitting 
ancillary service fee information to OTAs and GDSs. These costs would 
include the one-time set up costs to develop internal systems/processes 
to distribute the baggage fee information. These set-up costs would 
include upfront planning time to develop procedures to collect and 
distribute the necessary data, as well as any potential IT and software 
development costs to transmit data which is not already being 
transmitted to GDSs and ticket agents via ATPCO or NDC.
    Carriers would also incur some incremental ongoing costs to manage 
and transmit data relating to any changes in baggage fees defined as 
basic ancillary service fees by this rulemaking. Carriers might also 
incur some additional costs for system updates to any new IT systems or 
programs incorporated for the purposes of complying with this rule. For 
this analysis, only the ongoing costs which would not have occurred 
except for the rulemaking are considered.
    Carriers can present the information in a format of their choosing, 
including allowing consumers to opt out of viewing the information, or 
choosing only some of it, if that is their preference. The Department 
is requesting further comments on this specific issue with this SNPRM.
    Multiple commenters to the 2014 NPRM provided information on likely 
costs to carriers of the proposed requirement for basic ancillary 
service fee information, though most of these costs comments were 
directed at the possible inclusions of requiring transactability for 
these fees as well as their display (i.e., that consumers would be able 
to pay for these ancillary services on the OTAs and GDSs), an 
alternative which was considered by the Department but not adopted for 
this SNPRM.
    One mainline carrier (Delta) commented that the proposed rule as 
described in the NPRM would require the redesign of carrier 
distribution systems to provide ancillary fees at the first point of 
search. Delta estimates it would take 12 months and cost $1 million 
redesign its systems.
    An economic consultant (who submitted comments with the carrier 
trade association, A4A) argued that the costs to carriers to comply 
with the requirement for greater transparency as proposed in the NPRM 
would cost more than $3 million in the first year, and $7.2 million 
over 10 years. This commenter also argued that carriers would incur 
significant additional ongoing costs for managing estimates of the 
process of ``development and debugging programs and procedures that the 
carriers will have to create to report ancillary fee information.'' The 
commenter noted that carriers typically employ one full time employee 
to monitor and debug the baggage fee information reporting to ATPCO. He 
also noted that carriers spend approximately $1 million to ``establish 
each link to a GDS''.
    ATPCO also commented that the costs to carriers of compliance with 
the requirement as proposed in the NPRM could be quite high, noting 
that ATPCO's efforts alone to comply with the simpler baggage fee 
information requirements of the 2011 consumer rule cost over $1 
million.
    The Department believes that the estimates from commenters to the 
2014 NPRM overstate the likely costs to carriers of this SNPRM for 
several reasons. While reviewing these comments, the Department noted 
that much of the comments were directed to the challenges and 
additional costs of transferring information for advance seat 
assignment, which is dynamic information, changing frequently as 
carriers manage their loads. The cost for the transmittal of real-time 
advance seat assignment information to ticket agents would thus be 
significantly more than the transmittal of baggage fee information, 
which changes much less frequently. Additionally, the Department notes 
that several carriers are already in agreement to start providing that 
information to GDSs; and some carriers are moving to IATA's NDC which 
will allow for easier customization of flight and pricing options to 
consumers and at a lower cost to carriers (once they have incorporated 
NDC into their systems). And while the Department agrees that there 
will be ongoing costs to maintain and transmit data required by the 
rule, the Department does not believe that the SNPRM, if adopted as 
proposed, would generate the need for an additional full-time staff 
equivalent for each carrier, on average, to monitor and debug ancillary 
fee data shared with travel agents, given the current pace of 
technological improvements in all reporting systems, the pace at which 
carriers are adopting NDC, and the staff resources already committed to 
monitoring data transmittals.
    Given the existing questions and comments to the 2014 NPRM, the 
Department does not believe that it has enough information to 
confidently quantify the total cost to carriers of complying with the 
proposed rule. The Department believes that the costs of compliance are 
likely to be less than $1 million per carrier, but is nevertheless 
seeking additional information on the likely costs to carriers of the 
requirement as specified in this SNPRM.
2. Direct Costs to Ticket Agents
    Ticket agents would incur costs related to accepting ancillary 
service fee information from GDSs and carriers and posting that 
information on their Web site engines, and of communicating the 
additional fee information to consumers during reservation phone calls. 
The most significant cost to ticket agents is likely to be the one-time 
cost to reprogram their Web site search engines to provide the 
necessary baggage information.
    Larger ticket agents and OTAs are likely to have in-house 
capability to reprogram their Web sites accordingly, but small tickets 
agents probably will not. As the US Tour Operators Association (USTOA) 
noted in its comment to the 2014 NPRM, many tour operators are unlikely 
to have in-house web programmers and would likely need to hire 
consultants and contractors to bring their Web sites into compliance.
    Ticket agents that market and sell online to consumers already have 
systems in place to receive flight and cost information from carriers 
and GDSs, but it is unclear whether these systems have the capacity to 
receive and process all the necessary information to comply with the 
proposed rule. Several commenters to the NPRM argued that the RIA for 
the 2014 NPRM underestimates the costs to ticket agents to update their 
systems to comply with the rule. The Department is seeking comments on 
this specific issue with this SNPRM.

[[Page 7556]]

    At least three commenters noted that there could be significant 
ongoing compliance costs for ticket agents and tour operators to 
provide baggage fee information as per the proposed requirement, 
primarily in terms of longer times during reservation phone calls. The 
Department acknowledges that there may be additional time at the 
beginning of a call as ticket agents discuss baggage fees earlier in 
the reservation process but notes that such earlier discussion of 
baggage fees may also limit the likelihood of increased call time at 
the end of the call as some consumers are surprised by additional 
baggage fees and may revisit their flight searches.
    Ticket agents would also incur some ongoing costs to refresh the 
required baggage fee information when it changes. The Department does 
not expect that these costs would be significant, since the systems to 
transmit the data are already in place and the programming to display 
the required baggage fee has already occurred. In addition, these fees 
need only be updated when changed.
    We believe that the cost impacts of the proposal in this SNPRM 
would differ significantly from the costs which would have been 
incurred under the 2014 NPRM, since the current proposed rule no longer 
includes advance seat assignment in the basic ancillary service fees to 
be covered. Thus, the Department is seeking additional information on 
the potential costs of this SNPRM on ticket agents.
3. Other Cost Issues--Additional Costs to GDSs and/or ATPCO
    It is unclear if GDSs would incur additional costs to process the 
information required by this SNPRM. For this analysis, the relevant 
incremental costs to the GDSs would be those costs of efforts/
improvements which they would otherwise not have incurred, but for this 
rulemaking. Costs for efforts of GDSs to collect and transmit the 
needed baggage fee information to ticket agents that were already 
planned or which would occur in the future for reasons other than this 
rule (such as responding to market forces) are not considered to be due 
to the rule. According to some of the comments received, GDSs are 
already improving the capacity of their systems to manage more 
ancillary service fee information.
    Comments to 2014 NPRM regarding costs to GDSs to comply with it 
were somewhat inconsistent. At least two comments (one for from a 
carrier and another carrier trade association supported study) claimed 
that GDSs would incur significant costs. Yet one GDS (Sabre) commented 
that it already has the capability to comply with the requirements 
proposed in the 2014 NPRM (although it noted that ticket agents do not 
already have the needed systems in place). The Department thus expects 
that this SNPRM, if adopted as proposed, would not have significant 
costs to GDSs.
    ATPCO could also potentially incur additional costs to process the 
required information, due solely to this rulemaking, although this is 
also very uncertain. In its comments to the NPRM, ATPCO stated that it 
already has the capacity to meet the proposed 2014 NPRM requirements. 
The Department also expects that the SNPRM would not entail significant 
costs for ATPCO.
Costs to Consumers of Additional Time Waiting for Search Results
    Several commenters to the 2014 NPRM, including A4A, Delta, and 
IATA, argued that the Department's analysis should take into account 
potential costs to consumers from additional time spent waiting for the 
research results to load, given additional processing time required to 
display more ancillary fees. These commenters specifically cited the 
likely increased time needed to access real time information for up-to-
date seat assignment fee information. A study prepared for A4A by Dr. 
Daniel L. Rubinfeld estimated the additional wait times to consumers 
would cost approximately $805 million per year, based on the assumption 
that the proposed rule would add approximately 20-40 seconds to each 
itinerary search (drawn from a survey by A4A of its members). Elsewhere 
in its submittal, A4A estimates that the additional processing time for 
the proposed ancillary service fee information would cost approximately 
$139 million a year from an estimated loss of 5.5 million hours per 
year for online ticket agents alone.
    The Department notes that most of the costs relating to additional 
processing times and added wait times for consumers raised by 
commenters focus on the additional time and cost for transmitting 
advance seat assignment information, which, as noted above, is dynamic 
and thus more complicated and expensive to keep up-to-date. Since the 
SNPRM does not include advance seat assignment, the needed time to 
process and display the required fee information should be much less 
than what was estimated by commenters in response to the 2014 NPRM.
    Additionally, to provide more flexibility to ticket agents, this 
SNPRM would permit ticket agents to provide consumers the opportunity 
to opt-out of receiving the baggage fee information for carry-on and 
first and second checked baggage, if so desired. If ticket agents do 
choose to incorporate such an opt-out feature, additional time for 
processing and displaying information on baggage fees which the 
consumer does not want to see should be significantly reduced. The cost 
of waiting for baggage fee information, which the consumer does want to 
see, should be off-set by the value to the consumer of getting that 
information (hence the choice made to receive it). The Department 
acknowledges that some portion of consumers may misjudge/underestimate 
the amount of time it would take to receive all the baggage 
information, especially in the beginning period after implementation 
and that, therefore, there will be some additional wait time and costs 
to consumers but that this cost will decrease over time.
    Since the SNPRM does not include seat assignment fees in the basic 
ancillary fee data that must be communicated, the Department believes 
that there would not be significant additional wait time for consumers. 
Nevertheless, the Department is seeking additional comment on this 
issue.
Benefits of the SNPRM
1. Time Saving Benefits to Consumers
    Both consumers who purchase directly from carrier Web sites and 
those who use travel agents would benefit. A significant number of 
leisure travelers book online via online travel agencies, use 
metasearch engines, or even use their businesses travel management 
company. But since OTA Web sites do not currently have customer 
category-specific bag fees, these consumers must check multiple airline 
Web sites in order to get an accurate estimate of the flight costs 
including the fees for basic ancillary services related to carry-on and 
first and second checked bags. While information on baggage fees is 
already required to be available from travel agents, it is often 
available through links, which requires significant time and effort 
from the consumer to determine the actual fee that must be paid. The 
consumer must click the link or links to get the baggage information 
for the itinerary being considered and recalculate their cost. Not all 
consumers purchasing tickets via an OTA would experience a time 
savings, as not all consumers are concerned with baggage fees. For some 
consumers the additional cost for baggage will not factor into their 
choice of a flight, and as such these consumers

[[Page 7557]]

wouldn't search for baggage fees and thus would not benefit from the 
requirements proposed in this SNPRM. Additionally, in some markets 
there is only one (or perhaps two) carriers that offer flights at the 
preferred time or at a fare which the consumer would consider; these 
consumers also would not benefit. But the Department believes that many 
consumers seek out at least some baggage information, which would 
result in the time savings for those individuals.
    Meanwhile, a little more than a fourth of airline passengers 
purchase tickets directly from carrier Web sites (PhoCusWright 
estimates this figure at 23%).\7\ While these consumers have the most 
direct access to ancillary service fees, many carrier Web sites also do 
not include basic ancillary service fees when first quoting an 
itinerary fare. Thus, some consumers must access multiple Web pages to 
reach the information they need to calculate a cost to them which 
includes posted fare plus the fees for carry-on and first and second 
checked bags. Since the SNPRM would require that basic ancillary 
service fee information be consolidated in one place on carrier fare 
displays, some portion of consumers purchasing tickets on carrier Web 
sites would spend less time searching for the desired fee information.
---------------------------------------------------------------------------

    \7\ PhoCusWright (2011) ``U.S. Online Travel Overview.''
---------------------------------------------------------------------------

    Not all consumers purchasing from carrier Web sites would benefit. 
Consumers who purchase from a carrier Web site are more likely as a 
group to be aware of the carrier's baggage fees and policies. Many of 
these consumers are going directly to the carrier Web site because that 
carrier is one of the few or the only one to offer flights at the 
desired time and to the desired destination, or because the consumer is 
a member of the carrier's affinity program. Nevertheless, some portion 
of those consumers who purchase tickets on a carrier Web site do check 
to see what the baggage fees would be for their desired itinerary, and 
these consumers would save time under this SNPRM.
    Together, the time savings may be quite significant. The Department 
does not yet have the information to confidently estimate the value of 
this benefit so it is seeking additional comment on it.
2. Better Informed Consumer Purchasing Decisions
    The increased transparency in ancillary service fee information 
would also lead to some portion of consumers making more informed 
purchasing choices: (1) Those who learn of the baggage fees for a 
flight they intend to purchase but do so near the end of the purchasing 
process, and (2) those who remain unaware of the baggage fee 
information until after they make a purchase. Both of these consumer 
groups may end up making purchasing decisions they otherwise would not 
have made had they been aware of the associated baggage fees when first 
reviewing search results.
    Research has shown that when consumers first see a price which is 
lower than the final price they must pay (whether due to delayed 
display of taxes, fees, shipping and handling, etc.) they often end up 
paying more than if the first price they see is the final, total price 
(including taxes, fees, and/or shipping and handling). Studies and 
experiments have demonstrated that partitioned pricing (the separating 
of a price into its components) and the timing for when different 
pieces of pricing information (such as taxes) are revealed in a 
purchasing situation can lead to increases in consumer demand.\8\
---------------------------------------------------------------------------

    \8\ Deborah Shenck, ``Exploiting the Salience Boas in Designing 
Taxes,'' (New York University Law and Economics Working Papers, 
Paper 233, 2010) has an informative and extensive review of past 
work in this area. See also Morwitz, Vicki, Greenleaf, Eric, Shalev, 
Edith and Johnson, Eric J., The Price Does Not Include Additional 
Taxes, Fees, and Surcharges: A Review of Research on Partitioned 
Pricing (February 26, 2009). Available at SSRN: http://ssrn.com/abstract=1350004. Note, though that some studies have found that 
partitioned pricing can also lead to negative brand recognition and 
may hurt sales in the future, if the fees are perceived to be 
excessive and within the seller's ability to control. This differs 
somewhat from the situation here, since the separate portions of the 
price are taxes imposed by state, local and federal governments (as 
opposed to shipping fees, etc.).
---------------------------------------------------------------------------

    If revealing full prices later in the purchasing process leads to 
more purchases than if the full price had been seen immediately, (at 
least some) consumers are purchasing at a price higher than they 
otherwise would have. These ``sub-optimal'' choices lead to what 
economists call a ``dead-weight loss.''
    In other research conducted in market situations in which one group 
of consumers knows more about products and/or prices than others, some 
economists have proposed a ``tourists and natives'' framework, in which 
consumers are divided into two groups--those with access to more 
information about lower prices/better quality (the natives) and those 
with very limited information who will often pay more (the tourists). 
(Some researchers have called these two groups ``savvy'' and 
``unsavvy'' travelers.) This framework has two price-equilibriums; the 
``tourist'' one is higher than the one for ``natives.'' With respect to 
this SNPRM, one could consider the consumers who are well informed 
regarding fees for ancillary services (i.e. aware of itinerary-specific 
baggage fees) in contrast to other travelers (perhaps those who rarely 
travel) who are not aware of variance in carry-on and checked baggage 
fees. The result is that the latter group would end up, on average, 
paying more.
    While both of these theoretical constructs are useful in 
understanding how and why some consumers may be making sub-optimal air 
travel purchasing decisions, the Department does not have enough 
information to quantify or monetize this benefit.
3. Benefits to Businesses Employees That Travel
    Many businesses are also concerned with the ancillary fees 
associated with baggage. Travel can be a significant expense for many 
companies and ancillary service fees can substantially increase trip 
costs.
    Many business travelers book flights via travel management 
companies that seek the best flight at the best price for the traveler, 
given his or her parameters. But much of the information needed to 
ensure that each traveler gets the best full price taking into account 
base fare, mileage club memberships, specific credit cards used and any 
other potential discounts are not often readily available. Travel 
managers have complained that not all baggage fee information needed to 
ensure that business travel is booked according to company policy is 
readily accessible and readily incorporated into internal reservation 
tracking or accounting programs. The information must be manually 
entered, often based on receipts or information provided by the 
travelers themselves. Thus, many businesses either pay more than they 
needed to for a particular flight or must have employees spend time 
seeking out the appropriate fee information in order to make the best 
choice. The increased effort results in higher company travel costs.
    These costs associated with searching for baggage fee information 
have been identified repeatedly to the Department by travel management 
company representatives and raised at meetings of the Advisory 
Committee for Aviation Consumer Protection. In addition, several 
commenters, including trade associations, a GDS and at least one 
advocacy group, noted that benefits to business travelers of this 
requirement could be significant.
    While there is much interest in the industry on the impact of 
unbundling

[[Page 7558]]

and ancillary service fees on the costs of business travel, the 
Department did not find adequate data on this impact to estimate the 
benefits of this requirement for these business travelers, but notes 
that they may be significant for some entities.
4. Benefits to Ticket Agents
    While there is concern about the added costs of this provision to 
ticket agents in terms of additional programming expenditures and staff 
time to communicate the added baggage fee information, there is also 
the possibility that ticket agents may experience some benefits of the 
SNPRM. At least one commenter raised the point that ticket agents would 
be able to access ancillary service fee information more quickly in 
response to consumer requests, and could conclude some transactions 
with consumers more quickly. The Department agrees that ticket agents 
may benefit from the rule in this manner but is unable to estimate by 
how much.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an 
agency to review regulations to assess their impact on small entities 
unless the agency determines that a rule is not expected to have a 
significant economic impact on a substantial number of small entities. 
The rule proposed in this SNPRM would have some impact on a significant 
number of small entities, as discussed in the Initial Regulatory 
Flexibility Analysis.
    For purposes of rules promulgated by the Department regarding 
aviation economic and consumer matters, an airline is a small entity 
for purposes of the Regulatory Flexibility Act if it provides air 
transportation only with aircraft having 60 or fewer seats and no more 
than 18,000 pounds payload capacity.\9\ The Small Business 
Administration (SBA) size standard for small business for both travel 
agents and tour operators is $20.5 million in average annual receipts 
(SBA does not have a size standard for ticket agents as defined by the 
Department; travel agents and tour operators are the most applicable 
categories for which such data was found).
---------------------------------------------------------------------------

    \9\ See 14 CFR Chapter 11. Note that the Small Business 
Administration definition of small carriers is not used.
---------------------------------------------------------------------------

    A significant number of small entities would be impacted by this 
SNPRM. Due to the relative lack of key pieces of data, the Department 
was unable to quantify the costs of the proposed rule to small (or 
large) entities, but notes that some small entities may incur 
substantial costs. The primary costs of the rule arise from 
programming, data management and other related costs to carriers and 
ticket agents to transmit or display the required baggage information. 
The Department is seeking additional information on the potential costs 
and benefits of the requirements proposed in the SNPRM.

C. Executive Order 13132 (Federalism)

    This SNPRM has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13132 (``Federalism''). The 
notice does not contain any provision that (1) has substantial direct 
effects on the States, the relationship between the national government 
and the States, or the distribution of power and responsibilities among 
the various levels of government; (2) imposes substantial direct 
compliance costs on State and local governments; or (3) preempts State 
law. States are already preempted from regulating in this area by the 
Airline Deregulation Act, 49 U.S.C. 41713. Therefore, the consultation 
and funding requirements of Executive Order 13132 do not apply.

D. Executive Order 13084

    This SNPRM has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13084 (``Consultation and 
Coordination with Indian Tribal Governments''). The SNPRM would not 
significantly or uniquely affect the communities of the Indian tribal 
governments or impose substantial direct compliance costs on them, the 
funding and consultation requirements of Executive Order 13084 do not 
apply.

E. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.) 
requires that the Department consider the impact of paperwork and other 
information collection burdens imposed on the public and, under the 
provisions of PRA section 3507(d), obtain approval from the Office of 
Management and Budget (OMB) for each collection of information it 
conducts, sponsors, or requires through regulations. DOT has determined 
that the proposals included in this SNPRM would impose new information 
collection requirements on the affected entities. Accordingly, we are 
seeking comment on the impact of the requirements proposed in this 
SNPRM.
    The first collection of information proposed here is a requirement 
that air carriers and foreign air carriers provide useable, current, 
and accurate fee information for a first checked bag, a second checked 
bag, and one carry-on bag to all ticket agents that receive and 
distribute the air carrier's or foreign carrier's fare and schedule 
information. The second information collection is a requirement that 
air carriers, foreign air carriers, and ticket agents that provide an 
air carrier's or foreign carrier's fare and schedule information to 
consumers in the United States receive the information from carriers 
and disclose the air carrier's or foreign air carrier's fees for a 
first checked bag, a second checked bag, and one carry-on bag.
    For each of these information collections, the title, a description 
of the respondents, and an estimate of the annual recordkeeping and 
periodic reporting burden are set forth below:
    1. Requirement that air carriers and foreign air carriers provide 
certain baggage fee information to all ticket agents that receive and 
distribute the carrier's fare and schedule information.
    Respondents: Air carriers and foreign air carriers that provide 
fare and schedule information to ticket agents and charge baggage fees 
for a carry-on bag, first checked bag, or second checked bag. We 
estimate that approximately 206 carriers will be impacted by this 
requirement.
    Estimated Annual Burden on Respondents: Approximately 8 hours per 
respondent. Note that 8 hours is the basis used for computing the costs 
of providing baggage fee information, but since airlines already share 
this information with each other to facilitate code-share and interline 
ticketing, it likely overestimates the actual amount of additional time 
that most carriers will have to spend to meet the requirement.
    Estimated Total Annual Burden: 1,648 hours for all respondents.
    Frequency: Once information is provided, new or additional 
information only needs to be provided when baggage fee information 
changes; varies by airline but for most carriers is infrequent and will 
likely be less than annually.
    2. Requirement that air carriers, foreign air carriers, and ticket 
agents that provide carrier fare and schedule information to consumers 
in the United States disclose carrier's fees for a first checked bag, a 
second checked bag, and one carry-on bag.
    Respondents: Air carriers, foreign air carriers, and ticket agents 
that provide carrier fare and schedule information to consumers in the 
United States. We estimate that as many as 206 air carriers and foreign 
air carriers and as many as 600 ticket agents may be impacted by this 
requirement.
    Our estimate is based on the following information and assumptions: 
Ticket

[[Page 7559]]

agents includes online travel agencies (OTAs), brick-and-mortar travel 
agencies, corporate travel agencies, and tour operators that market 
airline tickets. As described in the Regulatory Impact Analysis 
accompanying this SNPRM, there may be approximately 9,500 travel 
agencies and over 2,500 tour operators in the United States, although 
not all of those entities market air transportation online to consumers 
in the United States. In addition, most ticket agents rely on GDSs to 
create online fare and schedule displays. GDSs and entities that create 
or develop and maintain their own online fare and schedule displays, 
such as many of the impacted airlines and the largest travel agents, 
will incur some planning, development, and programming costs to 
reprogram their systems to provide online displays of fare and schedule 
information that includes baggage fee information on their Web sites. 
Therefore we estimate that about five percent of United States ticket 
agents, including GDSs and large travel agencies, or as many as 600 
ticket agents, will be impacted by this requirement. Many smaller 
carriers also rely on GDSs to create online fare and schedule displays 
so our estimate of 206 impacted carriers may be overstated.
    Estimated Annual Burden on Respondents: Approximately 80 hours per 
respondent. Our estimate is based on the following information and 
assumptions: The primary costs to respondents for the disclosure 
requirement would arise from programming, data management, Web site 
modification and other related costs to carriers and ticket agents to 
display the required baggage information. Revising Web site displays in 
this manner would likely be similar to the revisions that carriers and 
ticket agents needed to make to their Web sites to comply with the 
requirement to include all taxes and fees in fare displays in 
connection with the Enhanced Airline Passenger Protections II 
rulemaking. Our estimate of those costs was 80 hours per respondent as 
discussed in the Regulatory Impact Analysis prepared in connection with 
the Enhanced Airline Passenger Protections II rulemaking (2011) (see 
page 59, https://www.regulations.gov/document?D=DOT-OST-2010-0140-2046.)
    Estimated Total Annual Burden: Approximately 64,480 hours for all 
respondents (based on an assumption of 16,480 hours for carriers and 
48,000 hours for ticket agents).
    Frequency: Once information is incorporated into Web site displays, 
the displays would not need to be revised. It would likely be a one-
time cost.

F. Unfunded Mandates Reform Act

    The Department has determined that the requirements of Title II of 
the Unfunded Mandates Reform Act of 1995 do not apply to this SNPRM.

G. National Environmental Policy Act

    The Department has analyzed the environmental impacts of this SNPRM 
pursuant to the National Environmental Policy Act of 1969 (NEPA) (42 
U.S.C. 4321 et seq.) and has determined that it is categorically 
excluded pursuant to DOT Order 5610.1C, Procedures for Considering 
Environmental Impacts (44 FR 56420, Oct. 1, 1979). Categorical 
exclusions are actions identified in an agency's NEPA implementing 
procedures that do not normally have a significant impact on the 
environment and therefore do not require either an environmental 
assessment (EA) or environmental impact statement (EIS). See 40 CFR 
1508.4. In analyzing the applicability of a categorical exclusion, the 
agency must also consider whether extraordinary circumstances are 
present that would warrant the preparation of an EA or EIS. Id. 
Paragraph 3.c.6.i of DOT Order 5610.1C categorically excludes 
``[a]ctions relating to consumer protection, including regulations.'' 
The purpose of this rulemaking is to enhance protections for air 
travelers and to improve the air travel environment. The Department 
does not anticipate any environmental impacts, and there are no 
extraordinary circumstances present in connection with this rulemaking.

    Issued this 9th day of January 2017 in Washington, DC.
Anthony R. Foxx,
Secretary of Transportation.

List of Subjects

14 CFR Part 399

    Administrative practice and procedure, Air carriers, Air rates and 
fares, Air taxis, Consumer protection, and Small businesses.

PART 399--[AMENDED]

0
1. The authority citation for part 399 is revised to read as follows:

    Authority:  49 U.S.C. 40101 et seq.

0
2. Section 399.85 is amended by removing paragraph (b).


Sec.  399.85  Notice of baggage fees and other fees.

* * * * *
    (b) Removed.
* * * * *
0
3. A new section 399.90 is added to read as follows:


Sec.  399.90  Transparency in airline pricing, including ancillary 
service fees.

    (a) The purpose of this section is to ensure that air carriers, 
foreign air carriers and ticket agents doing business in the United 
States clearly disclose to consumers at all points of sale the fees for 
a first checked bag, a second checked bag, and one carry-on bag 
wherever fare and schedule information is provided to consumers that 
may be purchasing or considering purchasing air transportation. Nothing 
in this section should be read to require that these ancillary services 
must be transactable (e.g., purchasable online or at other points of 
sale).
    (b) Each air carrier and foreign air carrier shall provide useable, 
current, and accurate information for fees for a first checked bag, a 
second checked bag, and one carry-on bag to all ticket agents that 
receive and distribute the air carrier's or foreign carrier's fare and 
schedule information. The information should be sufficient to allow 
ticket agents to express fees as itinerary-specific or customer-
specific charges. ``Customer-specific'' refers to variations in fees 
that depend on, for example, the passenger type (e.g., military), 
frequent flyer status, method of payment, geography, travel dates, 
cabin (e.g., first class, economy), ticketed fare (e.g., full fare 
ticket--Y class), etc.
    (c) Each air carrier, foreign air carrier or ticket agent that 
provides an air carrier's or foreign carrier's fare and schedule 
information to consumers in the United States must disclose the air 
carrier's or foreign air carrier's fees for a first checked bag, a 
second checked bag, and one carry-on bag.
    (i) The fee information disclosed to a consumer for these ancillary 
services must be expressed as customer-specific charges as provided in 
subpart (b) if the consumer elects to provide his or her customer 
category information to the carrier or ticket agent, such as frequent 
flyer type, payment method, or military status.
    (ii) If the consumer conducting a search does not opt out of 
receiving baggage fee information but elects not to provide his or her 
customer category information to the carrier or ticket agent, and 
conducts an ``anonymous'' search, the fee information disclosed to 
consumers for these ancillary services must be expressed as itinerary-
specific charges. ``Itinerary-specific'' refers to variations in fees 
that depend on, for example, geography, travel dates, cabin (e.g., 
first class, economy), and ticketed fare class (e.g., full fare 
ticket--Y class).

[[Page 7560]]

    (iii) This provision does not apply to air-tour packages advertised 
or sold online by ticket agents if the air transportation component is 
not finalized and the carrier providing air transportation is not known 
at the time of booking. However, the agent must clearly and prominently 
disclose on the first screen in which the agent or carrier offers a 
fare quotation for a specific itinerary selected by a consumer that 
additional airline fees for baggage may apply and where consumers can 
see these baggage fees unless no baggage fees will apply. An agent may 
refer consumers to carrier Web sites where specific baggage fee 
information may be obtained or to its own site if it displays carriers' 
baggage fees. In online displays and oral communications, prior to 
purchase, each ticket agent must disclose that baggage fees may apply 
if that is the case and that those fees may be reduced or waived based 
on the passenger's frequent flyer status, method of payment or other 
consumer characteristic.
    (d) If a U.S. or foreign air carrier or ticket agent has a Web site 
marketed to U.S. consumers where it advertises or sells air 
transportation, the carrier and ticket agent must disclose the fees for 
a first checked bag, a second checked bag and one carry-on bag as 
specified in paragraph (c) at the first point in a search process where 
a fare is listed in connection with a specific flight itinerary, 
adjacent to the fare. When providing customer-specific fee information, 
if more than one baggage fee may be responsive to the search 
parameters, e.g., fee for a particular frequent flyer status and fee 
for a particular method of payment, the lowest cost option must be 
identified and displayed. Carriers and ticket agents may permit a 
consumer to opt out of being provided search results with the fees for 
a first checked bag, a second checked bag or one carry-on bag, or any 
single baggage fee (e.g., second checked bag) or any combination of 
baggage fees (e.g., carry-on and second checked bag) but the opt-out 
option must not be pre-selected and must make clear which fee or fees 
will not be displayed.
    (e) In any oral communication with a prospective consumer and in 
any telephone calls placed from the United States, an air carrier, 
foreign air carrier or ticket agent must inform a consumer, upon 
request, of the fees for a first checked bag, a second checked bag and 
one carry-on bag as specified in paragraph (c).
    (f) Ticket agents with an existing contractual agreement at the 
time this rule becomes effective with an air carrier or foreign air 
carrier to act as an intermediary for the distribution of that 
carrier's fare and schedule information to other ticket agents shall 
not charge separate or additional fees for the distribution of the 
ancillary service fee information described in paragraph (b). Nothing 
in this paragraph should be read as invalidating any provision in an 
existing contract among these parties with respect to compensation.
    (g) It is an unfair and deceptive practice in violation of 49 
U.S.C. 41712 for an air carrier or foreign air carrier to fail to 
provide the fees for a first checked bag, a second checked bag and one 
carry-on bag as described in paragraph (b) to those ticket agents to 
which the carrier provides its fare and schedule information or for a 
U.S. carrier, foreign carrier, or ticket agent to fail to provide the 
fees for a first checked bag, a second checked bag and one carry-on bag 
to consumers as described in paragraph (c) and (d).

[FR Doc. 2017-00904 Filed 1-18-17; 8:45 am]
 BILLING CODE 4910-9X-P