[Federal Register Volume 82, Number 12 (Thursday, January 19, 2017)]
[Proposed Rules]
[Pages 7536-7560]
[FR Doc No: 2017-00904]

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

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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:<PHONE_NUMBER>.
    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,<PHONE_NUMBER> (phone),
<EMAIL_ADDRESS>or<EMAIL_ADDRESS>(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

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

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

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

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

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

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

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

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

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

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

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,

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

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

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,

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

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