SCHUMER REVEALS: IN MOVE THAT COULD COST TRAVELERS $6 BILLION MORE A YEAR, AIRLINES ARE WORKING TO PREVENT CONSUMERS FROM SHOPPING AROUND FOR BEST FLIGHT PRICE BY REFUSING TO SHARE FLIGHT INFO WITH WEBSITES LIKE EXPEDIA, ORBITZ, TRIPADVISOR & OTHERS; SENATOR PUSHES FEDS TO INVESTIGATE NEW AIRLINE POLICY—ON TOP OF CURRENT COLLUSION INVESTIGATION
At Least 2 Airlines Now Withholding Price & Flight Data From Third
Party Price Comparison Websites Or Charging Fees For Their Use; Sites Concerned This Could Expand; Change Restricts Where Consumers Can
Buy Tickets & Could Cost Them As Much As $6B More In Airfares
Amidst Current DOJ Airline Probe Schumer Helped To
Spur, Senator Wants Feds, Including DOT, To Include Comparison Freeze Out
Into Investigation
Schumer: Making It Harder To Get A Bargain By Freezing Out Websites That
Save Travelers On Airfare Is Just Plain Wrong
Following the recent announcement that the Justice Department will launch
an investigation into possible collusion among airlines, an investigation
he helped to spur, U.S. Senator Charles E. Schumer recently urged the
Department of Justice (DOJ) and Department of Transportation (DOT) to
go one step further by investigating a new practice among some airlines
that blocks consumers from shopping around for the best airfares. Specifically,
some air carriers have withheld critical price and flight data from popular
third-party price comparison websites, like Expedia, TripAdvisor, Kayak,
Orbitz and others that often help travelers save hundreds of dollars on
airplane tickets. According to the Travel Technology Association, such
restrictions could cost passengers more than $6 billion a year and discourage
more than 40 million passengers from flying because of more expensive
prices. Right now, approximately 44 percent of travelers book tickets
through online travel sources to compare prices before purchasing from
the airline’s website. Schumer explained that at least two major
airlines have instituted the price freeze-out practice by preventing online
comparison sites from obtaining and displaying flight schedule and price
information. Schumer also noted that this practice could limit competition
among airlines and possibly lead to even higher airfare prices down the road.
Online retailers have said this new move by some airlines to prevent comparison
price shopping on travel websites could cost consumers dearly, increasing
the overall cost of airfare. Schumer noted that sites are worried the
number of airlines implementing this practice could expand. In December,
Schumer called on the DOJ and DOT to investigate why airfares have been
extremely high, despite record profits for the airlines and rapidly declining
fuel costs. Earlier this month, DOJ announced that it will be investigating
potential unlawful actions related to capacity coordination between airlines.
DOJ has already issued subpoenas to a number of major airlines as part
of the investigation. Schumer said that he is hopeful the feds will heed
this call on this issue as well by ramping up the investigation to include
a closer look into the price freeze-out practice some airlines have pursued.
Schumer is also urging the U.S. Department of Transportation (DOT) to
investigate this new practice. Schumer went on to say that comparison
sites must be fair to consumers as well.
“With high ticket prices, additional fees and limited carriers,
we must ensure airlines aren’t taking further steps to prevent consumers
from comparison shopping. That’s why, in light of the recent Justice
Department probe into possible airline collusion, I am urging the feds
to step up their efforts and do a full investigation into this new deceiving
practice that limits access to cheaper, more affordable airfares for consumers.
So many consumers rely on bargain hunting when purchasing flights and
this practice makes it almost impossible by restricting transparency and
limiting competition among airlines,”said
Senator Schumer. “Freezing out websites that save travelers money on airfare is
just plain wrong and the feds should include this practice in their investigation
immediately.”
TripAdvisor, a comparison site that has experienced flight information freeze-out firsthand applauded Schumer’s push, saying, “We strongly believe in transparency and the freedom of information for all consumers,” said Bryan Saltzburg, general manager of TripAdvisor Flights. “The availability of airfare and schedule information is critical for travelers to be able to find the lowest airfares and make informed booking decisions. Sites like TripAdvisor have enabled travelers to quickly and easily comparison shop for years. However, the recent actions of some airlines to restrict this vital public information threatens consumers’ ability to get the full picture, which will lead to consumers paying higher prices. We believe it is crucial for the government to act now to ensure that consumers’ ability to comparison shop is protected. We support Senator Schumer’s efforts to shine a spotlight on this important issue and defend a fair and transparent travel marketplace for consumers.”
The Travel Technology Association, the association that represents Expedia,
Orbitz, TripAdvisor and others agreed, saying, ““With less
competition in air travel due to carrier consolidation, it is more important
than ever that consumers retain the ability to effectively comparison
shop across travel suppliers,”
said Steve Shur, president of The Travel Technology Association. “We applaud Senator Schumer for his interest in protecting transparency
and consumer welfare in the travel marketplace.”
The four largest U.S. airlines account for approximately 80 percent of
total domestic passenger flights. Recent reports have indicated that airlines
are now making record profits. According to the International Air Transport
Association, airlines’ collective global net profit in 2014 is expected
to be $19.9 billion and in 2015, is expected to be $25.0 billion. Airfares
have increased 10.7 percent over the past five years, after adjusting
for inflation, according to an Associated Press analysis of data from
the Airlines Reporting Corp., which processes ticket transactions for
airlines and more than 9,400 travel agencies, including websites such
as Expedia and Orbitz. Per passenger, airlines are expected to make a
net profit of $7.08 in 2015; this is up from the $6.02 profit per passenger
in 2014 and $3.38 profit per passenger in 2013. Schumer said that given
the fact that airlines are expected to experience a $25 billion profit
margin next year, it is deeply concerning that some airlines are restricting
consumer access to more affordable airplane tickets.
While pushing to protect consumers’ ability to shop on third party
sites, Schumer also condemned recent federal legislation that would allow
some third party sites the ability to strip away certain consumer protections.
Specifically, Schumer pointed to a rider included in the Senate Transportation,
Housing and Urban Development (THUD) Appropriations Bill that would exempt
certain online retailers from USDOT Consumer protection rules that require
retailers to provide prompt refunds, disclosure of cancellation policies,
notification of the customer in the event of itinerary changes, and responsiveness
to customer complaints. Schumer said he would oppose this provision of
the THUD Appropriations Bill and while urging airlines to continue to
provide information to third party sites, he also urged those sites to
continue to provide robust and required consumer protections.
A recent study titled, “Benefits of Preserving Consumers’
Ability to Compare Airline Fares,” and conducted by the Travel Technology
Association and overseen by a Yale professor, looked at restrictions by
airlines to limit certain airline information, including prices and schedules.
Comparison shopping online involves Global Distribution Systems (“GDS”),
a computerized reservation system in which travel agencies subscribe.
The GDS can access all of the flight schedules and prices being offered
by all airlines that subscribe to GDS. The GDS can search for available
flights, seats, prices, and fare restrictions. In the 2000s, metasearch
sites came online; these sites obtain price and schedule information and
enable comparison shopping across competing airlines. Research suggests
that price information, transparency and comparability have tended to
reduce prices.
Major airlines have recently been taking actions to prevent metasearch
sites from obtaining booking information. Specifically, airlines have
prohibited metasearch sites from displaying price information of the airline.
Southwest, for example, has always prevented online retailers from selling
their flights and recently Lufthansa added a fee for customers looking
to book flights through a third party site. Since 2010, other US based
airlines have removed their fares from a number of travel and metasearch
sites, including TripAdvisor, and have instituted policies that prevent
redistribution of price and schedule information. Their goal is to direct
consumers to the airlines’ websites. Schumer explained that ultimately,
this practice limits transparency and competition among airlines.
Schumer asked that DOJ and DOT immediately investigate the airlines’
price freeze-out practice on behalf of American fliers. Schumer said that
this examination should be folded into the current, ongoing investigation
regarding potential unlawful coordination among airlines. Schumer voiced
his concern that this deceiving practice may result in less competition,
higher prices for consumers and could possibly backfire by discouraging
millions of Americans from flying in the future.