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The Plane Facts: The DOT’s Proposed Rule is a Raw Deal in Disguise

Air travelers get the best level of service when airlines are able to tailor their products and services to the individual needs of their passengers. Unfortunately, the Department of Transportation (DOT) and special interest groups want to impose a new set of rules on airlines that interfere with the free market, which will harm consumers by inhibiting competition and innovation in the distribution of air transportation.

In simple terms, the DOT wants to mandate how and where airlines sell their products. The government does not prescriptively tell other industries (i.e., hotels, computer makers, rental car companies) how they should sell their products. Apple and Samsung are free to sell their products through the retail outlets of their choosing, and the government leaves stores to their own devices about how each company’s products are displayed. Why should airlines be treated any differently? In fact, Congress rejected precisely this kind of industry micro-management when it deregulated the airline industry in 1978. We believe consumers are best served when the companies they do business with respond to what consumers want and are able to tailor products and services to them.

This regulation is equivalent to forcing rental car companies to supply Orbitz with each car’s cost for power windows or making restaurants supply Yelp with data about how much they pay for extra cheese or drink refills. Airlines do support transparency, however. Airlines want customers to purchase ancillary products like in-flight Wi-Fi or seat upgrades, so it is in their best interest to display these optional services so consumers can decide whether they meet their preferences. Increased interference from the federal government will only inhibit market innovations that are meeting customer demands for tailored information and providing a variety of service options. To make matters worse, the DOT’s own analysis of this proposed rule shows the costs to implement it outweighs the benefits!

Special interest groups advocating for the DOT’s new rule are touting broad consumer support for these changes. Their claims deserve closer inspection. A recently released “survey” claims to reflect public opinion, yet is nothing more than a carefully timed publicity stunt intended to manufacture support for the proposed rule. The entities that sponsored that survey and their member companies are the very ones who stand to gain financially if the rule is adopted. Many questions remain unanswered about the survey sample group, how it was selected and the way the survey questions were framed because the underlying data has not been disclosed.

The reality is the marketplace is working. Several airlines have already reached agreements with Global Distribution System providers to distribute optional services. Now is not the time to change the rules of the game. The DOT should be putting customers first and letting the market work, not distorting it and leaving consumers to suffer the unintended consequences of this proposed new rule.

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