Wednesday, 8 February 2012

Major US Federal aviation bill enacted: 3 steps forward, 2 steps back for travellers

Christopher Elliott has a perceptive analysis this week in the Washington Post on the implications for travellers of the new long-term Federal Aviation Administration reauthorization bill just passed by Congress, and the larger issue of who speaks for consumers in Washington, and how effectively, in Federal aviation policy-makng, legislation, and administrative rulemakings:

"Some seemingly pro-consumer provisions of the bill have been so watered down by industry lobbying that they are likely to be of little value," says Edward Hasbrouck, an industry watcher and author of The Practical Nomad: How to Travel Around the World.

Hasbrouck says he's particularly wary of the new advisory committee, which calls for only one consumer representative but allows for two industry representatives and one government representative. "An enormous amount will depend on who is appointed to represent consumers on this committee," he says....

"Consumer lobbyists were hopelessly outnumbered and outspent by the airline industry," says Hasbrouck, pointing to the final outcome of the FAA bill, which favored the airlines.

The main effect of the FAA bill is to authorize a complete overhaul and upgrade of the US air traffic control system. That's a good idea, and long overdue, although I agree with Christohpher Elliott that it will have at best "trickle-down" benefits for travellers.

The real question about the "next generation" air traffic control system, however, should have been whether it would be paid for by taxpayers -- including those who never fly -- or by the industry it would benefit. Congress and the aviation industry took for granted throughout the debate that this infrastructure upgrade to benefit the "jet set" should be government-funded.

Yes, some of the costs will be repaid from "user fees", but not all, and the airline industry will continue to benefit -- at the expense of other modes of transportation -- from ongoing and massive government subsidies. (Railroads, by comparison, have had to pay for their own upgrades to each new generation of signalling and traffic control infrastructure. My father worked on one such project as a systems analyst for the Digital Equipment Corp. in the 1970s.)

The main consumer benefits in the FAA reauthorization bill are the provisions for disclosure of codeshare flights, fees, and total prices.

These provisions should have been unnecessary: they would prohibit practices that were already within the general definition of prohibited "deceptive" practices.

Congress shouldn't have to spell out for the Department of Transportation (DOT) that failure to disclose the actual price of a ticket or operator of the flight is a deceptive practice. That Congress has done so is a sign of both (a) continued DOT footdragging and reluctance to police deceptive airline practices, and (b) Congressional recognition that systematic airline fraud is out of control, and that Congress needs to force the DOT to start doing its job.

Most of what I see as the key consumer issues for air travellers, including Federal preemption of state and local truth-in-advertising laws that would otherwise prohibit current airline practices, and full disclosure of ticket and tariff details, are absent from the bill (and were never seriously considered).

The bill that was passed also contains major steps backward for consumers, particularly the elimination of any statutory mandate for publication of tariffs of fares for most international routes. Even where fares are deregulated, requiring them to be published is essential to transparency, oversight, and nondiscrimination and to preventing airlines from making up the rules of a ticket as they go along or modifying them after the sale.

Meanwhile, as Christopher Elliott reported in a separate article a day later, members of Congress led by the Representative from Spirit Airlines' home district have already introduced a sleazy and misleadingly-titled "Travel Transparency Act" that would partially repeal the new rule (which took effect last month, before the FAA reauthorization bill, under the DOT's longstanding regulatory authority to prohibit "deceptive" airline practices) requiring airline ticket price advertisements to state the total selling price of the ticket.

Link | Posted by Edward on Wednesday, 8 February 2012, 14:50 ( 2:50 PM) | TrackBack (0)
Comments

I am shocked to see you debate who should pay for the upgrade of the ATC system. You article is flat out wrong in many areas.

First, the taxpayer is not paying for it. It is paid for out of the Aviation Trust Fund. The monies for this fund come from PASSENGER TAXES which now equal about 20% of every ticket. Sin taxes are less!

Aviation is the only transportation mode forced to 100% pay its own way meaning no burden to the taxpayer. Rail, waterways, highways take some general fund subsidies. Can you say Amtrak? What you say is simply not true. What burden taxpayers have in aviation is about 10-20% and that is to pay for military use of the airspace.

Second, even if taxpayers did fund it, it would be a good return on investment since aviation contributes over $2 billion to the US economy and accounts for millions of jobs. In addition, every aviation job supports another 12-15 non-aviation jobs.

In addition, the investment in ATC is expected to reduce emissions by 12% and delays -- which now cost the economy tens of billions of dollars every year -- significantly. That, too, is a good return on investment and direct consumer benefits rather than some vague "trickle-down" effect.

What the consumer rules do is set aviation apart and re-regulate it. When Congress or the Administration force other industries into the same consumer transparency they demand of aviation, then we can talk but until then, why should passengers get from airlines what they could never get from Best Buy or MacDonalds?

Posted by: Kathryn Creedy, 9 February 2012, 07:07 ( 7:07 AM)

One more thing. You say rail is not subsidized. In addition to Amtrak can you say High-Speed rail?

Posted by: Kathryn Creedy, 9 February 2012, 07:10 ( 7:10 AM)

Dear Shocked:

I itemize some of the general fund subsidies to airlines, and their burdens to (non-flying) taxpayers, in this article which I linked to from my post above but which you don't appear to have read:

http://hasbrouck.org/blog/archives/001001.html

My comments about railroads were specifically about signalling and traffic control, for which all costs are borne by airlines except for the extremely small proportion of trackage actually owned by Amtrak (mainly the Northeast Corridor). Even where Amtrak trains operate over tracks owned by private railroads, Amtrak pays only for operating expenses. All capital costs, including those of signalling and traffic control infrastructure used by Amtrak, are paid for by those private railroads.

As for pricing transparency: Amtrak and other passenger railroads do file and publish tariffs. I have never had any tax added to the advertised price of a ticket on Amtrak or any other US railroad.

McDonalds and Best Buy are subject to state and local truth-in-advertising laws and regulations from which Congress has exempted airlines. State Attorneys General have been nearly unanimous in denouncing this federal preemption as allowing airlines to get away with deceptive practices that would be flagrantly illegal if engaged in by any business subject to state jurisdiction:

http://hasbrouck.org/documents/NAAG-13FEB2006.pdf

http://hasbrouck.org/documents/NAAG-8SEP2000.pdf

Posted by: Edward Hasbrouck, 9 February 2012, 08:32 ( 8:32 AM)
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