Friday, 9 October 2020

"Tariffs? We ain't got no tariffs. We don't need no tariffs. I don't have to show you any stinkin' tariffs!"

As I've mentioned many times before, one of the most important parts of the definition of airlines as "common carriers", and one of the most important consumer protections for airline passengers and ticket purchasers, is the requirement for airlines and other common carriers to sell tickets only in accordance with publicly-disclosed "tariffs" of fares and rules. That rule is now under attack, as never before, as the U.S. Department of Transportation (DOT) considers a frequent flyer's complaint against American Airlines (AA).

IATA's general rules define "tariffs" as "The published fares, rates, charges and/or related conditions of a carrier." By definition and by industry convention, the tariff of each airline (or other common carrier) includes:

  1. Each price ("fare") at which a ticket might be sold;
  2. The rules (including the allowable routings) applicable to each fare; and
  3. All of the general rules and conditions (not specific to a particular fare) that constitute the complete contract of carriage between the airline and the ticket purchaser, including general rules of fare construction, mileage calculation rules, any interline rules, and all general terms and conditions.

The point is for the entirety of the contract, including all terms enforceable by either party, to be defined within the published tariff, so that you can tell, before you buy a ticket, by reference solely to that tariff, exactly what contract you are entering into.

Pursuant to U.S. Federal law, 49 U.S. Code §41510, no international airline ticket to, from, or via the U.S (tariff requirements for purely domestic journeys within the USA are a thornier question) may be sold except at a price and in accordance with the rules specified in the airline's published tariff, and no contractual condition not specified in the tariff may be enforced by either party to the contract of carriage. By definition, the tariff, and only the tariff, defines the entirely of the contract.

The requirement to have, make publicly available, and adhere to a tariff guarantees transparency of prices, terms, and conditions and is essential for oversight of nondiscrimination.

Naturally, airlines don't like transparency or nondiscrimination. They want to engage in opaque and personalized pricing and make up the "rules" as they go along, case by case, at their own sole discretion.

Common carriers have never liked tariff requirements, which were imposed on them by governments to protect consumers. The tariff requirement in U.S. Federal law for airlines is derived directly from the rules enacted in the 1800s to protect travellers against exploitation, predatory pricing, and discrimination by railroads.

As I said a decade ago with particular reference to American Airlines (AA):

The simple way to enforce transparency and protect consumers is to enforce the existing law that requires tickets to be sold according to a published tariff available at each place tickets are sold -- which for online ticket sales means making the full tariff available online. I made this point in the comments I filed with the U.S. Department of Transportation in their latest, still ongoing, rulemaking on enhancing airline consumer protections. It remains to be seen if the DOT will act to enforce the law. [A decade later, the DOT still has not done so.]

At the PhoCusWright conference in November 2010, I asked a panel of executives from airlines including AA, "What do you really want? Do you want to repeal the requirement for tickets to be sold in accordance with a published tariff? Do you want to enforce the tariff requirement? Or do you really prefer the current system, under which the tariff and tariff publication requirement is on the books but universally ignored?"

None of them even tried to answer the question. They laughed at me, then moved on. But the issue won't go away.... Consumers need the full airline ticket price transparency that can best be ensured through enforcement of existing laws requiring them to publish all their fares and adhere to that published tariff.

The "wiggle room" the airlines have found in trying to evade the plain language of U.S. Federal law on international air tariffs -- seemingly led by AA as the U.S.-based airline most willing to flout this law and hope to get away with it -- has been to claim that there is a "tariff", but to make it practically impossible to obtain or consult.

Key to that is claiming that the tariff need only be available for public inspection at physical sales locations, and need not be available on the airline's Web site, even when that Web site is the "location" of most of the airline's ticket sales.

The novel coronavirus epidemic has made it especially important for ticket holders and prospective ticket purchasers to be able to tell what rules on cancellations, changes, mask-wearing, other health rules, etc. apply to tickets. COVID-19 also makes it especially important to the health of both travellers and airline ticket counter staff for ticket holders and purchasers to be able to consult these rules and conditions online, without having to visit a ticket counter at the airport.

But AA is, instead, endangering both its customers and its staff and contractors by telling ticket purchasers that they have to go to an airport ticket counter (or one of AA's two off-airport U.S. ticket offices, in Fort Lauderdale and Miami) if they want to consult AA's tariffs.

In the present day and age, during a pandemic after more than 25 years of ticket sales on AA.com, AA's claim that its Web site is not a ticket sales "location" is patent, and dangerous, nonsense.

This claim by AA comes in response to a complaint to the DOT by Mike Borsetti, a frequent traveller and consumer gadfly in the best sense of the word.

I wrote about Mr. Borsetti and submitted comments in his behalf in 2015 when he complained to the DOT
about AA's failure to comply with another, related, provision of Federal regulations, 14 CFR §399.83, whihc requires the airline to provide a "ticket" -- physical or virtual -- when it says that you are "confirmed". AA's violation is flagrant, and this should be an open-and-shut case, but the DOT has been sitting on this complaint for more thna 5 years after briefing (and submission of dozens of comments, many of them from readers of my newsletter and blog and all of them supporting Mr. Borsetti) without taking any action.

This time, AA told Mr. Borsetti its contract with him included various terms and conditions that were supposedly "incorporated by reference" but that weren't, and still aren't, available on the AA.com Web site where he bought his tickets.

Mr. Borsetti filed a formal complaint with the DOT that AAs failure to make these incorporated terms available violates the Federal regulations at 14 CFR §221.107.

(My friend Ben Edelman -- frequent traveller, lawyer, and former professor at Harvard Business School -- has the definitive explainer about how to file a formal complaint with the DOT against an airline here on his personal Web site.)

After Mr. Borsetti filed his complaint, AA set up an autoresponder at "TariffRequest@aa.com" that responds with a PDF of part of AA's general rules. But that still leads consumers down a rabbit-hole. What's sent back by the autoresponder isn't the current version, and it refers to yet more documents that are supposedly incorporated by reference but that are included or available neither on AA.com nor from the autoresponder:

For list of participating carriers, see IPGT-1, DOT:581, CTA:373. This tariff is governed, except as otherwise provided herein, by Maximum Permitted Mileage Tariff No. MPM-1, DOT:424, CTA:239; Aircraft Type Seating Configuration Tariff No. TS-2, DOT:220, CTA:111; and International Passenger Governing Tariff No. IPGT-1, DOT:581, CTA:373 issued by Airline Tariff Publishing Company, Agent, supplements thereto and reissues thereof.

Clear as mud.

What can you do to support Mr. Borsetti in pressuring the DOT to enforce consumers' rights? Go here to the DOT docket, click on the blue "Comment Now!" button at the upper right, and fill in the form to tell the DOT that:

  1. The DOT should consider airline Web sites to be "locations" where tickets are sold, and
  2. Airlines should be required to make their complete tariffs -- including fares, fare rules, and all general rules or conditions incorporated into their contracts with ticket purchasers, including recursively all documents incorporated by reference -- available on their Web sites where tickets are sold.

There's no specific deadline for comments, but sooner is better to get them considered by the DOT. The DOT could make a decision tomorrow, or it could wait another five years or more, as it has done with Mr. Borsetti's previous complaint.

Link | Posted by Edward on Friday, 9 October 2020, 19:46 ( 7:46 PM)
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