The Travel Detective

The Travel Detective on New DOT Rules

The DOT changed the game again last week. Following up on our news coverage and his recent interview with Mark Orwoll, the Travel Detective leaves no stone unturned and offers his perspective on the new DOT rules.

All the new Department of Transportation (DOT) rules benefit passengers. You remember the old tarmac delay rules? They’ve now been strengthened to also include foreign carriers. This means on a domestic carrier if they don’t bring a plane back to the gate if you’re delayed a third hour, on the dot, they can be liable for fines up to $27,500 per passenger. A fully loaded 747 puts you way north of $3 million dollars. That’s a nice wake up call for the airlines, but when the rules were first passed somebody cut the international airlines a deal, and they got exempt. Well, now they’re no longer exempt, although they still got a little bit of slack because the DOT gave them an additional hour. International airlines have four hours to get you back to the gate. I don’t know how effective that’s going to be with fuel burn and just the cost of re-accommodating passengers, but at least it’s better than nothing.

The airlines tried to delay two new DOT rules––they kept asking for a six month extension. One rule the airlines tried to delay, but basically couldn’t, was that they doubled your compensation if a plane was overbooked. I think that’s a good rule, especially when airlines have increased in capacity––they’re running at an 87 percent load factor. I challenge anybody to tell me they’ve been on a plane lately that hasn’t been totally full. What’s happening is they’re overbooking to begin with.

Most people don’t realize that even when the airliners are flying empty they were still over-booking 30 percent because a lot of business travelers would double book or triple book and then not show up. Now everybody gets denied boarding all the time because planes are already full to begin with, so it’s good that they doubled the compensation for that.

Last but not least, and the most important thing for me, is that the DOT has now required airlines to actually play fair on their websites and fully disclose all of their ancillary fees––think ticket change fees, cancellation fees, breathing fees. Full fee disclosure allows passengers to effectively budget the true cost of a trip. Every airline still wants to be competitive on price, but they’re not very competitive on value.


If a cruise ship sells you a cabin for a weeklong trip to the Caribbean for $600, which is about $100 a night including your three meals, that’s great. But what they’re not totally being transparent about is that they will charge you if you want to go to the spa, if you want to go to the rock climbing wall, if you want to go to the ice skating rink, if you want to take a shore excursion, if you want to go to the casino, if you want to have a Coca-Cola, everything is a profit center on that ship. So I tell everybody, the reality of this is whatever your base fare is the cruise line makes all their money through on-board revenue. So, you need to budget three times the cost of the base fare for incidentals.

In the airline business, it’s a very different situation because until recently many of their Web sites made you opt out of a lot of garbage. No, I don’t want the insurance; no I don’t want this; no I don’t want that. Now they just have to be transparent, and list their options as opposed to being forced to do it and then opt out. Now, at least, you can then budget accordingly. The funniest thing of all is that the airlines made over $6 billion last year in ancillary fees, which hardly involved any labor. So, it was almost pure profit that came from charging for things that you used to get for free. Also the airlines are taxed less on fees because they’re not considered tickets. The airlines made more money from ancillary fees last year than they made from actually flying airplanes. In fact, if the airlines went to bed at night and had a dream, it would be that they didn’t have to fly you at all. They’d just sell you a pillow, make you live at the airport, and earn money that way. The whole business model has changed radically and not necessarily to our liking. But, it’s the world we live in; therefore, we have to at least live with that and adjust to it.

By Peter Greenberg for PeterGreenberg.com

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