TINA.org Tells DOT: Don’t Muddy Airline Pricing

I’m writing this from seat 41B, somewhere over the Atlantic – a seemingly fitting place to make this point. I booked this flight about a month ago, paying the single, all-in price that was advertised on the airline’s website. I wasn’t presented with a slew of different prices related to the fare that might have complicated the transaction – it was just the total price, plain and simple. That’s not luck. It’s the law – at least for now.

For more than a decade, airline shoppers have been able to rely on a simple premise: that the price they see advertised is the price they’ll pay. That’s the result of a federal regulation – the Department of Transportation’s Full Fare Rule – which since 2012 has required airlines to display a ticket’s total price, including all mandatory taxes and fees, more prominently than any individual component of that price.

Now DOT wants to unwind it.

In a Notice of Proposed Rulemaking (NPRM) issued July 1, DOT proposed amending the Full Fare Rule to give airlines “flexibility” to display individual fare components – the base fare, taxes, carrier-imposed fees – with the same prominence as the total price, reversing its longstanding requirement that the total stand out above everything else.

On Friday, TINA.org, joined by Harvard Law School professor and First Amendment expert Rebecca Tushnet, filed a comment urging DOT to reject the proposal.

Here’s why it matters.

The rule works because it’s simple

The proposed changes to the Full Fare Rule would make comparison shopping harder, not easier. As it currently stands, the rule relies on the fact that consumers use the most visually prominent number when comparing prices. When that number is the total price, comparison shopping works the way it’s supposed to. When it’s just one component of the price – a base fare that omits mandatory fees, for example – shoppers tend to compare incomplete numbers without realizing it.

This isn’t a novel theory. It’s backed by decades of published research on “partitioned pricing” – splitting a price into a base amount plus separate charges instead of displaying one all-inclusive price. For example, landmark research in the Journal of Marketing Research found that when shown partitioned prices, consumers systematically recall a total cost lower than the real one.

DOT’s own justifications don’t hold up

DOT says its proposed changes will “ensure information is presented clearly to consumers.” But piling on more information for consumers to digest only muddies the waters – DOT is attempting to solve a problem that doesn’t exist. What consumers actually need is the total price, and that’s exactly what they already get under the current regulatory framework. If a fare component can be displayed just as prominently as the total, consumers lose the one visual cue that currently tells them which number they’ll actually pay.

Further, DOT classifies the NPRM as “not a significant regulatory action” and describes it in the Federal Register notice as a deregulatory cost-savings measure for airlines – without highlighting any offsetting cost to consumers from increased confusion or deception. In other words, DOT is essentially asking the public to accept, on faith, that flexibility for airlines won’t come at consumers’ expense.

The Internal Revenue Code doesn’t require this

The NPRM leans in part on a tax-code provision, 26 U.S.C. § 7275(b), governing how airlines display certain federal excise taxes. But that provision sets a floor: If an airline shows the base fare and taxes as separate numbers, it must display the total price just as prominently as the more prominent of those two numbers. It doesn’t say the total can’t be shown more prominently, and it says nothing about DOT’s independent authority to police deceptive advertising under 49 U.S.C. § 41712. Nothing in the tax code’s text or history suggests Congress meant it to override DOT’s consumer-protection mandate.

What we’re asking for

TINA.org’s comment urges DOT not to adopt the proposed changes to the Full Fare Rule and to preserve its existing guidance documents. It also formally petitions DOT’s general counsel for a hearing on the NPRM – a chance to put the disputed economic and factual questions underlying this proposal to a real evidentiary test, including cross-examination, before any final changes to the rule take effect.

Stay tuned for updates.