Spirit Airlines’ $2 ‘Unintended Consequences Fee’

 @MarkJohansonIBT
on February 02 2012 1:03 PM

Spirit Airlines announced this week that it would add a $2 unintended consequences fee to all tickets due to new federal regulation aimed at protecting consumers.

The Department of Transportation Unintended Consequences Fee was added to each ticket effective immediately and is a direct response to new DOT rules put in place Jan. 26 to offer travelers better passenger protections.

The most visible of the new rules was a law that required airlines to include mandatory government taxes and fees in all advertised fares. Other rules pertained to ticket cancellation policies and baggage fees. Spirit says it's the DOT regulation allowing passengers to change flights within 24 hours of booking without paying a penalty that's forced them to add the fee.

Spirit believes that consumers have a right to know that this misguided regulation is expensive and is hitting consumers directly in their pocket books, the company stated on its website.

People love the idea of not having to commit to a reservation, but this regulation, like most, imposes costs on consumers, CEO Ben Baldanza added in the airline's statement. Wouldn't we all like to eat all we want and not get fat? Regulators like to try to sell the idea of this rule, but have ignored the cost impact to consumers. You simply can't eat all you want without consequences.

The low-cost airline says the new regulation forces them to hold the seat for someone who may or may not want to fly while not allowing someone who really does want to fly to book that seat.

However, the nation's transportation chief disagrees.

This is just another example of the disrespect with which too many airlines treat their passengers, Department of Transportation Secretary Ray LaHood said in a statement. Rather than coming up with new and unnecessary fees to charge their customers, airlines should focus on providing fair and transparent service - that's what our common sense rules are designed to ensure.

Last week, Spirit lashed out against another part of the rule - the one pertaining to advertising.

If that airline ad for a $9 fare on Spirit seemed too good to be true, that's because it was. With the new rule, advertisements that make airfares seem enticingly low will become a thing of the past.

The DOT eliminated the asterisk pointing to a dense paragraph of additional taxes and fees that make a cheap ticket significantly more costly. In many cases, the additional charges could raise the ticket price by 20% or more.

For the last 25 years, the department allowed airlines and travel agencies to list government-imposed fees in a separate area, resulting in a paragraph of fine print and disclaimers.

Increasing use of Web ads, Facebook, and Twitter -- where actual prices are harder to decipher -- prompted the government to change the long-standing rule. All advertised airfares now include the non-optional fees and taxes, including fuel charges and the Sept. 11 Security Fee.

Items like baggage fees, however, are not included because they are optional.

The DOT is considering several other protections such as requiring airlines to disclose fees for optional services when passengers book a flight, requiring additional carriers to file on-time performance reports, and enhancing the disclosure of code-share flights (those marketed by one airline but operated by another).

Spirit built its business model around advertising $9 fares and then charging for both checked and carry-on bags, taxes, and additional fees. The airline posted warnings on its Web site last week and said the advertising rule was arbitrary and capricious, arguing that advertising fees and taxes separately has been done for years by virtually every other industry in the United States.

Again, the government strongly disagreed.

Spirit has embarked on a misguided and disingenuous project, wrote the DOT's top lawyer in a letter to Spirit criticizing the airline's statements on the pricing regulations. The rule does not prevent carriers from disclosing the amount, type, and nature of government taxes and fees.

The government has increasingly cracked down on airlines over deceptive advertising. Air Canada, JetBlue, Thai Airways, LAN Airlines, South African Airways, Orbitz, Virgin Atlantic and Sprit have all been fined at least $50,000 for advertising infractions in the past six months.

The new rules are part of a greater list of passenger protections the Transportation Department proposed in 2010 and adopted last spring. A number of new measures required by the rule took effect on Aug. 23, 2011, including requirements that airlines refund baggage fees if bags are lost and provide increased compensation to passengers bumped from oversold flights.

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