J UNE 28, 2012

A FTERNOON S ESSION

U.S. D EPARTMENT O F T RANSPORTATION

W ASHINGTON , D.C.

T ERRY D ALE

P RESIDENT , U NITED S TATES T OUR O PERATORS A SSOCIATION 

## Presentation before the Advisory Committee on Aviation

Consumer Protection

## Overview of USTOA

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 

### Headquartered in New York, N.Y.

 

### Founded in 1972 to represent the tour operator industry.

 

### Encourages and maintains the highest standards of professionalism, integrity and service.

 

### Comprised of 45 active members, representing almost 150 brands, from iconic names to niche/specialized labels.

 

### Combined, members move 11 million passengers and account for $9 billion in revenue annually.

## Overview of USTOA (cont’d)

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 

### All active members are required to participate in USTOA’s Travelers Assistance Program.

 each member must post $1 million in security, in the form of a bond, letter of credit or U.S. Treasury Bill

 security is held by the USTOA Depositors Trust

 solely for use in reimbursing consumers for tour payments or deposits lost in the event of an active member’s bankruptcy, insolvency or cessation of business

 

### USTOA’s Travelers Assistance Program is the only consumer protection deposit plan recognized by the Attorney General of California under that state’s
seller of travel law.

## Tour Operators Provide a Unique Service

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 

### Tour operators are regulated by DOT as “ticket agents,” but differ significantly from online travel agencies and brick

- and

- mortar retailers. Tour operators:

 depend on multiple product suppliers in connection with a single tour, including not only airlines but hotel, cruise, rail and motor coach operators;

 provide consumers with the flexibility to pay over time, vastly increasing access to travel and consumer choice;

 have booking windows of up to 12 months or more prior to departure; and

 are accountable for the customer’s experience, from departure to return, and depend on repeat business to succeed, with every incentive to care for their customers.

## Tour Operators’ Sale of Air Transportation

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###  

### Airline tickets are but one subcomponent of tour operators’ packages.

 

### Between deposit and the time of airline ticketing, international airline fuel surcharges

— over which tour operators have no control

— often increase.

 

### Volatile fuel prices pressure airlines to suspend or discontinue unprofitable routes, in some cases leaving tour operators and partipants with few

viable alternate itineraries.

## Tour Operators’ Sale of Air Transportation

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 

### Tour operators, due to their long booking window, must prepare brochures more than a year in advance of the travel season, notwithstanding constantly shifting airline prices, rules and service patterns.

 

### Although the sale of air constitutes only a fraction of their business, tour operators often struggle with new DOT requirements mandating additional airline

specific disclosures (particularly on e

- tickets and websites), given technological challenges and the frequency of changes to airline rules, policies and fees.

## DOT Consumer Protection Efforts

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 

### USTOA has been an active participant in DOT’s consumer rulemakings, including the second round of consumer protection rules and the pending website accessibility proposal.

 

### During the second round of consumer protection rules, USTOA supported DOT’s proposals to:

 ban post

- purchase price increases other than increases attributable to government taxes; and

 provide consumers with information on airline baggage fees.

 

### USTOA intends to participate fully in the forthcoming proposal for a third round of consumer protection rules.

## Current DOT Requirements

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 

### USTOA appreciates DOT’s continued efforts to adopt enforcement policies that allow sellers to utilize a variety of means to comply with its latest consumer protection rules.

 

### Given the current challenging economic climate, DOT should review its existing requirements to

ensure the stated objectives are achieved through:

 the least burdensome means; and

 in a manner that preserves operational flexibility for all sellers

of travel.

## Future DOT Rulemakings/Policies

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 

### DOT must strike an appropriate balance between the need to protect consumers and the important objectives of the Airline Deregulation Act, including:

 placing maximum reliance on competitive market forces; and

 fostering an air transportation system that relies on competition to provide innovation and determine the variety and quality of

services.

 

### DOT’s future consumer protection efforts should focus on addressing practices that are likely to deceive or
confuse consumers or otherwise cause substantial or significant harm.

 

### New requirements should be reserved for cases where DOT is aware of actual consumer injury.

## Conclusion

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 

### USTOA looks forward to continuing to work with the
DOT to ensure:

 USTOA members understand DOT’s enforcement policies and expectations with respect to tour operators’ offerings and services;
and

 DOT understands the unique role that tour operators play in arranging consumer air travel, including matters over which tour operators do and do not have control.

 

### USTOA also welcomes the opportunity to assist the Committee with the important task of evaluating and recommending opportunities to improve existing aviation consumer protection requirements and, where necessary, such additional programs as may be prudent.

## Contact Information

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Terry Dale

President
United States Tour Operators Association

345 Seventh Avenue, Suite 1801 New York, NY 10001
212.599.6599 (phone)

tdale@ustoa.com (email)

www.ustoa.com (website)