Written Presentation of AirlinePassengers.org for June 28, 2012, Meeting of Advisory Committee for Aviation Consumer Protection

Washington, D.C.

I am Jack Corbett, a director of AirlinePassengers.org , a non-profit educational

organization 1 established to serve as the “Voice for Airline Pas senger Rights.” We thank you for the opportunity to present issues 2 that this Advisory Committee should consider during its statutory two-plus years of operation. These comments also represent the views and positions of the Assoc iation for Airline Passenger Rights (AAPR). 3

We are pleased that the Advisory Committee provisio n survived in the final FAA Reauthorization statute and, as importantly, are gr ateful for DOT Secretary LaHood’s being the most pro-consumer DOT Secretary since the Department was

established in 1967.

-- This Advisory Committee is Needed

The first question worth addressing is “Is this Adv isory Committee really needed?” The scheduled airlines have suggested that the rece nt statute and two existing sets of airline consumer regulations have already impose d more requirements on a seemingly deregulated industry than most other segm ents of our society receive.

1 Chartered in the Commonwealth of Virginia; classifi ed by the Internal Revenue Service as a section 501(c)(3) educational organization. Our organization, with a Board of Directors and a P olicy Advisory Committee, was activated in response to th e 112 th Congress’ having weakened in conference almost all of the airline passenger righ ts provisions in the House and Senate versions of the recently-enacted FAA Reauthorization Act.

2 The Advisory Committee is to submit to the DOT Secr etary not later than October 15, 2012, and again by October 15, 2013, a summary of its recomme ndations concerning any needed

improvements to existing aviation consumer protecti on programs and the need for establishing any additional aviation consumer protection programs, a nd for the DOT Secretary thereafter to report to Congress annually, but not later than February 1, 2 013, and February 1, 2014, on how he/she has implemented each of the Advisory Committee’s recomm endations, and, for each recommendation not implemented, the reasons for not implementing t he recommendation.

3 http://www.flyfriendlyskies.com/

P.O. Box 42142, Washington, D.C. 20015 Reply to: c ontact@airlinepassengers.orgOur answer is “Yes, this Advisory Committee is needed” for two important

reasons. First, there are a number of airline cons umer issues that still need Federal regulatory or statutory solutions, and we hope to i dentify them as your work

progresses.

Second, if the Federal Government doesn’t act to pr otect airline consumers in these remaining areas, it just won’t happen. Why? Becau se the Federal Aviation Act “preempts” state and local governments from regulat ing airline prices, routes and services and the Federal courts have interpreted th e term “services” too broadly to cover almost anything that happens to passengers in an airline aircraft. We’ll come back to the preemption issue later.

What issues do we most hear about from airline pass engers? Number one is frustration with TSA’s passenger and baggage screen ing operations, but your Committee doesn’t have jurisdiction over TSA matter s.

-- Comparison Shopping for Airline Fares and Hidden Ancillary Charges

Issue number two is consumer confusion in calculati ng the total cost of flying, since the airlines are resisting sharing all of the infor mation consumers need about the airlines’ now-unbundled ancillary fees so that they can easily determine the total cost to fly and, as important, to compare costs bet ween competing carriers in a sideby-side fashion.

Transparency is a huge issue. One of the major ben efits of this internet era has been the airline consumer’s ability to compare each airl ine’s prices against competing carriers’ prices and quality of service to determin e the best deal. The carriers’ push to force consumers to visit each airline’s webpage to calculate fares and ancillary fees and thus to lose the advantage of side-by-side comparisons is a major loss. We are sure that comparison-shopping has saved airline passengers billions of dollars over the years.

We are disappointed that DOT’s third airline consum er protection NPRM – one that proposes to regulate the issue of hidden airline an cillary fees -- has been delayed, and that any final regulation won’t now be publishe d until sometime after Spring 2013. That will be five years since the carriers s tarted aggressively adding their somewhat-hidden ancillary fees, disadvantaging airl ine customers. This Committee should urge DOT not to let this proposed rulemaking – relating to side-by-side comparison of airline fares and fees b y consumers - slip any further than absolutely necessary for all comments to be fairly considered

.-- Legislation to Refund Unused Federal Aviation Ti cket Taxes

As everyone knows, the airlines are sensitive to Fe deral and local governments’ imposing aviation taxes and fees that collectively could total some 20% of the fare. Airline passengers have a similar concern on which we could use the Advisory Committee’s help.

It irritates passengers who’ve purchased non-refund able airline tickets that they end up not using -- that Treasury retains all the F ederal ticket taxes that have been prepaid by the passengers. There’s no problem with the airline retaining the nonrefundable fare – that was part of the deal for a l ower fare – but why should Treasury not be able to refund all the prepaid and unused Federal ticket taxes? It could easily be as much as $50. on a long-haul flig ht. 4 Specifically, we need your support in DOT’s report to Congress next February f or amending the Federal aviation tax statute to allow passengers to get ref unds for Federal taxes paid on flights not taken.

-- Provisions in Carriers’ Contracts of Carriage Sh ould be Made

Enforceable

Each of the last two DOT rulemakings has proposed t hat the airlines’ Contracts of Carriage – the promises they make to their passenge rs – be made enforceable by passengers. The last rulemaking proposed that the airlines’ customer service plans and tarmac delay contingency plans be incorporated into their Contracts of Carriage rather than just being posted on their webpages. B oth times the airlines objected that they didn’t want to make those commitments leg ally enforceable by passengers so DOT decided not to require incorporation but to just require posting.

DOT feared that if the provisions in Contracts of C arriage were really enforceable, airlines “might weaken existing plans” “to exclude certain key terms from their [current] plans.” That says it all: the carriers d on’t want passengers to be able to enforce the provisions in their Contracts of Carria ge in state courts. They want their behavior to be Federally “preempted” but then they also don’t want DOT to adopt additional regulations that would be enforceable di rectly by DOT.

AirlinePassengers.org believes airline passengers should have some judic ially enforceable rights in state courts in addition to D OT’s ability to impose civil penalties on airlines directly for unfair and decep tive practices under 49 U.S.C.

41712. The Advisory Committee should request DOT ‘s Office of Inspector General over the next year (1) to review the airlin es’ Contracts of Carriage to determine whether their provisions are often so hed ged by legalese (e.g., “to the extent possible”) that “passenger rights” are n ot practically enforceable in

4 The 7.5% domestic ticket tax plus $3.70 per flight segment tax would total $49 on a round-trip onestop domestic $500 fare. See enclosed February 22, 2011, AirlinePassengers.org letter to Hon. David Camp, Chairman of the House Ways and Means Committe e.state courts (including small claims courts); and ( 2) to review past Federal

litigation as to whether the Federal preemption of state regulation of airline “services” has been so broadly interpreted that it should be narrowed by Congress when the next FAA Reauthorization Act is e nacted in 2015. 5

This legal analysis and the Advisory Committee’s re view of its findings will take considerable time. If requested soon, this importa nt project could be completed well before your Advisory Committee expires.

The work of the Advisory Committee and the continui ng attention of Secretary LaHood are very important because what this industr y has achieved by 2012 is really highly anomalous within free market concepts . What airlines have is a high degree of deregulation with respect to themselves a s producers, a necessarily high degree of Federal regulation closely limited to saf ety, and a high degree of regulation imposed on their customers with respect to enforcement of the economic aspects of the transaction. The current result is airline deregulation but with customers’ exercise of their legal rights negated b y an overly broad Federal preemption scheme. It is difficult to imagine anot her branch of commerce in which customers are so highly proscribed in the limited, if any, remedies available to them for producers' breach of their obligations.

The hallmark of free markets in most cases is some mutuality of responsibility under the rule of law. If airlines truly wish to e mbrace deregulation and the benefits of enhanced competition they should welcome an adju stment in the pendulum swing that currently deprives their custom ers of any meaningful enforcement of the advantages each carrier claims o ver its competitors.

Again, we appreciate the opportunity to present our initial suggestions for the Committee and hope to participate fully in all your future agenda items. For additional information, contact us at toll-free pho ne 1-855-AIRPASS (247-7277).

5 See enclosed June 21, 2012, AirlinePassengers.org letter to Hon. Robert S. Rivkin, General Counsel o f the U.S. Department of Transportation.