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Truth in Advertising?

Last week, new guidelines from the US Department of Transportation went into effect regarding advertising of airfares. The guidelines are designed to get rid of widespread deceptive practices in the transportation industry, most notably the practice of advertising impossibly cheap airfares and then tacking on huge mandatory fees just before you pay. It had gotten so bad that in some cases the fees were larger than the advertised price.

The new rules also require airlines to give customers 24 hours after purchase to change or cancel a flight reservation without paying a fee (as long as the trip does not start within seven days). Airlines must also disclose baggage fees at the time of purchase, and must notify passengers promptly about flight cancelations, diversions, or delays greater than 30 minutes. So no more sitting around in an airport wondering what happened to your flight that was supposed to leave two hours ago.

As someone who travels frequently, this is wonderful. It used to drive me crazy shopping for flights, since advertised prices often bore little relationship to the actual cost of the ticket and it was a lot of work to compare prices from different airlines. Even the Wall Street Journal applauded the new regulations, saying they give “a bit more common sense and consumer fairness” in the air-travel industry.

But that didn’t stop Congressman Tom Graves (R-GA) from announcing plans to introduce a bill to overturn the new rules. His reason? He claims the new rules limit the consumers’ ability to see how much they are getting taxed. Of course, that is a complete fabrication, since the rules do not limit in any way an airline’s ability to break down the advertised (total) price. In fact, most airlines already do that. And just how is the old practice of advertising prices that do not include any taxes or fees help consumers see those taxes? Pure BS.

And at least one airline is upset about the new rules. Spirit Airlines posted a banner on their main web page that says “Warning: New government regulations require us to HIDE taxes in your fares.” Again, pure BS, since Spirit already breaks out those taxes. Spirit is also contesting the new rules in court. Of course, Spirit was one of the worst with deceptive practices. They would advertise very low ticket prices, but the ticket did not even include a seat, which cost more (and was required — no standing in the aisles!). They also charged a $5 fee to print a boarding pass, $40 for a carry-on bag, charged for all drinks (including water) and snacks, and at one time was even considering a charge to use the bathroom.

For example, Spirit used to advertise a price of $71 for a flight from Fort Lauderdale, FL, to Las Vegas, which works out to $142 round trip, but the actual cost was $219.18 (that’s $77.18 more in taxes and fees, which is more than the original advertised price). Now, they will have to advertise the flight for $219.18.

In response, Spirit has now tacked on a new $2 fee to every ticket, which they call the “Department of Transportation Unintended Consequences Fee“. Which is ironic, since they claim that the government is hiding taxes in the advertised prices, but they don’t mention how they hide their ridiculous fees.

Personally, I’d like to see rules like this expanded to other businesses. How many of you have tried to buy a concert or play ticket from Ticketmaster recently, and been hit with a barrage of mandatory “convenience” and other expensive fees? I’d like to see a “truth in pricing” law that requires advertised prices to reflect the true end cost of all products.



  1. TJ wrote:

    I agree with you wholeheartedly.

    Spirit Airlines has always been the worst company to deal with for pricing and hidden fees. I have never actually flown with them because their final price never reflects their advertised price and I’m cheap enough to actually start the search over rather than pay $X more than I expected at checkout time. Once I found out that they started charging for a carry-on bag ($40!?) I stopped looking at them as an option altogether.

    Friday, February 3, 2012 at 11:21 am | Permalink
  2. PatriotSGT wrote:

    Spot on IK. And don’t get me started on ticketmaster type operations. Legal scalping from ticket venders. OMG
    Its against the law to stand outside a venue and sell your ticket at face value, but legal to hoard up tickets and sell them online at sometimes double or more then the original price. There aught to be a law… 🙂

    Friday, February 3, 2012 at 11:24 am | Permalink
  3. Jim Oremland wrote:

    I’d like to see how much money the airline industry donates to Graves. I would bet it’s a substantial sum.

    Saturday, February 4, 2012 at 7:02 am | Permalink
  4. ebdoug wrote:

    Just so everyone knows: TaxAct advertises Free Federal Returns “for everyone”. I helped someone do a return on TurboTax the other day. Her’s would be a free Federal except she has one tiny business item. TurboTax charged $111 for Federal and State. So we switched from them (didn’t file) and started all over on TaxAct. With a business form on her return, her Federal was “FREE” and her state cost $15. When you watch the SuperBowl tomorrow and see the TaxAct Ad, FREE FEDERAL Means FREE FEDERAL. All states are $15, I think. So I’m helping people do their tax returns on their computer for the $15.

    Saturday, February 4, 2012 at 7:17 am | Permalink
  5. Arthanyel wrote:

    Completely agree. Companies have the right to compete, and to be creative, but they should not have the right to lie to their customers and to defraud them.

    I am ok with actual options at extra cost – like on flights, having changeable tickets or upgrades – but being fooled about the real cost is just wrong.

    Saturday, February 4, 2012 at 11:05 am | Permalink