BEFORE THE
DEPARTMENT OF TRANSPORTATION
WASHINGTON, D.C.
______
Application of )
)
ORBITZ, L.LC.)
)Docket OST-01-11086
for an exemption, to the extent )
necessary, pursuant to 49 U.S.C.)
§40109)
______)
COMMENTS OF RADIUS SM-The Global Travel Company
John MelchiorEdward P. Faberman
Interim Managing DirectorMichelle M. Faust
RADIUSSM-The Global Travel Company UNGARETTI & HARRIS
4330 East-West Highway1500 K Street, NW, Suite 250
Suite 1100Washington, DC 20005-1714
Bethesda, MD 20814-4408Tel: 202-639-7501
Fax: 202-639-7505
Counsel for RADIUS- the Global Travel Company
Brent Garback
President, Total Travel Management
4330 East-West Highway
Suite 1100
Bethesda, MD 20814-4408
Date: January 4, 2002
DCDOCS:10180-1
BEFORE THE
DEPARTMENT OF TRANSPORTATION
WASHINGTON, D.C.
______
Application of )
)
ORBITZ, L.LC.)
)Docket OST-01-11086
for an exemption, to the extent )
necessary, pursuant to 49 U.S.C.)
§40109)
______)
COMMENTS OF RADIUSSM
Introduction
In response to a request submitted by Orbitz, L.L.C. (“Orbitz”) on December 3, 2001, the Department of Transportation (“Department”) issued Order 2001-12-7 which granted Orbitz a conditional exemption from the airfare advertising requirements of 49 U.S.C. §41712, 14 CFR §399.80(f) and 14 CFR §399.84. The exemption allows Orbitz to list its service fees separately rather than as part of the airfares listed in its fare displays on its website provided it meets certain conditions. On December 19, 2001, the Department issued a Notice of Revised Enforcement Policy extending the Orbitz exemption to all Internet travel agents.
RADIUSSM- the Global Travel Company[1](“Radius”) believes that it is essential that business and leisure travelers have complete and clear access to all fare information. Radius has supported previous Department efforts to provide such information to the public. It is essential that when the Department addresses these issues, it does so in an equitable manner treating all travel agencies identically. Therefore, Radius asks that the Department allow its shareholders and all travel agencies to disclose fares in the same manner as it has allowed Orbitz to display fares. If the Department is not prepared to treat all in the same manner, then Radius opposes the Department’s decision as it provides Orbitz with preferential treatment and consequently discriminates against “off-line” travel agents.
Under the Revised Enforcement Policy, the Department departs from its long-standing policy that “any fuel surcharges, as well as ad valorem taxes or any additional carrier or vendor fees, must be included in the advertised fare”. (Order 2001-12-1.) As a part of the revised policy, the Department sets forth several conditions the Internet travel agents must comply with in order to utilize the exemption. Although these conditions are intended to protect consumers from being misled by the separation of service fees from the advertised fare, they do not achieve this result. In practice, consumers will likely believe they are getting a better deal from an Internet agency’s website because traditional offline travel agents cannot separate the service fee out from the quoted fare. As a result, the Department has provided an unfair advantage to Internet travel agents. That advantage will drive customers from regular travel agencies to Internet agencies.
Travel Agency Service
Travel agencies are the legal "agents" of the airlines and the preferred choice of the American consumer for making travel reservations because they provide choice, fairness and efficiency in their dealings with the airlines and the entire travel industry. Travel agents sell 95% of all cruises, 90% of all tours and packages, 40% of all car rentals and more than 25% of all hotels. The travel agency industry provides employment for over 300,000 Americans. Travelers see travel agents as their advocates. Travel agencies distribute 75% of airline inventory - or three out of every four airline tickets. Passengers like having specific travel professionals to deal with, particularly as problems develop during travel. As we have seen recently, travelers often face last minute changes and need assistance in making alternative travel arrangements. As airlines continue to limit direct customer contact with airline sales representatives (they recently announced that they would close most city ticket offices), travel agents are the only ones who will offer travelers complete fare choice and personal attention. If travel agents are prevented from obtaining and displaying all fare information on an equal footing with other suppliers, travelers will remove their business from travel agencies and will take that business elsewhere.
State of Tourism
The Department’s action on the Orbitz request comes at a time that all of those involved in the travel and tourism industry have suffered significant losses as a result of the events of September 11. The travel agency industry has been hit particularly hard during the past several months.
As individuals and businesses have cut back on travel, travel agencies have lost significant amounts of business. As a result, travel agencies have been forced to lay off hundreds of employees. While there have recently been some increases in overall travel, numbers remain below forecasts and previous years.
Online Ticket Sales
Travel agencies are prepared to compete for business. At a time when flights are empty and many individuals are still not traveling, it is in the public interest to ensure that travel professionals can offer all fares in the same manner as the online ticketing organizations.
Orbitz, which is owned and controlled by the nation’s largest carriers, already has a significant advantage in dealing with customers in that it has been allowed to offer fares that are not made available to travel agencies or others. The National Business Travel Association (“NBTA”) which represents corporate travel departments, has complained that the airlines are not offering all airfares to all travelers. NBTA stated that it “opposes current pricing practices, in which corporate clients are not offered the same low fare that are offered to consumers through Orbitz. NBTA urged the Department to apply the same ‘full access to fare’ rules to Orbitz that apply for the Customer Reservation Systems.”
Unless the travel agency industry is able to operate under the same rules as these other organizations, they will continue to lose business. If customers believe that they can routinely obtain lower fares by purchasing tickets through Orbitz or other Internet agencies, the travel agencies will suffer even greater losses. If that occurs the entire travel industry, consumers, businesses and communities from throughout the country will suffer.
Pro-Consumer Proposal
It is essential that consumers obtain similar information regarding airfares from all sources. A consumer utilizing an Internet site to obtain a fare, would initially obtain an airline’s fare without the applicable service fees. Thus, the consumer would not have a “total price” for the ticket. Traditional travel agencies, however, are held to a different standard. The Department’s December 19, 2001 Notice stated:
…under 14 CFR §399.84, travel agents who do not sell air transportation over the Internet must continue either (1) to include any service fees they charge in their airline fare quotes to consumers or (2) to quote the fare, the service fee, and the total price, presenting all three elements together.
The Department adds that it prefers option 2 since “…it provides consumers with more complete information on which to base their purchase decisions.” In other words, a consumer searching an online provider for an airfare would obtain the fare without additional charges. It is only if the consumer is willing to search further on subsequent screens that he or she would learn that a service fee would be added to the fare. On the other hand, if the consumer called a travel agency and asked for a comparison of fares, the travel agency would be required to inform the consumer about service fee charges up front whereas the online provider would not have to disclose the service fee amount until later in the transaction. Here is an example:
Online Travel Agent Information:
Fare for travel between Baltimore-San Diego.
Fare -$230.00 each way. $460 roundtrip
There may be a fee with this.
Traditional (“Offline”) Travel Agency Information:
Fare for travel between Baltimore-San Diego.
Fare -$230.00 each way. $460 roundtrip, $20 service fee
TOTAL TICKET PRICE - $480
Based upon initial contacts, the consumer would believe that Orbitz is offering a cheaper fare.
Although the Department imposes some conditions to the exemption as “safeguards against deception”, RADIUS believes these conditions do not protect a consumer from believing that Internet travel agents have better deals (even when they do not). Having a link to service fee information somewhere on the homepage will not provide equivalent information to customers.
Allowing Internet travel agencies to display fares without the service fee included in the price creates a unique fare. Therefore, RADIUS opposes the Department’s interpretation of 14 CFR §399.84, Order 2001-12-7 and the Notice of the revised policy on airfare advertising unless all travel agencies are allowed to list service fees separately and provide fare information in the same manner. If the Department is not prepared to treat all travel agencies in an equal manner, then no travel agency should be allowed to list service fees in accordance with Order 2001-12-7 until a final rulemaking has been completed.
Since the Department has allowed agencies to list service fees separately, it is time to require that this same principle apply to all ticket stock. In its filing with the Department, Orbitz cites an article in Consumer Travel Reports Travel Letter (June 2001) that advocates separate disclosure of fees as the best and fullest form of disclosure. Therefore the Department should require that ticket stock (through ARC) have a separate “fee” line.
Conclusion
At a time that competition is dwindling, travel agents remain one of the few parties that will find the best bargain for customers. As a result of the increasing costs of air travel, customers are sensitive to higher costs. Allowing Internet travel agencies to display fares that might suggest that they have better fares will drive a certain percentage of customers away from “offline” travel agencies. That could lead to additional disruptions to those agencies at a time when they are, consistent with President Bush’s statements, helping bring the travel and tourism industry back to normal.
Therefore, RADIUS requests that the Department apply the policies enunciated in Order 2001-12-7 to all travel agencies, not just to Internet agencies. Consistent with the Department’s actions, Radius also asks that the Department take steps that will allow service fees to be listed separately on all tickets.
Respectfully submitted,
______
Edward P. Faberman
Michelle M. Faust
UNGARETTI & HARRIS
1500 K Street, NW, Suite 250
Washington, DC 20005-1714
Tel: 202-639-7502
Fax: 202-639-7505
Counsel for RADIUS- the Global Travel Company
Dated: January 4, 2002
CERTIFICATE OF SERVICE
I hereby certify that on January 4, 2002, a copy of the Comments of RADIUSSM –The Global Travel Company, was served upon the parties on the attached service list.
______
Jessica A. Quast
Frank J. Costello, Esq.
Jol A. Silversmith, Esp.
Paul E. Schoellhamer,
Director of Government Affairs
ZUCKERT, SCOUTT & RASENBERGER, L.L.P.
888 Seventeenth Street, NW
Washington, DC 20006-3309
202-298-8660
202-342-0683 (fax)
1
[1]RADIUS® - the global travel company, is the world’s largest travel management company with combined annual sales of over $21 billion (USD). RADIUS is comprised of 100+ shareholder agencies in 70+ countries around the world with over 6,000 travel agency locations and is headquartered in Bethesda, Maryland with regional offices in London, Miami, and Singapore.