Proposed Biden rule would try again to compel airline pricing transparency; it worked out so well last time

President Biden has his own plane.

(U.S. Mission photo by Eric Bridiers CC BY-SA 2.0 via Flickr)

The U.S. Department of Transportation (DOT) has proposed a rule to refresh pricing transparency in the airline industry.

According to a DOT press release: "Under the proposed rule, airlines and travel search websites would have to disclose upfront—the first time an airfare is displayed—any fees charged to sit with your child, for changing or cancelling your flight, and for checked or carry-on baggage." 

For me, the new rule can't happen soon enough. At the same time, I'm doubtful we'll see much change in the opacity of the airfare market.

I'm a libertarian. But in America, libertarianism is too often confused with a radically absolutist version of laissez-faire capitalism. Libertarianism rather is about the virtues of a free market. And free markets depend on conditions that don't naturally tend to exist in the real world, including a free flow of information between buyer and seller—that is, transparency. Free markets require regulation to ensure that they remain free.

The airline industry, especially since it moved to online sales, is case in point. In the online marketplace, customers are attracted by low upfront prices. Airlines found that sales improved when the upfront price was lowered by moving some of the fare, especially bag-check costs, to add-on fees later in the purchase transaction. Southwest famously resisted bag-check fees and has capitalized on its exceptionalism, though not without costs. 

In the usual purchase transaction, the low upfront price is too attractive to resist. And competitors' add-ons are not always apparent until the customer has sunken too much time and money into the booking to look back. Indeed, Delta does not even allow customers to prepay bag check, so fliers are not confronted with the bag-check add-on until the day of departure.

Dollars are not the only costs that airlines can conceal from customers doing online price comparison. Inconvenient routing with multiple and lengthy layovers can cost fliers time and money down the line. Early morning and late night flight departures and arrivals can significantly increase airport transfer costs, besides risking personal security and inducing exhaustion. Seat availability can be limited, making flying literally painful for someone six-foot-five or weak of bladder. 

Negotiating these options can be grueling for the consumer, and the market can seem ungoverned by logic. For me, it is not unusual to take days, at hours per day, sifting and testing the market to get the best deal on an air itinerary. In a recent search process, I found, not atypically, that I could fly from city A to city B to city C for less than it cost to fly from city A to city B, which was my actual destination, because direct service is more desirable. But buying the cheaper fare and leaving the airport at city B is called "skiplagging," or "hidden city ticketing," and airlines can be nasty about enforcing their prohibition on it.

On the one hand, I respect the airlines' free-market discretion to charge a higher price for a direct flight than for a less desired routing. On the other hand, there is a confounding absurdity to the idea that I would find myself at home in city B, yet be obligated to board a plane to carry on to someplace I don't want to go. Courts have been hostile to airlines' efforts to penalize skiplaggers financially. But they won't stop an airline from zeroing out a customer's frequent flier miles or even banning the flier from the line.

Like radar detector technologists with speeding enforcers, airlines have played cat and mouse with private and public regulators. Search engines have become more sophisticated in allowing customers to specify parameters, such as bag checks and connections. But the providers vary in options and their efficacy. Kayak tries to help with bag-check fees; Expedia not as much. And the mere act of online price comparison might introduce costs; despite industry denials, there is some evidence that consumers trigger price increases by repeating searches on Kayak and Google.

The search engines anyway can only sort data that the airlines provide, and they are not always forthcoming with details. Some airlines shun intermediary booking sites wholly. Airlines started gaming bag-check fees in 2008. Customer frustration finally precipitated disclosure regulation in 2011.

The regulation failed; bag-check fees are not easy to find. At Frontier and Spirit, the pricing is variable, so a shopper must enter data about a specific flight to get a number that allows price comparison. Meanwhile, bag-check fees have extended to an array of options. United is among airlines that now charge for a carry-on bag, and JetBlue charges for overhead bin space.

Add to the mix that JetBlue and Spirit announced their merger in 2022, even as JetBlue defends its partnership with behemoth American Airlines in litigation with the Justice Department (DOJ). Fewer carriers never results in improved transparency or lower prices for customers. Anti-competitive conglomeration is a natural market tendency, and healthy to a point, but it must be counterbalanced by thoughtful and vigorous antitrust regulation.

Even if DOJ is successful in the present antitrust litigation, the success will be a drop in the bucket of an industry that already is far too monopolized. The United States has nothing like the peanut airlines that blanket Europe. There are legitimate reasons for that deficiency, for example, our larger land mass. But there are plenty of illegitimate reasons, too, including monopoly by air carriers and monopoly in secondary markets, such as airports, baggage handling, and the transportation infrastructure that supports transfers.

The proposed rule announced by the Biden Administration is better than nothing, if it is promulgated intact. But the rule barely scratches the surface of what's needed to move the airline industry into a truly free market, in which consumers have a fighting chance. Extrapolating from past efforts to compel the disclosure of bag-check fees, it's safe to predict that the airlines already are one step ahead, and little will change for the consumer's experience.

A free market is a transparent market with manageable entry barriers. Consumers should be able to compare prices head to head for the same services. The internet should have facilitated the free market and leveled the playing field for buyers. Instead, weak regulation has let industry run amuck and obfuscate pricing. Absolutist laissez-faire capitalism is otherwise known as corporatocracy.

 —

Presently, I'm using two different modalities to try to pursue penalty fees from airlines for flight delays I experienced in the summer under European Union regulatory jurisdiction. When I have outcomes to report, I'll blog about it.

Missionaries kidnapped in Haiti reach freedom, but murky U.S. policy generally fails ransomed abductees

Haitian child in 2012 (photo by Feed My Starving Children CC BY 2.0).

News came last week that the last 12 of 17 Christian missionaries abducted for ransom in Haiti in October either escaped or were released, reports vary, and walked miles to freedom. The circumstances of their liberation raise questions about the ongoing apparent lack of any clear U.S. policy on abductions abroad.

Less well reported than the story of the missionaries, Haitian lawyer and university professor Patrice Dérénoncourt was shot and killed on October 31 by the kidnappers who abducted him in October.  Dérénoncourt taught crimonology and constitutional law in the Economic, Social and Political Sciences Department of the Université Notre-Dame d'Haiti.

Dérénoncourt and the missionaries are typical of the some 800 kidnappings in Haiti just this year. Economic desperation and political turmoil have resulted in flourishing gang violence, and kidnappers seeking ransom have targeted aid workers and the education sector, children included.  Struggling to maintain rule of law, the Haitian government has not been able to get a handle on the problem.  Foreign governments seem either habitually disinterested or similarly impotent.

In the Dérénoncourt case, some of the $900,000 ransom demanded had been paid.  It is unclear whether any ransom was paid for the missionaries.  Representatives of the families and, apparently, the U.S. government through the FBI, were involved in negotiation over kidnappers' outrageous demand for $1 million per person.  Whatever reports are accurate, and whether or not a ransom was paid or the pressure simply became untenable, I find it difficult to believe that the last 12 missionaries surmounted a concerted effort by the kidnappers to keep them.

The Biden Administration was understandably tight-lipped about how it was dealing with the kidnapping crisis while it was going on.  Now that the event is over, it's time for an open conversation about what U.S. policy should be, both with regard to kidnappings and to the social and economic catastrophe unfolding less than 700 miles from Miami.

In the broader picture, U.S. policy on abductions for ransom seems at best inconsistent and at worst incoherent.  In late October, families of Americans still detained abroad, in China, Egypt, Russia, Saudi Arabia, and Venezuela, called on the Biden Administration to do better.  "When we do meet with ... officials," the families wrote, "we feel we are being kept in the dark about what the U.S. government intends to do to free our loved ones."

The murder of an educator such as Dérénoncourt sets back rule of law in Haiti not by just one mind, but by a generation of students he would have taught.  Persistent instability in Haiti meanwhile is contributing to a burgeoning refugee crisis in the Americas and threatens to destabilize democracy in the Caribbean.  Even an isolationist American administration can ignore Haiti for only so long.

From soccer pitch to memoir, and now to White House, Rapinoe shines in USWNT equal pay crusade

Rapinoe speaks at the White House (from White House video).

Today a federal district court in California is expected to approve a partial settlement over working conditions in the equal pay battle between the U.S. Women's National Team and U.S. Soccer.  The settlement leaves the central issue of equal pay in play in the case.

As Tokyo seeks "to blunt" its fourth wave of coronavirus, public support and flat-out feasibility fade for pulling off the 2020 Olympic Games even in the summer of 2021.  An Olympic omission will downplay the news of late March that the U.S. Men's National Team failed to qualify for the Olympics upon a loss to Honduras.  Meanwhile the U.S. Women's National Team (USWNT) has been training up for another record-shattering international appearance.

Rapinoe, 2019 (Jamie Smed CC BY 2.0)

The USWNT has not fared as well in court as on the pitch.  On the equal-pay front, the USWNT complainants suffered a major setback in a trial court decision in May 2020.  I wrote then that the court's conclusion was defensible on the law, if arguable on the rationale and tormenting for its rank unfairness.  The complainants plan to appeal.

One is left to marvel at U.S. Soccer's shameless persistence of what I can only imagine is a cold commitment to the bottom line.  At some point, the bad PR for the sport in America must become too costly even in the commercial calculation.  And with the winds having shifted in Washington, the women wisely have opened up other fronts in the war.

A soccer legend in her own time and a hero of mine, USWNT captain Megan Rapinoe has been on a tear lately on the PR-and-lobbying circuit.  On March 24, she joined the J'Bidens at the White House to commemorate "Equal Pay Day."

The White House visit had added significance because Rapinoe feuded with Donald Trump while he was on office—see commentary in 2019 by Sue Bird, Rapinoe's then girlfriend, now betrothed—and Rapinoe said she would not go to the White House even if invited.  In March, President Joe Biden ordered resuscitation of the White House Gender Policy Council, and Rapinoe gave the White House visit a positive review.  Newsweek observed that Rapinoe received a White House invite before Sen. Mitch McConnell.

Here is Rapinoe's statement at the White House.  Watch the whole event at YouTube; Rapinoe's four minutes followed statements by USWNT teammate Midge Purce and First Lady Jill Biden.  

Rapinoe got her money's worth out of her ticket to Washington, because she also testified before the House Committee on Oversight and Reform, which was "examining the long-term economic impacts of gender inequality."  Her affirmative statement, below, ran only about two and a half minutes.  With experts representing NGOs also testifying, Rapinoe participated in the questions and answers afterward; the full-length video of the committee hearing is posted online (image from House video).

Rapinoe wound up her testimony with the USWNT rallying cry, "LFG."  She has since remained ready to fight when the situation calls for it, recently, as Comic Sands put it, "eviscerat[ing an] NBA star who criticized female athletes 'complaining' about pay gap."  An HBO Max-CNN Films documentary on the USWNT, titled "LFG" (teaser), is set for release later this year.

All the while, Rapinoe has let no artificial turf grow under her feet.  At the day job on Saturday, she scored for the USWNT to pull out a draw against Sweden and preserve the women's undefeated streak.

Rapinoe published a memoir, One Life, in the fall.

LFG.

Confessions of a Gina Raimondo fanboy

R.I. Gov. Gina Raimondo (2017)

Photo by Kenneth C. Zirkel CC BY-SA 4.0

Well maybe there's not much to confess.  Searching this blog, I've ill disguised my affection for the Governor of the smallest American state, Rhode Island, my home of nine and a half years.  So I was thrilled to see Raimondo named as President-Elect Joe Biden's nominee to be the Secretary of Commerce.

A lot of Rhode Islanders are irritated that Raimondo previously denied that she would take the job, issuing the usual politician's disclaimer that her only focus was on Rhode Island.  But I get it.  You have to play these things cool, so if Pop-pop Joe doesn't pick you, you act like you didn't really want it anyway.

The same libertarianism that unites most Americans at the corner of conservative economics and social liberalism, yet seems an intersection where no Democrat or Republican dares to tread, characterizes Rhode Islanders and explains Raimondo's two-term appeal.  She is a social liberal only as much as we need her to be.  Her "Knock It Off" missive during the lockdown (I mentioned at the time) garnered national attention and is said to be one of the reasons she caught the eye of the Biden campaign.  On the civil rights front, she vetoed the first draft of a state "revenge porn" bill that tread too heavily on free speech.

At the same time, she's a fiscal conservative.  A finance aficionado by trade, she founded a venture capital firm and then entered public service as Rhode Island's General Treasurer.  The powers-that-were saddled her with an unfunded pension liability of more than $7bn, no less in the wake of a recession.  That was probably supposed to be a scapegoating when the problem proved intractable; Raimondo turned it into a pathway to the Governorship.  In the aftermath of Rhode Island's massive squandering of economic development funds on a software development firm, Raimondo championed fiscal accountability in seeking public disclosure of the grand jury investigation.

Raimondo is super smart: high school valedictorian, top economics honors at Harvard, a Rhodes Scholarship and Oxford doctorate, and, why not, a Yale law degree for good measure.  Some of those qualifications might smack of lefty elitism, but they come also with solid working-class bona fides and an Italian-immigrant heritage that complements Rhode Island's Federal Hill—the best "little Italy" on the East Coast by quality, if not size, and I've seen, and tasted, them all.  According to Raimondo's official biography (link as long it's still there), her grandfather immigrated from Italy at age 14 with no English; her father, a U.S. Navy veteran and butcher's son, went to college on the GI Bill; and her family suffered loss of livelihood when Bulova outsourced factory jobs and the Rust Belt was born.

For my immediate family, it meant a lot to have had Raimondo leading Rhode Island while our daughter was in grade school.  From the perspective of a parent, desirable role models seemed harder and harder to come by in our dawning age of social-media stars and normalized divisiveness.  I don't know whether the Commerce Department will be where Raimondo makes the most difference.  Certainly I have grave reservations about what President Biden will achieve, even aims to achieve, as talk of bringing back union jobs resonates to my ear as tone deafness to our crisis in American education.  But wherever the chips fall, I'll be in Gina Raimondo's corner.

Bon voyage, Governor.