Backgrounder on Air Services Price Advertising: Proposed Amendments to the Air Transportation Regulations and the Designated Provisions Regulations
On December 16, 2011, the Government of Canada announced that the Canadian Transportation Agency would proceed with developing regulations requiring air carriers to include all taxes, fees and charges in their advertised prices.
To inform the development of the proposed amendments, which are of interest to both consumers and industry, the Agency undertook a broad consultation process in January and February 2012. The aim of the consultation was to obtain input from stakeholders, including air carriers, travel and advertising industry experts, public interest advocacy groups, representatives of provincial and foreign governments, as well as Canadian citizens before drafting the regulations.
The Agency’s Consultation Process
The Agency’s consultation process employed a variety of techniques:
- face-to-face consultations and teleconferences with selected industry stakeholders, industry experts and consumer interest organizations;
- e-mail solicitation of comments from a large group of stakeholders and industry representatives; and
- an on-line consultation using a Web 2.0 platform that allowed individuals to comment on and discuss airfare advertising, providing an interactive dialogue forum for Canadians and other interested parties to provide their personal views.
As part of the online consultation, Canadians and other interested parties were asked: “In an ad, what would help you to easily determine the total price of an airline ticket?” Canadians and industry stakeholders across the country answered the call to action. In the two-week online consultation, over 3,500 Canadians visited the site to gather information and/or participate in the forum.
The use of crowdsourcing allowed Canadians to share information, discuss ideas and actively participate on the consultation site, and provided an effective additional channel for the Agency to interact with the public.
Social media promotion resulted in numerous tweets by Canadian influencers, industry and government stakeholders, which had a direct impact on the consultation website’s traffic. Interested parties also had the opportunity to provide formal written submissions, with 60 posted on the site in support of a transparent consultation process.
For background information on air services price advertising and to read what Canadians and other interested parties had to say, please visit the archived Idea Forum and Formal Written Submissions links.
What We Heard During the Consultation
The following four points represent the most common topics noted during the consultation process.
Total, all-inclusive price
Participants in the consultation process, including individual consumers and consumer advocacy groups, indicated that the price shown in the advertisement should include all costs necessary to complete the travel. Participants wanted the advertised price to present the entire cost of travelling from point A to point B.
The air travel industry, including representation from both air carriers and travel agents, was also in agreement with the concept of the total price, being the all-in total price, inclusive of all taxes, fees and charges.
Consistent representation of advertised price
Participants indicated that the proposed regulation should apply to all forms of advertising and to any person or entity that advertises air fares, including travel agents and their agencies, loyalty programs and vacation package providers.
The air travel industry was also in agreement with the concept that regulation of air services price advertising should apply to all who advertise the price of air services in order to provide for a level playing field.
Consistent regulatory regime
Participants indicated that the Government of Canada should base regulation of air services price advertising on the approaches currently in place in the United States and the European Union. They were of the opinion that by using a comparable regulatory approach, the consumer would know what to expect on nearly every airline and flight in the world. Compatibility with other international practices would also minimize confusion with respect to ticket pricing and fare rules when comparing fares.
The air travel industry was also in agreement with the concept of harmonizing regulation of air services price advertising with those of our major markets and competitors in order to reduce the need to develop and maintain different compliance mechanisms in an integrated world marketplace.
Details of included costs and optional services
Participants expressed a strong interest in an itemization of the charges which make up the total price, provided either in the advertisement or easily accessible at a specified location, i.e. posted online. Most agreed that listing of the basic price along with other costs (fuel, airport improvement, taxes, security, etc.) and the total price would be optimal. Respondents also indicated they would welcome such an approach since showing a breakdown would alleviate confusion associated with hidden costs and make it easier to calculate the total cost of the air service.
The air carriers felt that there were business or marketing reasons to show the detail of costs collected on behalf of others with respect to the provision of the air service. Other members of the air travel industry, perhaps due to the nature of their business models, were less concerned with the need to detail or break out the costs—except for optional services or upgrades. However, there was general acceptance of the proposal to provide access to a breakdown of the taxes, fees and charges collected on behalf of a third party.
Input received through the consultation process informed the drafting of the proposed amendments to the Air Transportation Regulations and the Designated Provisions Regulations were pre-published in the Canada Gazette, Part I on June 30, 2012. The proposed amendments are available for review on the Canada Gazette, Part I website.
Canadians and other interested parties have 75 days from the pre-publishing date to review the proposed amendments and to provide their comments and feedback. It is anticipated that after comments from interested parties are received and evaluated (which may result in changes to the proposed amendments), the amendments will be published in the Canada Gazette, Part II this winter, at which time they will enter into force.
Canada Gazette Part I: Proposed Amendments to the Regulations
As the official newspaper of the Government of Canada published since 1841, the Canada Gazette is one of the vehicles that Canadians can use to access the laws and regulations that govern their daily lives.
Pre-publication in Part I of the Canada Gazette gives various interested groups and individuals, as well as Canadians in general, a final opportunity to review and comment on a proposed regulation at the last stages of the regulation-making process, before it is enacted by publishing in Part II of the Canada Gazette.
Pre-publication also gives interested parties, those stakeholders previously consulted at the beginning of the regulatory process, the opportunity to see how the final draft proposal reflects their comments.
To assist you in understanding the proposed amendments, the Agency has prepared a Question and Answer document.
Once the amendments enter into force, the Agency will develop accompanying guideline documents and reference materials. These will be made available to industry stakeholders to ensure they are provided with all the information required for a seamless transition to the new regime.
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