Las Vegas-based Allegiant Air has filed a court petition against the U.S. Transportation Department to block the implementation of consumer protection regulations that an airline executive says could bite into the city’s visitation numbers.
In its petition to the U.S. Court of Appeals for the District of Columbia, Allegiant objected to rules that would change the way fares and ancillary fees are disclosed and to allow consumers to get a refund within 24 hours of buying a ticket.
Allegiant Chairman and CEO Maurice Gallagher said the airline fully discloses ticket prices and fees on its website, but the Transportation Department wants airlines to list prices with fees and taxes compiled. That’s a challenge for Allegiant because its a la carte pricing model allows customers to opt in or out for services such as baggage fees, seat selection and meals.
Gallagher contends that if airlines had to compile total ticket costs, fewer people would travel to Las Vegas because leisure travel is price sensitive.
“I take a great deal of umbrage when they say ... I’m not treating my customers very well,” Gallagher said of the Transportation Department’s proposed rules.
Allegiant had until 60 days from the publication of the proposed rules to file an appeal, and the airline joined Florida-based Spirit Airlines, which filed its petition Wednesday. Other carriers could join in today.
Three airline trade groups last week asked for a delay in the rules implementation to 2012 to allow airlines to update technology and train employees.
“Regulation is very expensive,” Gallagher said. “I think the mind-set of the Department of Transportation is that it thinks its new rules are pro-consumer, but in our minds, they are anti-consumer.”
Since deregulation in 1978, millions of people who would never have flown because of the cost routinely travel by air because of competition, he said.
Spirit Airlines’ statement in opposition to the requirement to hold fares for 24 hours after booking without payment said the plan would generate massive abuse and force airlines to raise ticket prices as they compensate for “spoilage” of unpaid but blocked seats.
Spirit said a rule to invoke a price freeze for nonticket services from the time of the initial ticket purchase, even though the customers has not purchased or paid for those services would force airlines to increase fees to cover business risks.
“We’re kind of putting a bull’s-eye on our back by doing this,” Gallagher said. “But there are a lot of new regulations put in place by the Department of Transportation that we have fundamental objections to.”
Gallagher said he expects that the court would consolidate airline objections into one case, and that if it moves forward it could be heard by the end of the year or early next year.
Allegiant had asked the Transportation Department for a review of the ban on raising prices after a ticket purchase. The airline was considering a plan to offer deeply discounted fares that could rise or fall based on the change in fuel prices.