Rubberstamping Regulations Is Not Consumer Protection


Earlier this week, Tribune Publishing’s syndicated travel writer Ed Perkins criticized the appointment of CEI’s Fran Smith to the newly reconstituted Aviation Consumer Protection Advisory Committee at the U.S. Department of Transportation. In his column, Perkins makes a number of erroneous claims that are discussed below and which appear to have been drawn from a coordinated campaign by progressive consumerist groups who recently sent Transportation Secretary Elaine Chao a letter making nearly identical claims. Perkins is quoted in bold and my responses follow.

In examining CEI writings, I’ve concluded that it is by no means on an anti-consumer side of all airline interests: I agree with its position on FAA modernization, even though many consumer advocate colleagues do not, and its position on passenger facility charges. But it’s neither a travel-focused consumer organization in the sense that Travelers United, Flyers Rights and the Business Travel Coalition are, nor a broad-focus pro-consumer organization such as the National Consumers League, Consumers Union, PIRG, Consumer Action, the Consumer Federation of America and other similar groups.

Charlie Leocha was the previous consumer member, and as co-founder and president of Travelers United, he exemplifies the sort of consumer representative that the FAA and Advisory Committee acts specify. Charlie would be a good choice to continue in that position, but I can name a handful of others who could also fill the bill.

So, Perkins concedes, CEI is not “on an anti-consumer side of all airline interests?” My question to Perkins is, on which aviation policy issues are we anti-consumer? We have been one of the loudest advocates in Washington of a modernized passenger facility charge, a pro-competitive airport user fee strongly opposed by major airlines and Perkins’ friend Charlie Leocha of Travelers United—the previous ACPAC consumer representative—who uncritically repeats airline talking points against the PFC. As we’ve noted for years,

When airports are constrained in bankrolling their own improvements, they often must turn to large incumbent airlines. In exchange for financing these needed improvements, the airlines then demand long-term exclusive use gate leases, which they use to keep low-cost competitors from accessing the airport. Gate access limitations have been estimated to raise U.S. airfares by more than $4.4 billion per year (in 2005 dollars), a significantly larger amount than that of the total annual revenue generated by PFCs across the country.

We’ve long noted that many consumerist advocates push policies that have surface appeal to many but actually harm consumers. Our primary aim with respect to aviation policy is protecting the massive gains to consumers that came from the bipartisan Airline Deregulation Act of 1978 and encouraging further pro-consumer reforms. Meanwhile, many of these self-styled consumer advocates have made careers out of attempting to undermine the last 40 years of consumer progress.

The committee does not need a “consumer representative” who will echo airline positions; it needs someone who will advocate for consumers where needed. And, sadly, regulations are often needed. The airline industry has an extended record of ignoring consumer abuses so long that consumers, in frustration, turn to government for relief. When looking at many regulations that airlines complain about as onerous, one can only conclude, in the words of Miss Twiddle, “They brought it on themselves.”

As noted above, CEI is in direct opposition to the airline industry in one of the largest aviation policy debates, unlike many of Perkins’ consumerist friends. CEI has also recently litigated on behalf of airline customers against the Transportation Security Administration’s use of airport body scanners and in opposing the Department of Transportation’s tortured extension of the longstanding smoking prohibition aboard airliners to cover smokeless nicotine delivery products—a rule that was strongly supported by the airline industry.

Further, what are these “regulations [that] are often needed?” It’s telling that Perkins couldn’t name one. A possible reason is many of the ostensible “consumer protections” advocated by progressives wind up hurting consumers. Restrictions on truly nonrefundable ticketing are prone to drive up airfares as airlines compensate for the additional risk (refundability is one of the strongest determinants of airfares) and the tarmac delay rule led to increased flight cancellations.

At the root of these misguided efforts is the continued abuse of the nebulous “unfair and deceptive practices and unfair methods of competition” statute by regulators and their cheerleaders in the consumerist community. Most aviation consumer protection regulations are derived from this problematic law. Congress’s continued failure to act risks increasing anti-consumer regulatory capture at the Department of Transportation.

CEI is the only national nonprofit public interest organization that for years has called on Congress to reform the aviation consumer protection authority to bring it into line with similar authorities held by the Federal Trade Commission (15 U.S.C. § 45(n)) and Bureau of Consumer Financial Protection (12 U.S.C. §§ 5531(c)(1)(A)–(B)). Both of these laws provide explicit exemptions for harms that are “reasonably avoidable by consumers” or for practices that are “outweighed by countervailing benefits to consumers or to competition” in order to minimize the potential for abusive regulatory capture. And both the 1994 FTC Act amendments and Dodd-Frank Act of 2010 that codified these exemptions were enacted when Democrats controlled the House, Senate, and the White House, so there has long been bipartisan recognition of this problem in virtually every federal consumer protection context outside of aviation.

None of these groups have meaningfully engaged on this core issue, belying their claims to special competence on aviation consumer protection matters. This is why it is important to think about these policies in an informed, rational, holistic manner, not seek to dole out some form of Katzenjammers cartoon justice untethered from facts and careful analysis.

You can expect some strong pushback on Ms. Smith’s nomination from the several consumer advocacy organizations that Congress had in mind as sources from which the ACPAP consumer representative should have been chosen. And, realistically, you can expect Secretary Chao to ignore any consumer group pushback. Ms. Smith’s unsuitability for the position will not come as a great surprise, and DOT has a record of ignoring congressional requirements it doesn’t like. The pushback will nevertheless be useful, because it will likely encourage Ms. Smith — and DODT [sic] — to think twice before taking positions antithetical to the interests of the consumers who so often have issues with arrogant and unresponsive airlines.

Fran has spent decades working on consumer policy, including 12 years as executive director of a national consumer advocacy organization. The “several consumer advocacy organizations” that Perkins arrogantly encourages to attack Fran—and who demonstrate their ignorance by incorrectly claiming Fran’s appointment somehow violates the Federal Advisory Committee Act’s “fairly balanced” requirement at 5 U.S.C. App. § 5(b)(2)—should focus on making their best cases to ACPAC, the Department of Transportation, and Congress. That’s the job their supporters expect them to do.