Big FAA Fines: Do they Help?

In recent weeks, the U.S. Department of Transportation (DOT) has levied “civil penalties” of $60,000 to $70,000 each on three airlines for failure to comply with requirements about displaying accurate fare information on their websites. According to FAA, Egyptair, Royal Air Maroc, and Royal Jordanian Airlines failed to disclose required information about baggage fees.

There’s no question about whether the lines did, in fact, violate DOT guidelines, but the events raise the question as to whether such fines really help consumers. My take is that they do. Although those fees are not high enough to cause the three airlines involved any real financial harm, they are enough to “get their attention” and pressure them into quick compliance. As far as I know, no domestic lines have failed to adapt to the most recent DOT guidelines about fare and fee displays, and I suspect if a big U.S. line did violate those requirements, the fine would be much bigger.

As to the larger question about whether the government should even get involved in the way airlines disclose their fares and fees, my answer is emphatically, “Yes, it should.” Big airlines have demonstrated repeatedly that they’re willing to disguise their true fares by a variety of ruses and deceptions—and that the industry is incapable of policing itself. Although I believe in free markets, I also conclude that when the free market doesn’t work as theory says it should, governments need to take action. Feel free to disagree.