It seems that the Supreme Court is siding with the adage that my grandparents repeated to me over and over again as a child: Honesty is the best policy.
Earlier this week, the nation’s highest court decided that it would not be hearing a case brought on by Southwest Airlines Co. (NYSE:LUV) , Allegiant Travel Company (NASDAQ:ALGT), and Spirit Airlines Incorporated (NASDAQ:SAVE) . At issue were certain aspects of the Airfare Advertising Rules put in place by the U.S. Department of Transportation back in early 2012. Specifically, the rules state that all government taxes need to be included in the advertised fares of air carriers.
Upon news of the Court’s decision, shares of all three companies took a tumble, with Spirit’s falling the most, at 3%.
Why challenge the ruling?
It seems a little odd that the airlines would oppose the rule, especially since the rest of the industry decided not to join these three, and because the rules allow for passengers to see what portion of a ticket’s price comes from paying government taxes.
I’ll take the three on one by one, as each airline has a cost structure somewhat different than traditional airlines. In Southwest’s case, the complaint was based both on principle and logistics. Arguing that grocery stores could sell products for prices not including the taxes, it wondered why airlines should be any different. Furthermore, the company said that the cost for making changes to company websites and rewards programs would be steep.
Allegiant and Spirit, on the other hand, have made a living off lower-than-reality cost advertising. In fact, even after the Airfare Advertising Rules went into effect, Allegiant was fined $100,000 — in part, for brazenly advertising that passengers could “Fly Free” to Las Vegas or Tampa Bay.
And Spirit, which I’ve made no secret about disliking, took things to an even weirder level. Personally, I think it’s bad enough that passengers are charged for everything from printing a boarding pass, to carry-on luggage (as much as $45), and have to try to decipher it all on the company’s confusing fares page; but according to SmartTravel.com, Spirit went so far as to create a webpage to show its displeasure.
Though I was unable to find an active link, Spirit advertised keepmyfareslow.org on its homepage in 2012. As SmartTravel noted back then:
The word “WARNING” is posted in bold capital letters that flash red, driving home a melodramatic point. Spirit invites flyers to contact their representatives to “help stop this injustice,” adding, “If the government can hide taxes in your airfares, then they can carry out their hidden agenda and quietly increase their taxes.”
Maybe I could take Spirit Airlines Incorporated (NASDAQ:SAVE)’s message a little more seriously if the company wasn’t so reliant on difficult-to-understand fees for so much of its revenue already. Talk about the pot calling the kettle black!
Either way, with the Supreme Court’s decision, all airlines will have to post ticket prices in a uniform way now.
The article Supreme Court: Sorry, Airlines, You Have to Tell the Whole Story originally appeared on Fool.com is written by Brian Stoffel.
Fool contributor Brian Stoffel has no position in any stocks mentioned. The Motley Fool recommends Southwest Airlines. The Motley Fool owns shares of Spirit Airlines.
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