Spirit Airlines is so annoyed at a costly new Department of Transportation regulation that it has slapped a $2 fee on passengers and called it the DOTUC fee, for "Department of Transportation Unintended Consequences." A Reuters dispatch and a Spirit airlines press release have details. From the press release, headlined "New Regulation Costs Consumers Millions Each Year":
The U.S. Department of Transportation's new supposedly "consumer friendly" regulation requiring airlines to hold fares for 24 hours after booking without penalty comes with unintended consequences and is costing consumers millions.
To cover the costs of this misguided and expensive regulation, Spirit (Nasdaq:SAVE) is introducing the $2 DOTUC fee. The $2 fee to cover the unintended consequences of government regulations goes into effect on Tuesday, January 31, 2012.
While this may appear to be a consumer-friendly rule at first, the USDOT has ignored the cost impact to consumers. As the transparency leader, Spirit believes that consumers have a right to know that this misguided regulation is expensive and is hitting consumers directly in their pocket books. Spirit believes low fares are what help consumers most.
"People love the idea of not having to commit to a reservation, but this regulation, like most, imposes costs on consumers," says Spirit President and CEO Ben Baldanza. "Wouldn't we all like to eat all we want and not get fat? Regulators like to try to sell the idea of this rule, but have ignored the cost impact to consumers. You simply can't eat all you want without consequences."
This rule mandates that we take out seat inventory for those who may or may not decide to pay for it. This prevents us from selling these seats to someone who definitively wants to book their reservation and leads to seats not being filled. The consequence is that we must spread costs over fewer customers, thus raising the cost for all passengers.
This 'tax' on consumers ripples through all aspects of the economy and costs Americans jobs. Spirit is urging Americans to take action and hold our elected officials and their appointees accountable to their promise to reduce regulations.
Give Spirit credit for fighting back in public rather than just hiring some former DOT official or former colleague of a current DOT official to lobby in private to overturn the rule, imposing yet more costs that wind up getting passed along to consumers or shareholders.