BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Transparency of Airline Ancillary Fees and Other Consumer Protection Issues Docket DOT-OST-2014-0056

COMMENTS OF GOOGLE, INC., HIPMUNK, INC., KAYAK SOFTWARE CORPORATION, SKYSCANNER LIMITED, TRAVELZOO, INC., AND TRIPADVISOR LLC

Communications with respect to this document should be sent to:

Vinesh Rathore Product Counsel Google, Inc. 1600 Amphitheatre Parkway Mountain View, CA 94043 (650) 253-5953 vrathore@google.com

Joseph Gambescia Chief Commercial Officer Hipmunk, Inc. 434 Brannan St., First Floor San Francisco, CA 94107 (415) 633-6865 joe@hipmunk.com

Benjamin Berman General Counsel KAYAK Software Corporation 7 Market Street Stamford, CT (203) 899-3100 berman@kayak.com

Carolyn Jameson Director, General Counsel Skyscanner Limited Quartermile One 5 Lauriston Place Edinburgh EH3 9EN carolyn.jameson@skyscanner.net

Rachel Barnett General Counsel Travelzoo, Inc. 590 Madison Avenue New York, NY 10022 (212) 484-4900 rbarnett@travelzoo.com

Seth Kalvert Senior Vice President and General Counsel TripAdvisor LLC 141 Needham Street Newton, MA 02464 (617) 670-6300 skalvert@tripadvisor.com

Kenneth P. Quinn Pillsbury Winthrop Shaw Pittman LLP 2300 N Street NW Washington, DC 20037 (202) 663-8000 kquinn@pillsburylaw.com

Dated: September 19, 2014

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BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Transparency of Airline Ancillary Fees and Other Consumer Protection Issues Docket DOT-OST-2014-0056

COMMENTS OF GOOGLE, INC., HIPMUNK, INC., KAYAK SOFTWARE CORPORATION, SKYSCANNER LIMITED, TRAVELZOO, INC., AND TRIPADVISOR LLC

As six of the leading travel metasearch sites covering a wide range of consumer

interests, from destination information to hotels, from restaurants to rental cars, including links to

either airlines or online travel agents (“OTAs”) where consumers book their flights, Google, Inc.

(“Google”), Hipmunk, Inc. (“Hipmunk”), KAYAK Software Corporation (“KAYAK”), Skyscanner

Limited (“Skyscanner”), Travelzoo, Inc. (“Travelzoo”), and TripAdvisor LLC (“TripAdvisor”)

(collectively, “Metasearch Providers”),1 hereby submit these comments in opposition to the

Department of Transportation’s (“Department’s”) Notice of Proposed Rulemaking (“NPRM”) in

the above-referenced docket that attempts, for the first time and without congressional

authorization, to expand the definition of “ticket agent” to capture Metasearch Providers.2

Collectively, the Metasearch Providers provide travel-related information to millions of internet

users every day, but only a small percentage of those inquiries involve flights, and none involve

the actual booking of a flight by a Metasearch Provider. These Metasearch Providers are

1 Some of the Metasearch Providers also may separately file comments in the above referenced docket. These joint comments are intended to summarize the Metasearch Providers’ consensus views on the nature of the services they provide and the Department’s jurisdiction. 2 79 Fed. Reg. 29,970 (May 23, 2014).

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information sources and do not themselves arrange for, book, or sell air transportation.

Consumers use Metasearch Providers to plan their trips, not purchase flights, as they do directly

through online travel agents (“OTAs”) or airlines. As such, they do not fall within the definition of

“ticket agent” as that term is defined in 49 U.S.C. § 40102(a). The Department’s attempt to

regulate a whole new class of entities is without precedent or authority, and would have

unintended consequences that would harm consumers.3

The Metasearch Providers respectfully submit that such an expansive and strained

interpretation of “ticket agent” is inconsistent with the statutory definition, would impose undue

regulatory burdens without justification, and is likely to stifle technological innovation that is

fostering a consumer information revolution. As explained below, metasearch sites are

fundamentally different from bricks-and-mortar ticket agents and OTAs (or even Global

Distribution Systems (“GDSs”)), which the Department has historically regulated. Metasearch

sites are unique in that they serve as neither principal nor agent in the sale or arranging of air

transportation, nor do they hold themselves out as providing or otherwise arranging for air

transportation – they are planning and information sources for consumers, more akin to a

newspaper or magazine travel section than airline websites or OTAs.

No additional consumer benefits would be added through such an expansive

interpretation. The Metasearch Providers urge the Department to withdraw its proposal to

expand the scope of its jurisdiction to include metasearch sites in its entirety.

(1) As a legal matter, metasearch sites do not fit within the statutory definition of “ticket agent” and thus are not susceptible to regulation by the Department.

As an initial matter, it is important to understand how metasearch sites typically operate,

and how consumers use metasearch sites in broader and different ways from OTAs or airline 3 That Metasearch Providers would continue not to be subject to the Department’s regulation is not to say that they would be unregulated. Metasearch Providers would continue to be subject to the oversight of the Federal Trade Commission which protects consumers from unfair and deceptive advertising practices, as they already are with respect to other travel-related services (e.g., hotels and car rentals).

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sites. Metasearch sites first collect information regarding air transportation routes, schedules,

and fares. Next, they present this information through a decision tool that seeks to match users’

customized criteria with sellers. The metasearch site, in connection with a consumer’s search

and the provision of responsive data, does not collect personal identification, payment, or

frequent flyer information from the user. Besides the data fitting the criteria of the user, the

metasearch sites offer a variety of options that can meet the user’s flight search criteria, such as

forwarding the user’s search criteria to a separate seller.

The substantive role of the metasearch site ends there. The metasearch site does not

control the booking function of the seller; it cannot reserve, book, sell, or ticket any air

transportation. No direct transactional relationship exists between the metasearch planning site

and the user, who usually does not even make a purchase – and if they do, they purchase

airline travel elsewhere. The metasearch site is neither a principal nor an agent of the airline or

ticket agent. All communications involving the purchase of the air transportation occur between

the user and the seller – not the metasearch site. The user provides personal and payment

information to the seller, and the seller – not the metasearch site – provides the terms of the

agreement, reserves the seat, confirms the user’s ability to purchase, confirms the sale of air

transportation, and tickets the transportation. None of the information related to the booking

made by the seller is controlled by the metasearch site. Moreover, the seller – not the

metasearch site – handles any post-transaction matters directly with the user, such as changes,

refunds, and other customer service functions.

The statutory language and historic and common understanding of ticket agent clearly

excludes metasearch sites. For more than 60 years, with non-substantive revisions, a “ticket

agent” has been expressly limited to persons acting as principal or agent who sells, offers for

sale, negotiates for, or holds itself out as arranging for air transportation.4 The Metasearch

4 49 U.S.C. § 40102(a)(45) (2014).

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Providers fall outside this statutory definition and are fundamentally different than a “ticket

agent.”

First, metasearch sites are not “principals” or “agents” in selling, offering for sale,

negotiating, or holding themselves out as arranging for air transportation. Third parties (i.e.,

airlines, OTAs, and GDSs) are the principals and agents to the transaction. They are also the

parties that determine the content and breadth of the information displayed by the metasearch

sites. By definition, a principal “authorizes another to act on his or her behalf as an agent.”5

Metasearch sites do not authorize any person to act on their behalf for any reason, let alone

authorize someone to sell, offer for sale, negotiate, or hold themselves out as arranging for air

transportation on their behalf. On the other hand, an “agent” is “one who is authorized to act for

or in place of another; a representative.”6 Metasearch sites do not enter into agency

relationships with airlines or other sellers of air transportation. Ticket agents and air carriers do

not authorize metasearch sites to act for or in place of themselves to sell, offer for sale,

negotiate, or hold itself out as arranging for air transportation. Metasearch sites do not

represent the airlines or the ticket agents. Regardless of the form of compensation received by

metasearch sites or the manner in which they obtain the information, they are not authorized by

either the airlines or the ticket agents to perform a sale or arrangement of air transportation on

their behalf. This is further evidenced by the fact that when users engage in a transaction to

purchase air transportation, the metasearch sites do not define the terms of the agreement, set

fares or ancillary costs, or provide or sell any air transportation.

Second, metasearch sites do not sell, offer for sale, negotiate, or hold themselves out to

arrange for air transportation. Without having any substantive participation in the exchange of

goods, services, or money, the Department cannot reasonably assert that metasearch sites are

5 Black’s Law Dictionary (9th ed. 2009). 6 Id.

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selling, offering for sale, negotiating, arranging, or brokering air transportation. Users cannot

purchase travel or tickets directly from metasearch sites – instead users do so through airlines

or OTAs, which act as the merchant of record for the transaction. At most, metasearch sites are

redistributing information based on customized requests received from the user, and are not

parties to any part of the actual sale of air transportation.

Third, the Department ignores the common meaning of the term “arrange” in seeking to

expand the definition to include metasearch sites. The common definition of “arrange” is “to

make preparations” or “bring about an agreement or understanding.”7 Metasearch sites do not

make preparations for air transportation (e.g., they do not themselves set up travel between two

particular destinations, such as by selecting specific vehicles or capacity on given routes, or

setting prices for any particular routes). Nor are they directly or indirectly brokering the sale of

transportation by making a booking for a particular user; as described above, that is the role of

the airline or ticket agent that fulfills the consumer’s request. By providing information and

introducing a prospective consumer to a prospective seller, the metasearch site has not brought

about an agreement or understanding for air transportation between its user and the seller. To

find otherwise would be akin to deeming as ticket agents a third-party billboard advertisement of

a new route or a newspaper travel page describing a featured airline discount – other services

that provide information to aid consumers in planning their travel and obtain airfare-related

advertising revenue. Significantly, the metasearch site cannot confirm whether the user

subsequently purchased air transportation. Also, the mere introduction of a prospective

customer does not bind either the airline or ticket agent to providing air transportation or the

prospective customer to purchasing air transportation from the seller to whom they are

redirected.8

7 Merriam-Webster Dictionary (2014). 8 Moreover, even if the user decides to make a purchase from the seller that the metasearch site introduced, there is neither an expectation nor an obligation that the user will book the particular itinerary (continued…)

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Ultimately, metasearch sites’ “surfacing” of information about air transportation options

and providing a link to the air transportation seller does not make metasearch sites “ticket

agents” – irrespective of whether they are compensated in some cases if a consumer proceeds

to make a booking through an airline or ticket agent. That point was made clear in the Sabre

litigation, which the Department in the NPRM erroneously asserts as a basis for the pending

proposal. In fact, the Sabre decision makes clear that what the Department now proposes

previously was understood by the agency to be beyond its authority. The U.S. Court of Appeals

for the District of Columbia noted that the Department had “expressly avoided claiming

jurisdiction over firms that provide only information on airline services . . . or firms that provide a

link to sites where bookings could be made.”9 Less than a decade ago, the Department realized

that in protecting consumers from potential financial harm, Congress appropriately targeted

entities that are directly involved in the sale and booking process, but are not themselves

airlines.10 While the medium may have changed, a metasearch site is akin to the paperback

airline guide by which air travelers could search for air travel before contacting a ticket agent or

airline to purchase the air transportation, which the Department never has suggested – and

could not suggest – is a “ticket agent” by virtue alone of providing information about particular

air transportation options.

seen on the metasearch site, or even that the user will book a flight instead of opt for an alternative form of transportation. For example, a metasearch site might show the user a particular itinerary from Boston to New York on Delta Air Lines from September 25 to 27. When the user arrives on the seller’s site, the user might instead decide to (a) fly from Providence to Newark on United Airlines from October 4 to 7, (b) to take a train from Boston to New York from September 29 to 30; or (c) to reserve a rental car and drive instead. This flexibility illustrates why the nature of the metasearch site’s role is one of providing an “introduction” between the user and a seller, rather than making an “arrangement” between the user and the seller. 9 Sabre, Inc. v. Dep’t of Transp., 429 F.3d 1113, 1123 (D.C.Cir. 2005). 10 Congress was concerned about “deceptive sales practices by entities that . . . presented themselves either as the merchants or brokers of travel services, or as carriers themselves.” Sabre, Inc., 429 F.3d at 1122 (internal citations omitted) (emphasis added). Congress was not concerned about information providers but parties directly involved in the sale of air transportation. Thus, metasearch sites are outside of congressional concern, neither presenting themselves nor acting as merchants or brokers of travel services, which would sell or act as an intermediary between two parties in negotiating a contract or sale.

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The Metasearch Providers urge the Department to recognize that Congress granted it

finite legal jurisdiction by clearly defining a “ticket agent” and that the underlying regulations

should remain focused on the core functionality of ticket agents, as historically defined, who

actually sell air transportation. Information service providers that merely categorize information

and pass along prospective customers, but do not issue tickets or exercise control over the

underlying air transportation, are not within the scope of the harms that were of concern to

Congress. As a result there is neither a factual nor legal predicate for the Department’s

erroneous assertion of jurisdiction over metasearch planning sites.

(2) As a factual matter, metasearch sites provide different services than ticket agents, for which the proposed regulations would be both unnecessary and counter-productive.

Metasearch sites are information service providers, designed to provide consumers with

relevant information in response to their personalized search requests – including but by no

means limited to travel services – well beyond air transportation.11 Ultimately, metasearch sites

can introduce consumers to points of sale for air transportation or other travel products, but a

consumer’s travel exploration process on a metasearch site is a very different experience from

that on a ticket agent’s site. Indeed, metasearch sites can provide different functionality at

different stages of the travel exploration and planning process, which considerably depart from

the OTA model. Thus, requiring that metasearch sites universally comply with requirements

applicable to a “ticket agent” – e.g., that certain information be disclosed to consumers from the

11 As the Department is aware, metasearch sites exist for a wide array of goods and services other than travel – and other regulatory agencies have understood that search sites are distinct from fulfillment sites (such as online airline and travel agent sites) that actually sell such goods and services. For example, the FTC recognizes that sellers may have to repeat disclosures on different pages because potential purchasers may enter the middle of their site from a search engine. Federal Trade Comm’n, .com Disclosures: How to Make Effective Disclosures in Digital Advertising, at 19 (March 2013); available at http://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-staff-revises-online-advertising-disclosure-guidelines/130312dotcomdisclosures.pdf (last visited Sep. 19, 2014). The Metasearch Providers emphasize that unlike other contexts, in the case of air transportation, metasearch sites redirect consumers to a supplier such that the consumers receive all disclosures required by the Department; see infra note 15.

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start of the information discovery process on a metasearch site – not only is unnecessary, but

actually could hamper a consumer’s desired search and discourage overall innovation in travel

exploration services, contrary to the Department’s intent.

Research into how consumers use metasearch sites also shows the distinction between

metasearch site discovery functions and the ticketing function of ticket agents or carriers. For

example, studies indicate that a large percentage of consumers who use metasearch sites do

not actually click on a purchase option; while metasearch sites may have significant traffic, only

a small percentage of consumers “click through.”12 The specific experience of metasearch sites

also shows that most metasearch users are broadly exploring and researching, without an

immediate interest in purchasing a particular air transportation selection.13

By way of further explanation, consumers utilize metasearch sites in many different

ways. For travel, consumers often start a metasearch process with the broad intention of

searching for desirable vacation locations, or to obtain a general sense of route availability and

options. Metasearch sites emphasize the browsing and research of travel options – inquiries

focused on exploration, rather than making a definite booking. These broader search queries

and consumer intentions are notably different than how consumers input specific destination,

date and other fields into the initial page of an OTA or airline site. In response, metasearch

sites can provide nonstop or regional destination options from the consumer’s starting point,

regardless of fares, so that users may explore potential options to better plan their travel. Only

12 See, e.g., FlightView, Building Loyalty and Maximizing Engagement with the Connected Traveler (“90 percent of survey respondents have searched for flights on a third-party site and then booked directly through the airline”). PhoCusWright reported that even though in 2012 traffic to metasearch sites rose by 13%, only 2% of consumers actually clicked through to sellers of air products. See OTAs Outshine Metasearch Sites in Sending Traffic to Air and Hotel Suppliers, Says Study (Dec. 13, 2012); available at http://www.tnooz.com/article/otas-outshine-metasearch-sites-in-sending-traffic-to-air-and-hotel-suppliers-says-study/ (last visited Sep. 19, 2014). Likewise Dara Khosrowshahi, CEO of Expedia, in 2011 stated that: “Metasearch has been around for a long time and we haven’t seen them drive an undue amount of traffic to direct sites.” Id. 13 According to KAYAK usage data, over 90% of consumers who use KAYAK sites do not click on a purchase option.

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later, if at all, do such consumers pursue a particular option and actually purchase travel. For

example, some consumers may be primarily interested in learning which carriers fly directly

from their location to their desired destination, and how frequently. Others may want just to

know if an attractive pairing of hotels, rental cars and flights is available. Some may have had a

weekend free up and want to explore spontaneous travel options. And others may be just

generally tracking prices and availability to determine the optimal time of purchase based on

personal or family interests. Simply put, because consumers are empowered through

metasearch sites to conduct their own individualized research and discovery, our experience

shows that consumers use metasearch sites in vastly broader ways than consumers use

traditional ticket agents, which emphasize immediate booking and not exploration.

Indeed, Metasearch Providers’ core business model relies on offering the best and most

transparent flight information to consumers – and their goal is to obtain more and higher quality

data from airlines, GDSs, and OTAs, and to pass it along to metasearch users at the

appropriate points in their travel exploration. Metasearch Providers constantly update and

innovate their displays to provide information in the forms most useful for and most desired by

the consumer. Our experience with how consumers research travel options demonstrates to us

that additional information is only useful when it is wanted and requested by the consumer in the

research process. As the Department itself has recognized, displaying too much information at

too early a stage in travel exploration and discovery process may confuse and sidetrack the

user experience.14 For example, accurate information about ancillary fees is important – and

should be provided by carriers to GDSs, OTAs, metasearch sites, consumers and other entities

that request such information – but requiring metasearch sites to display a growing list of

ancillary fee information during a consumer’s initial comparison of travel information – as 14 Dep’t of Transp., Disclosure of Code-Sharing and Long-Term Wet Lease Arrangements, 70 Fed. Reg. 44,848, 44,850 (Aug. 4, 2005) (“requiring the provision of too much information in a necessarily complicated format can result in increased customer confusion”). This same concern is valid generally – and especially relevant to the mobile web, for which the available screen real estate is very limited.

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opposed to during the actual booking process – could simply result in “clutter,” a potential the

Department recognized. Prescribing the customers’ travel research experience – with respect

to air transportation (but not other travel-related services) – will not only frustrate the

Metasearch Providers’ ability to meet the customers’ research demands, but hamstring the

Metasearch Providers to legacy display models that may be incompatible with the customers’

demands and the ever-developing devices and platforms on which the customers seek to

research travel information.

By way of example, a consumer attempting to decide where to go on a week’s vacation

may be flexible as to destination or dates. It is the function of the metasearch provider to help

the user broadly explore options for each consumer. In this case, before a consumer chooses a

particular flight itinerary to purchase through a fulfillment site, the consumer must decide when

and where to go. With Google Flight Search, for example, a consumer can use its “explore”

feature to see base flight prices around the world or a price graph to see changes across dates.

Hipmunk lets users see where they could go on upcoming weekends for a price lower than the

historical average. On KAYAK, one of its search tools provides consumers with a range of

suggested options based on starting location, such as “Cheap flights to New York from $332.”

Skyscanner has an “Everywhere” feature to inspire consumers. On Travelzoo’s Fly.com

metasearch site, consumers using the “Today’s Best Fares” feature are shown a list of fares to

popular destinations based on starting location. Similarly, TripAdvisor can show consumers a

list of origin and destination options with a price, such as “Today’s lowest fares from San

Francisco.”

The fare information supplied is obtained from GDSs, OTAs or airlines without

modification, so consumers and the Department can be assured that the displayed fares are

consistent with the Department’s requirements applicable to these entities. At this stage of a

consumer’s search, additional information – such as code-share partners, bag fees and seat

assignment fees – would not necessarily be useful to the consumer. Indeed, the display of such

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information actually could prevent presentation of a coherent comparison of possible

destinations, the core subject of interest at that time to the consumer.15 Further, because of the

limited role played by metasearch sites, they do not have access to information about a

consummated transaction that is available to the entities actually selling or arranging for air

transportation to a consumer.16 This is true irrespective of whether a metasearch site receives

any compensation in connection with a particular transaction; the fulfillment site, not the

metasearch site, is the ticketing entity or the merchant of record and retains the information

provided by the consumer in the actual booking process.

Likewise, any post-transaction issues – such as the refund and reissuance of tickets,

and any other customer service issues – are matters to be resolved between the airline/OTA

and the consumer; a metasearch site has no role. Accordingly, purchase-related requirements

should not – and cannot – simply be extended to metasearch providers as they do not control

the information from the consumer or the ticket agent or airline necessary to comply with such

15 However, code-share, bag fee, seat fee, and other required information will be provided to consumers once they choose to make a purchase and are redirected to a fulfillment site. Indeed, the Metasearch Providers understand that the NPRM proposes that fulfillment sites specifically be required to provide ancillary service fee information, which is the most appropriate and efficient stage of the booking process at which to do so. In the NPRM, the Department asserts that consumers who start a search for travel on a metasearch site and are redirected to a fulfillment site may “in the process, bypass the pages containing disclosures regarding code-share operations, baggage fee information, and other consumer protection information that the Department requires air carriers, foreign air carriers, and ticket agents to provide to consumers before an air transportation purchase is finalized.” 79 Fed. Reg. at 29,973. This appears to be the only factual premise in the NPRM for the regulation of metasearch sites. But the Department has not accurately stated the functionality of the Metasearch Providers, all of which already ensure that consumers are redirected to a fulfillment site in such a manner that all required disclosures are provided by purchase – and going forward those fulfillment sites will be further mandated to provide ancillary fee information in addition to the disclosures already required. Respectfully, before the Department takes the broad step of expanding beyond congressional intent to redefine ticket agents to encompass information providers, it should provide, analyze and seek public comment on specific real-world evidence, and not mere anecdotes or theoretical concerns. 16 Indeed, the absence of direct sales ability is a key distinction between metasearch sites and OTAs. Mark Okerstorm, Expedia’s CFO, commented: “The metasearch product is something that we generally do pretty darn well at, because again, only people that have the actual inventory — they can pump in rates and they can pump in the inventory — can participate.” See OTAs Outshine Metasearch Sites in Sending Traffic to Air and Hotel Suppliers, Says Study (Dec. 13, 2012); available at http://floost.com/tnooz-post-otas-outshine-metasearch-sites-in-sending-traffic-to-air-and-hotel-suppliers-says-study-1533646 (last visited Sep. 19, 2014).

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an expansive definition. The NPRM appears to have recognized this, to the extent that it

specifies that the proposed minimum consumer protection standards for ticket agents would

only apply to “ticket agents that sell air transportation.”17

(3) Expanding the scope of a “ticket agent” could impose significant costs and harm innovation for consumer travel exploration services.

The Department appears to have assumed – incorrectly – that its proposal would not

impose costs on metasearch sites. The Initial Regulatory Impact Analysis that has been

provided in the docket does not even attempt to estimate the costs of compliance with the

Department’s proposal to redefine “ticket agent.”18 The Department’s analysis recognizes that

“significant investment” is behind the Metasearch Provider’s technology, but without any

analysis, superficially dismisses the needed investment to change such technology and meet

the Departments proposed requirements.19 However, the Metasearch Providers anticipate that

compliance costs would be significant and ongoing.

As an initial matter, significant system programming would be required to ensure

compliance with the Department’s expanding list of requirements – but that would be just one

element of the burden. As above, the necessary changes would work to the detriment of

consumers, by making it harder for them to perform the same inquiries that they can today –

i.e., because certain tools would become “cluttered” and less useful, or unavailable altogether,

as well as discouraging further innovation.

17 79 Fed. Reg. at 29,984. 18 See also 79 Fed. Reg. at 29,993. 19 HDR, Initial Regulatory Impact Analysis for Proposed Consumer Rulemaking Regarding Transparency of Airline Ancillary Fees and Other Consumer Protection Issues (Apr. 16, 2014) (“Initial Regulatory Impact Analysis”). Notably, the Initial Regulatory Impact Analysis directly addresses the technology costs for GDSs to receive basic ancillary service fee information from the carriers. Id. at 49. It notes that “recent enhancements concerning the display of ancillary service fees and other information involved a lengthy development phase, which suggests that significant investment is required for all such GDS software-related development.” Id. at 27 (emphasis added). Meanwhile, the Department, without any analysis, concludes that it does not expect the impacts upon Metasearch Providers to be significant. Id. at 37.

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Moreover, the Department ignores another unintended consequence of declaring

metasearch sites to be ticket agents: customer confusion about who is handling their

transaction. Currently, the overwhelming majority of users understand that their transaction is

happening with the actual merchant (e.g., OTA or airline), rather than with the metasearch site.

The proposed rule would confuse users and lead them to contact metasearch sites, which can

do nothing to help them book or change their travel or answer their inquiries about existing

itineraries.20

Often, when customers are trying to change their flights, time is of the essence. When a

flight is delayed or cancelled (e.g., due to inclement weather), changing flights quickly can mean

the difference between getting out the same day and spending the night in the airport; it can

mean arriving in time for a wedding or arriving after the ceremony has ended. The confusion

that the Department’s rule creates will lead customers to call metasearch sites – which cannot

help them – at exactly the moment they need to be calling the actual ticket agent or airline

instead. It would be as if consumers were implicitly advised to call their newspapers to return

clothes after buying them on sale at Macy’s after seeing an ad in that newspaper.

Additionally, in the hyper-competitive online advertising market, it is often those sites that

are willing to pay the most for new leads that are able to get new customers to visit their sites.21

The Department’s proposed rule would draw a distinction between metasearch sites and other

information sites that they currently compete with for customers (e.g., destination guides,

photography sites, coupon sites, etc.) which serve the same functions in helping users plan their

20 When the Department issues new rules that have a putative consumer benefit, one consequence is news stories in major press outlets. E.g., http://travel.usatoday.com/flights/story/2012-01-10/Government-forcing-full-disclosure-on-airfares/52486078/1 and http://www.nytimes.com/1987/09/03/us/airlines-ordered-to-disclose-data-on-flight-delays.html. If the Department passes this proposed rule, journalists will tell the public – truthfully – that the Department now considers metasearch sites to be ticket agents. As a consequence, customers will think they can contact metasearch sites to cancel or modify their itineraries. 21 Many search engines, display advertising networks, and other marketing channels allocate their inventory via an auction.

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travel. The financial cost of compliance, and the detrimental impact to customer experience of

additional clutter, would under the Department’s proposed rule fall exclusively on metasearch

sites. This is not merely a theoretical harm. By imposing costs on research sites that do show

flight prices (metasearch sites), but not on research sites that don’t show prices, the Department

would create financial disincentives for metasearch sites to show prices at all. And even if

metasearch sites continued showing prices, they would be at a disadvantage relative to less-

informative research sites. This is entirely contrary to the intent of the Department’s rules.

The long-term practical harm of the proposed rule goes even beyond this particular rule.

Prior to the advent of metasearch sites, there were many websites where users could find

general information about flights and routes, but no sites where customers could compare

actual fares and availability in one place. Metasearch sites have injected innovation in the

consumer travel exploration and discovery process. But as a consequence of metasearch sites’

innovation in helping users, the Department now proposes to impose regulatory burdens on

providers of that innovation. The chilling effect is obvious. Any travel site that would consider

producing a new feature or new interface (e.g., mobile services or applications) that helps users

would now have to consider whether it will be required to meet display requirements and comply

with other ticket agent regulations or otherwise forego the innovative new feature.

Moreover, there is a potential “Trojan Horse” within the Department’s proposals – i.e.,

that airlines might not be obligated to provide ancillary service fee and schedule information to

metasearch sites, but metasearch sites, as “ticket agents,” nevertheless would be required to

display such information.22 The Metasearch Providers anticipate that the costs of compliance

with this requirement, if they are not entitled to the underlying information, could be

astronomical, with extraordinary detrimental consequences for both them and consumers. If

metasearch sites are to be required to display ancillary service fee data, they cannot realistically

22 79 Fed. Reg. at 29,977.

15

do so without accurate, flight-specific, real-time data made available through an automated

process based on industry standard open data formats. Thus, an effect of the new rules –

unless this uncertainty is appropriately addressed – would be reduced transparency, directly

counter to the Department’s goal, as consumers will be frustrated in their ability to easily

compare travel options.

In sum, by failing to appreciate the functional differences between metasearch sites and

OTAs, GDSs and traditional ticket agents, the Department threatens to burden innovation and

harm consumer welfare. Given the unique (and fundamentally different) role played by

metasearch sites in the travel research and planning process, the NPRM would result in

material damage to consumer welfare – without any offsetting consumer benefits (or

demonstrable consumer harm that needs to be remedied).

(4) The Department’s rulemaking lacks overall justification and explanation in other significant respects.

The Department’s proposal is not only overreaching, but also lacks any justification in

the record, a prerequisite of rulemaking. For example, the Department initially proposes to

include in its expanded definition of “ticket agent” any entity that receives compensation “in any

way related to the sale of air transportation.”23 As discussed in section 1, the Department

appears to be asserting authority of incredible breadth – e.g., to regulate the content of

newspaper articles that discuss travel, if the newspaper accepts any advertising for air

transportation. Indeed, the Department actually has solicited comment as to whether limiting its

interpretation of “ticket agent” to “an entity that arranges for or sells air transportation for

compensation . . . is sufficiently broad” and “whether the definition of a ticket agent should

include all entities that operate flight search tools.”24 Thus, the Department appears to not only

23 Id. at 30,000. 24 79 Fed. Reg. at 29,974.

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be asserting that it could – but that it should – regulate the content of any website (or other

publication) that provides information about, or links to, air transportation, irrespective of

whether a search tool is at issue and irrespective of whether that entity receives any

compensation for its services or actually sells air transportation. Such an expansion not only

would lack any foundation in the text and intent of the statutory definition of “ticket agent” in

Section 40102 but would directly conflict with the First Amendment to the Constitution.25

The Department then further muddles the issue by excluding in practice from its

proposed definition of “ticket agent” those “persons who only publish advertisements of fares

and are paid only per click for linking consumers to the Web sites of the carriers or agents that

provided the advertisement.”26 Although this backtracking implies that the Department will not

regulate the news media or general search sites at this time, the line the Department has drawn

is completely arbitrary and not based on consumer welfare or any other objective criteria. As a

preliminary matter, as discussed in section 1, whether a metasearch site accepts compensation

in any form should not matter, because it simply does not engage in activities over which the

Department has statutory authority. As a second matter, as discussed in section 2, the

Department’s rule would have the effect of creating additional customer confusion and

benefiting less-informative sites over more-informative ones, both of which are at odds with the

Department’s stated goals. A restriction on speech – even commercial speech – cannot

possibly be defended if it doesn’t even serve its intended purpose.

25 Additionally, the NPRM appears to suggest that if one line of a metasearch site’s business is subject to regulation by the Department, then all of the metasearch sites lines of business would be regulated by the Department, even if the other lines – standing alone – would not be within its jurisdiction. That clearly contradicts the narrow intent of Congress in 1952 in authorizing the regulation of “ticket agents.” See, e.g., Pub. L. 82-538, § 4 (“[n]othing contained in this Act shall be construed to enlarge or extend the jurisdiction of the Civil Aeronautics Board over transportation not subject to the Civil Aeronautics Act of 1938, as amended”). See also Universal Air Travel Plan, Silver Card, Order 75-8-35, at 5 (Aug. 8, 1975) (cautioning, even before deregulation, against the CAB injecting itself “into non-air transportation areas in which it has no direct jurisdiction or expertise”). 26 79 Fed. Reg. at 30,000.

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Additionally, the Department has not shown why the fact that some metasearch sites are

paid by sellers of travel is sufficient to justify regulation of metasearch sites as if they were

sellers of travel. Airlines pay lots of money to suppliers, consultants, advertising agencies, and

others who might help bring them consumers willing to purchase tickets, but that does not mean

the Department should regulate all such entities as “ticket agents.” From the perspective of

consumer welfare, what is relevant is that consumers have transparent ancillary service fee

data, and not whether the company that provided travel exploration information might be paid

after that customer goes to another site.

Even if compensation were deemed to be relevant, no demonstrable reason exists to

support the notion that the standard should be cost-per-click compensation. From a practical

perspective, little to no difference exists between compensation on a cost-per-click (“CPC”)

advertising and a cost-per-action (“CPA”) basis, because the consummation of a transaction

occurs out of view or control of the metasearch site at the start of the process. Furthermore,

some airlines already receive traffic from some metasearch sites on a “free” basis, without any

associated CPC or CPA. Others receive compensation on a flat-monthly-fee or cost-per-

thousand-impressions (“CPM”) basis. Additionally, metasearch sites generally calculate their

revenues deriving from the traditional metasearch “link off” model as an effective CPC, no

matter how the underlying contracts are structured or characterized by an airline. Given that

metasearch sites may convert a CPA to an effective CPC on the back end, the traditional

metasearch “link offs” are effectively CPC – advertising – transactions.27 Moreover, it is entirely

unclear why CPC advertisements should be exempt from regulation, but a CPC search tool

should not. In either case, information is being provided to a consumer. In fact, the added utility

27 The arbitrariness of the distinction between CPC and CPA agreements becomes even more obvious when considering whether advertisers themselves (such as OTAs and airlines) consider the distinction relevant in making business decisions. In fact, advertisers typically look at “return on investment” (ROI) or “return on advertising spend” (ROAS) metrics in deciding whether to continue advertising, which are calculated independently of the CPA/CPC/CPM distinction.

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of a search tool that shows apples-to-apples comparisons between airlines, rather than one

specific airline’s paid-for message, is a benefit – not a harm – for the consumer, and not a

functionally legitimate trigger for regulatory obligations.28

In sum, the Department not only has failed to adequately explain the foundation for the

broad underlying authority implicitly asserted in the NPRM, but it also has failed to adequately

explain the subsequent distinction that it utilizes to narrow the scope of its regulation in practice.

Both of these positions are arbitrary and capricious and – in conjunction with the other issues

identified in these comments – could mean that the pending proposal would not survive judicial

scrutiny.29

* * * *

For the reasons set forth above, the Metasearch Providers urge the Department to

withdraw its proposal to regulate metasearch sites, which help consumers plan their trips, but

are not involved in arranging for or consummating any consumer decision to purchase air travel.

28 Consider as an example health disclosures in cigarette advertising. The reason that the FDA can constitutionally compel advertising agencies to put health disclosures in the cigarette advertisements they produce is because the end of protecting public health is a compelling government interest. The reason is emphatically not because the advertising agency is getting paid by the cigarette company. To the specific point addressed above: a regulation that declared that cigarette health warnings are mandatory if the advertising agency is being compensated in one way, but not if the agency is being compensated in a different way, almost certainly would be arbitrary and capricious. 29 See Prometheus Radio Project v. Fed. Comm. Comm'n, 652 F.3d 431, 449 (3d Cir. 2011) (rulemaking requires notice that would “fairly apprise interested persons of the subjects and issues before the agency”) (internal quotations omitted); Chrysler Corp. v. Dep’t of Transp., 472 F.2d 659, 668 (6th Cir. 1972) (requiring agencies to support their actions with “substantial evidence”); Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 48 (1983) (“an agency must cogently explain why it has exercised its discretion in a given manner”).

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Joseph Gambescia Chief Commercial Officer Hipmunk, Inc.

/s/ Benjamin Berman ________________________ Benjamin Berman General Counsel KAYAK Software Corporation

________________________ Carolyn Jameson Director, General Counsel Skyscanner Limited

/s/ Rachel Barnett ________________________ Rachel Barnett General Counsel Travelzoo, Inc.

/s/ Seth Kalvert ________________________ Seth Kalvert Senior Vice President and General Counsel TripAdvisor LLC

Kenneth P. Quinn Pillsbury Winthrop Shaw Pittman LLP

September 19, 2014