Fees undermine fliers’ ability to compare fares

0

WASHINGTON (AP) — For many passengers, air travel is only about finding the cheapest fare.
But
as airlines offer a proliferating list of add-on services, from early
boarding to premium seating and baggage fees, the ability to
comparison-shop for the lowest total fare is eroding.
Global
distribution systems that supply flight and fare data to travel agents
and online ticketing services like Orbitz and Expedia, accounting for
half of all U.S. airline tickets, complain that airlines won’t provide
fee information in a way that lets them make it handy for consumers
trying to find the best deal.
"What other industry can you think
of where a person buying a product doesn’t know how much it’s going to
cost even after he’s done at the checkout counter?" said Simon Gros,
chairman of the Travel Technology Association, which represents the
global distribution services and online travel industries.
The
harder airlines make it for consumers to compare, "the greater
opportunity you have to get to higher prices," said Kevin Mitchell,
chairman of the Business Travel Coalition, whose members include
corporate travel managers.
Now the Obama administration is wading
into the issue. The Department of Transportation is considering whether
to require airlines to provide fee information to everyone with whom
they have agreements to sell their tickets. A decision originally
scheduled for next month has been postponed to May, as regulators
struggle with a deluge of information from airlines opposed to
regulating fee information, and from the travel industry and consumer
groups that support such a requirement.
Meanwhile, Spirit
Airlines, Allegiant Air and Southwest Airlines — with backing from
industry trade associations — are asking the Supreme Court to reverse an
appeals court ruling forcing them to include taxes in their advertised
fares.
The appeals court upheld a Transportation Department rule that
went in effect nearly a year ago that ended airlines’ leeway to
advertise a base airfare and show the taxes separately, often in smaller
print. Airlines say the regulations violate their free-speech rights.
At
the heart of the debate is a desire by airlines to move to a new
marketing model in which customers don’t buy tickets based on price
alone. Instead, following the well-worn path of other consumer
companies, airlines want to mine personal data about customers in order
to sell them tailored services. You like to sit on the aisle and to ski,
so how would you like to fly to Aspen with an aisle seat and a movie,
no extra baggage charge for your skis, and have a hotel room and a pair
of lift tickets waiting for you, all for one price? You’re a frequent
business traveler. How about priority boarding, extra legroom, Internet
access and a rental car when you arrive?
"Technology is changing
rapidly. We are going to be part of the change," said Sharon Pinkerton,
vice president of Airlines for America, which represents most U.S.
carriers. "We want to be able to offer our customers a product that’s
useful to them, that’s customized to meet their needs, and we don’t
think (the Transportation Department) needs to step in."
If
airlines have their way, passengers looking for ticket prices may have
to reveal a lot more information about themselves, such as their age,
marital status, gender, nationality, travel history and whether they’re
flying for business or leisure. The International Air Transport
Association, whose 240 member airlines cover 84 percent of global
airline traffic, adopted standards at a meeting earlier this month in
Geneva for such information gathering by airlines as well as by travel
agents and ticketing services that would relay the data to airlines and
receive customized fares in return.
"Airlines want, and expect,
their (ticket) distribution partners to offer passengers helpful
contextual information to make well-informed purchase decisions,
reducing the number of reservations made based primarily or exclusively
on price," said a study commissioned by the association.
Consumer
advocates question how airlines would safeguard the personal information
they gather, and they worry that comparison shopping for the cheapest
air fares will no longer be feasible.
"It’s like going to a
supermarket where before you get the price, they ask you to swipe your
driver’s license that shows them you live in a rich zip code, you drive a
BMW, et cetera," Mitchell said. "All this personal information on you
is going out to all these carriers with no controls over what they do
with it, who sees it and so on."
The airline association said
consumers who choose not to supply personal information would still be
able to see fares and purchase tickets, though consumer advocates said
those fares would probably be at the "rack rate" — the travel industry’s
term for full price, before any discounts.
It’s up to individual
airlines whether they price fares differently for travelers who don’t
provide personal information, said Perry Flint, a spokesman for the
international airline association.
The stakes, of course, are
enormous. Since 2000, U.S. airlines have lost money for more years than
they’ve made profits. Fee revenue has made a big difference in their
bottom lines. Globally, airlines raked in an estimated $36 billion this
year in ancillary revenue, which includes baggage fees and other a la
carte services as well as sales of frequent flyer points and commissions
on hotel bookings, according to a study by Amadeus, a global
distribution service, and the IdeaWorksCompany, a U.S. firm that helps
airlines raise ancillary revenue. U.S. airlines reported collecting
nearly $3.4 billion in baggage fees alone in 2011.
One expense
airlines would like to eliminate is the $7 billion a year they pay
global distribution systems to supply flight and fare information to
travel agents and online booking agents like Expedia. Airlines want to
deal more directly with online ticket sellers and travel agents, who
dominate the lucrative business travel market. Justice Department
officials have acknowledged an investigation is underway into possible
anti-trust violations by distribution companies.
Airlines also
have been cracking down on websites that help travelers manage their
frequent flier accounts. The sites use travelers’ frequent flier
passwords to obtain balances and mileage expiration dates, and then
display the information in a way that makes it easier for travelers to
figure out when it makes more sense to buy a ticket or to use miles.
"What
the airlines are trying to do right now is reinvent the wheel so they
can hold all their information close to their chest," said Charles
Leocha, founder of the Consumer Travel Alliance. "As we move forward in a
world of IT, the ownership of passenger data is like gold to these
people."
By withholding information like fee prices, he said, "we
are forced to go see them, and then we are spoon-fed what they want to
feed us."
___
Airlines for America http://www.airlines.org

Travel Technology Association http://www.traveltechnologyassociation.org

Business Travel Coalition http://businesstravelcoalition.com/

___
Follow Joan Lowy at
http://www.twitter.com/AP_Joan_Lowy
Copyright 2012 The Associated Press.

No posts to display