CTA Warns of More Complex Airline FeesJune 5, 2012 By: George Dooley Travel Agent
Airline fees have been expanding in number and rising in cost, becoming time-consuming to research and virtually impossible to compare in combination with base airfares across airlines, says Charlie Leocha, Director, Consumer Travel Alliance (CTA). He warns that airlines are starting to turn to yield management systems to maximize baggage and seat-reservation fees, further complicating pricing.
"In most cases, base airfares are defined differently among airlines, and thus, have become meaningless. Robust price competition when it comes to ancillary fees does not exist," Leocha says in a statement, "Thought airline fees were bad? They are getting worse!" prepared for the Open Allies for Airfare Transparency.
Leocha argues that for nearly half-a-decade consumers have been forced to purchase airline tickets without the complete information (base fares and ancillary fees) necessary to easily evaluate the full cost of air travel.
"Consumers are being denied the complete and accurate price information needed to make informed decisions. There has been a market failure since 2008 as airlines have refused to provide ancillary fee information to travel distribution participants such as travel agencies and websites that allow across-airline price comparisons. Consumers need real-time, comprehensive fee information that enables them to purchase the complete air travel product at all outlets where airlines sell airfares," CTA's Leocha says.
"Consumers trying to figure out their vacation budgets need to be allowed to easily compare prices across airlines including baggage and seat reservation fees. This means that airlines must be required to release their prices, including those for ancillary services, through local community travel agents, online travel companies and other outlets where airlines choose to sell their tickets," Leocha says.
Airlines are just getting started, Leocha notes, warning of the impact of airline yield management techniques and their impact on consumers and travel distributers.
"The baggage and seat reservation world is going to get even more complicated as airlines begin to apply yield management to their fees that will permit them to vary fees based on the day of the week, time of the day and whether passengers are flying, for example, during holiday peak seasons," Leocha says.
"Airlines have been using yield management varying prices based on timing and/or demand for services for years to maximize airfares. Now they are starting to turn to the same systems to maximize baggage and seat-reservation fees. While baggage fees have been heretofore static for flights regardless of the distance traveled, seat-reservation fees have varied from $5 to $50."
"With yield management practices applied to baggage fees, air travelers may soon find that those charges will spike during the days leading up to the December holidays and be lower during non-holiday midweek travel. Or, as checked bags begin to fill the airplane hold, baggage paid for closer to travel dates may end up costing more than that paid 21 days in advance."
"Yield management adds a new wrinkle to the amazing complexity of the new airline world of ancillary fees that has been created. Overall, once yield management programs are applied, route/fee/airfare/passenger price possibilities will soar well beyond the already staggering number of possibilities," CTA's Leocha says.
Leocha says that the U.S. Department of Transportation has been considering the problem of opacity in airline fees and has already taken action requiring some disclosure,Leocha says. "But it has not been enough. Now that the number of fee variations is pegged in the tens of millions, computer programs are the only way for travel agencies and consumers to efficiently compare total air travel pricing."
"The disclosed fees should be able to be purchased by consumers at the same time and through the same retail outlets as basic airfares. In other words, once an airline chooses to do business through a distributor or retail outlet, all airfare and extra fee information should be available and purchasable through that distributor or outlet."
"Knowing the price of air travel and services that passengers are purchasing so that they can compare prices across airlines is not too much to ask," Leocha said.
Open Allies for Airfare Transparency is a coalition 380 leading travel management companies, corporate travel departments, consumer groups and travel agencies.