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BTC: Strong Travel Distribution System NeededApril 11, 2012 By: George Dooley Travel Agent
Offering a strong defense of an independent, pro-consumer travel distribution system, Kevin Mitchell, chairman of the Business Travel Coalition (BTC) blasted the airlines for failing to provide fee information on core services to the travel agency channel. Mitchell urged action by the Department of Transportation (DOT) or Congress to protect consumers.
“The DOT has little choice but to act and protect consumers by enabling the restoration of efficient one-stop comparison shopping of the all-in price of air travel,” Mitchell said on behalf of the Open Allies for Airfare Transparency.
Mitchell’s article, Threatened: The Democratization of U.S. Air Travel, says there are negative consumer consequences to current airline product unbundling practices.
“After nearly a half a decade of stonewalling on this issue, few industry observers are betting on airlines to do the right thing, in time," Mitchell said. “The airlines actions undermine industry deregulation in 1978 that were predicated on increased airline competition and enforcement of consumer protections.”
Mitchell argues that consumers are virtually powerless without Congress or the DOT mandating specific consumer protections – and the existence of an independent distribution system. “Consumers are without legal rights and remedies,” he says, and the “DOT recognizes the uniquely vulnerable position of airline industry consumers in this virtual no-mans-land.” Mitchell’s conclusion: The DOT is compelled to provide meaningful consumer protections.
“By refusing to provide information regarding core services and related pricing in a workable, transactable format to travel agencies, airlines have made it exceedingly difficult for consumers to determine the all-in comparative price (airfare and fees) at the point of sale based on needs identified at the time of purchase. Unless a consumer is armed with a spreadsheet and lots of spare time, its tremendously problematic to determine what the best value is when comparing airline offers,” BTC says.
One result is the weakening of the distribution system. “The travel distribution system acts as a competitive check and balance to airlines pricing practices and policies. When consumers are deprived of the opportunity of one-stop shopping, i.e., they cannot purchase core services in the channel in which they are shopping, they could be induced to use airline websites to access and purchase those core services.”
“This result will no doubt weaken travel agencies at a time of increasing airline industry consolidation to ever more powerful individual carriers turbocharged by globalized, antitrust-immunized alliances,” Mitchell says.
Airline unbundling has compounded the problem, Mitchell says. “Since 2008, when U.S. airlines began to aggressively unbundle previously included core services, i.e., seats, bags and boarding, from traditional airfare offerings, consumers have been effectively stripped of this mission-critical, one-stop shopping ability.”
“Two important keys to ensuring vigorous airline competition have been the ubiquity of complete and accurate product and pricing information and the ability of consumers to one-stop comparison shop and make informed purchase decisions from among competing airline offers.”
Key points in the BTC’s arguments include charges that consumers pay more than necessary, including billions of dollars in fees, for core services because of an inability to efficiently compare the total cost of air travel on an apples-to-apples basis across multiple airlines. "This necessarily guarantees that prices go largely undisciplined by the marketplace.”
BTC also questions airline information practices. “Often consumers are startled at the airport by fees that can add 30 percent, 40 percent or more to a base airfare. These travelers may have made a different travel decision had they been fully aware of these added costs.”
“Equally troubling is an apparent decline in truthful information about access to seat assignments. It is increasingly reported that airlines may be misleading consumers via seat maps with graphically greyed-out seats that are noted in a typical seat-chart legend as ‘booked’ with only middle seats or premium-priced seats available,” BTC says
“As such, a family with small children seeking to sit together can feel emotionally compelled to purchase premium seats straightaway, which can cost hundreds of dollars on a round-trip basis. What is especially egregious here is the use of the term ‘booked’ if an airline is indeed just holding seats back for release and assignment (free or for sale) closer to departure, in which case disclosure of this fact should be an absolute obligation.”
The travel distribution system acts as a competitive check and balance to excessive airline pricing practices and policies, Mitchell concludes, warning of a weakening of travel agencies as well as a weakening of the original pro-consumer goals of airline deregulation. ”A strong and independent travel distribution system is growing in importance by orders-of-magnitude with respect to safeguarding consumer interests.”
BTC is a founding member of Open Allies for Airfare Transparency.