After four years of airlines stonewalling customers’ demands for ancillary fee data, the only reasonable conclusion is that there is a market failure that will only be remedied with U.S. Department of Transportation (DOT) intervention, Kevin Mitchell, chairman, Business Travel Coalition (BTC) argues in his new analysis, "Impacts of Hidden Airline Fees on Managed Travel Programs."
In a clear warning to major agency travel managers and TMC's, Mitchell says the most significant problem with hidden airline fees is the "erosion of the effectiveness and benefits of a professionally administered managed-travel program - in short an escalation in costs deriving from diminished control."
Prepared for the Open Allies for Airfare Transparency, Mitchell offers a list of top line negative impacts of airline stonewalling and warns that traveler confusion and frustration are growing while managed travel programs are being undermined.
"It takes massive computing power for travel management companies (TMCs) to efficiently present relevant routing options, let alone if ancillary services and associated fees were included. Combined fare and ancillary services prices are currently not automated and presented to travelers for comparison-shopping purposes because airlines have refused since 2008 to provide TMCs with ancillary fee data in a transparent and purchasable format," Mitchell says.
"Corporate travel managers understand this and are frustrated over the many wholly avoidable problems caused by airlines denying them the automated and dynamic ancillary fee data necessary to run managed travel programs effectively and efficiently."
"A static list of services and fees on an airline website hardly represents transparency and offers little benefit for travel programs, particularly when you consider that these fees may or may not apply to any individual traveler on an itinerary-by-itinerary basis."
Mitchell urges agents to consider that the fees may apply to some fares, but not to others according to an individual airline’s fare rules.
"It may apply for some negotiated rates but not for others. Some travelers may receive ancillary services for free based on the charge card used or frequent flyer tier status; others may not."
"In order for there to be true transparency, ancillary services and fees need to be combined with airfares via this massive computing power so that fully priced, side-by-side comparative travel options can be presented for a traveler’s consideration. Otherwise, fees remain, for all intents and purposes, completely obfuscated from the millions of disparate options that were once so efficiently comparison-shopped," Mitchell says.
"True transparency requires that fees be purchasable during the same transaction with airfares. In this symbiotic relationship, there can be no real transparency without purchasability and no effective purchasability without automated and real-time transparent fee data."
"The consequences of this problem for corporate travel managers are significant and growing with each day that airlines refuse to provide their best customers with what they require for success within modern managed travel programs," Mitchell says.
Mitchell's list of top-line negative impacts include:
- budgeting and forecasting are rendered unreliable;
- shopping, purchasing and data collection processes for TMCs are more costly;
- clarity of total air travel spend is clouded;
- airline negotiations are made more arduous from the lack of comprehensive data;
- ineffective comparison-shopping reduces marketplace pricing discipline on fares and fees;
- financial, travel policy and audit controls are rendered less effective.