What’s in a fare?

The Washington Post Sunday - - TRAVEL - Christo­pher El­liott El­liott is Na­tional Geo­graphic Trav­eler mag­a­zine’s reader ad­vo­cate. E-mail him at cel­liott@ngs.org.

The ques­tion at the bot­tom of the dust-up be­tween Amer­i­can Air­lines and on­line travel agency Or­b­itz.

Maybe you’ve heard about the lit­tle dust-up be­tween Amer­i­can Air­lines and sev­eral on­line travel agen­cies, in­clud­ing Or­b­itz and Ex­pe­dia.

Maybe you’ve no­ticed that when you go fare-shop­ping on those travel sites, you aren’t of­fered any Amer­i­can flights.

Maybe you’ve said to your­self, “So what?”

“It’s re­ally an in­side base­ball kind of story,” ad­mits Wil­liam Swel­bar, a re­search en­gi­neer in MIT’s In­ter­na­tional Cen­ter for Air Trans­porta­tion.

But not so fast. Yes, the in­tra­mu­ral spat be­tween air­lines and travel agen­cies may seem ir­rel­e­vant, but there’s a lot at stake. The fu­ture of how you buy air­line tick­ets could hang in the bal­ance.

Here’s what has hap­pened: Late last year, Amer­i­can Air­lines in­vited Or­b­itz to switch the way it man­ages tick­ets from a tra­di­tional reser­va­tion sys­tem to a new one that Amer­i­can had de­vel­oped, called Di­rect Con­nect. Ac­tu­ally, Amer­i­can in­sisted. When Or­b­itz de­clined the in­vi­ta­tion, Amer­i­can pulled its tick­ets from the on­line travel agency. Then Ex­pe­dia, the largest on­line travel agency, stopped sell­ing Amer­i­can tick­ets in a re­lated dis­pute.

Then Sabre, one of the largest reser­va­tions sys­tems for travel agents, re­tal­i­ated by “de­pref­er­enc­ing” Amer­i­can Air­lines tick­ets on its dis­plays, which es­sen­tially made Amer­i­can fares the last choice for tens of thou­sands of agents. Sabre also raised Amer­i­can’s book­ing fees, claim­ing that the air­line wasn’t of­fer­ing ac­cess to its full con­tent by with­hold­ing in­for­ma­tion about ex­tra air­line fees from its reser­va­tion sys­tems.

Since then, there have been law­suits, court in­junc­tions — and lots of rhetoric.

“ This is a dis­pute over which com­pany or travel in­dus­try sec­tor con­trols price in­for­ma­tion,” says Ed­ward Hasbrouck, a con­sumer ad­vo­cate. “But con­sumers’ in­ter­est is in price trans­parency, which no­body in the in­dus­try re­ally wants.”

In other words, air­lines and travel agen­cies are squab­bling over how they show you ticket prices. Agen­cies want to dis­play it their way; air­lines want to show you the prices the way they want. Nei­ther nec­es­sar­ily has your in­ter­ests in mind, in Hasbrouck’s view.

On­line agen­cies typ­i­cally show “ base” air­fares, mi­nus any taxes and op­tional fees. They al­low trav­el­ers to com­pare prices be­tween air­lines, but those com­par­isons have be­come in­creas­ingly dif­fi­cult to make in the past two years, as air car­ri­ers have re­moved on­cein­cluded items from the ticket price, such as check­ing a bag or mak­ing a seat reser­va­tion. Gen­er­ally, air­lines have re­fused to dis­close these fees to travel agents in a mean­ing­ful and com­pre­hen­sive way.

By with­hold­ing the fee in­for­ma­tion and wait­ing un­til the end of the reser­va­tion to dis­close it, air­lines stand to make more money be­cause their tick­ets ap­pear cheaper, and they can pocket all the prof­its from the ex­tra fees that they charge later. Travel agen­cies want ac­cess to the in­for­ma­tion, and they say that they want to dis­close it ear­lier so that they can keep their cus­tomers from be­ing sur­prised by these fees at the air­port. Plus, they hope to sell you the ex­tras up front, po­ten­tially earn­ing them a bonus or a com­mis­sion.

Or­b­itz has kept a low pro­file in re­cent days, say­ing only that it is still try­ing to iron out its dif­fer­ences with Amer­i­can. “We have not closed that door,” says spokesman Brian Hoyt.

Not so with Amer­i­can Air­lines. Cory Garner, the di­rec­tor of dis­tri­bu­tion strat­egy at the car­rier, spoke with me at length, say­ing that one rea­son the air­line is mov­ing to Di­rect Con­nect is so that it can show a full air­fare.

“We want the cus­tomer to know what the to­tal cost of the trip is,” he says.

Garner said Di­rect Con­nect wouldn’t make it more dif­fi­cult for travel agen­cies or con­sumers to shop for and com­pare Amer­i­can’s ser­vices with other air­lines.

To get an idea of what a fu­ture Di­rect Con­nect reser­va­tion might look like, Garner sug­gested that I take a look at Amer­i­can’sWeb site, AA.com.

But Amer­i­can’s vi­sion of trans­parency seems dif­fer­ent from what the av­er­age con­sumer might be look­ing for. TheWeb site cur­rently doesn’t of­fer you the choice to build a fare that in­cludes a checked bag or a meal — in­stead, it re­veals the fees af­ter you’ve cho­sen your flight.

The only fee cur­rently of­fered up­front is the new “Board­ing and Flex­i­bil­ity Pack­age,” which al­lows you to board a flight early and of­fers a dis­count on change fees, if your flight plans change. Garner as­sured me that the air­line was work­ing on mak­ing all fees avail­able right off the bat.

JimOs­borne, a vice pres­i­dent at the travel agency con­sor­tium Vir­tu­oso, is skep­ti­cal of Amer­i­can’s claims that fare com­par­isons will be just as easy un­der Di­rect Con­nect. “ The pro­posed frag­men­ta­tion that could come if each air­line re­quired you to book di­rectly with the air­line would re­quire the agency com­mu­nity to dras­ti­cally change the way they do busi­ness,” he says. “Re­search

“Con­sumers’ in­ter­est is in price trans­parency, which no­body in the in­dus­try re­ally wants.”

— Ed­ward Hasbrouck, con­sumer ad­vo­cate

would take much longer and easy com­par­i­son shop­ping would no longer ex­ist.”

That would be bad news for pas­sen­gers, ac­cord­ing to An­drewWe­in­stein, di­rec­tor of Open Al­lies for Air­fare Trans­parency, a coali­tion of travel com­pa­nies push­ing for ac­cess to air­lines fares and fees. “By try­ing to turn back the clock to an era of closed sys­tems and hid­den pric­ing, air­lines risk alien­at­ing their cus­tomers and clos­ing off the very dis­tri­bu­tion chan­nels they need in or­der to suc­ceed,” he says.

But Swel­bar, whose cen­ter re­ceives fund­ing from the air­line in­dus­try, says that the change is in­evitable and will save air­lines money. “Amer­i­can’s ac­tions are an ex­ten­sion of the air­line in­dus­try’s ef­forts to re­struc­ture the busi­ness by cut­ting costs in the short-term and tak­ing in­creas­ing own­er­ship of their re­spec­tive in­ven­to­ries for the long-term,” he told me. “I think it is safe to say that air­lines know their prod­uct bet­ter than some third­party ven­dor.”

And how about trav­el­ers? I asked read­ers of this col­umn whether they had any thoughts on this travel in­dus­try al­ter­ca­tion. The re­sponse: a col­lec­tive shrug. “If I never saw Amer­i­can Air­lines on aWeb site again, it would be OK,” wrote David Kazar­ian, a reader from St. Peters­burg, Fla.

But Steve Lapekas, an ex­ec­u­tive vice pres­i­dent at Pe­ga­sus So­lu­tions, a reser­va­tions technology com­pany, and a for­mer Amer­i­can em­ployee, says that the dis­pute is about to change the way peo­ple buy tick­ets, if it hasn’t al­ready. “It’s very likely that trav­el­ers will start shop­ping the air­line sites, where air­lines will claim they can find the best price,” he says.

Be­yond the hy­per­bole and ar­gu­ments, here’s what should change: The Trans­porta­tion Depart­ment needs to ap­prove a pro­posed new air­fare and air­line fee trans­parency rule that would re­quire any air­line or ticket agency to quote an allinclu­sive price for an air­line ticket right up front and al­low air trav­el­ers to eas­ily com­pare the true cost of travel across air­lines.

The technology al­ready ex­ists, apart from Di­rect Con­nect, to spec­ify which ex­tras — such as a checked bag, in­flight In­ter­net con­nec­tions or a sandwich — we want with our tick­ets. We should be able to tell air­lines or agen­cies what we want right up front and be al­lowed to com­pare our pref­er­ences and the fi­nal prices across all avail­able air­lines, in­stead of be­ing hit with sur­prise fees af­ter buy­ing a nonre­fund­able ticket.

Both sides in this quar­rel claim that they want to dis­close a com­plete air­fare along with op­tional fees as soon as pos­si­ble, so they should have no ob­jec­tions to such pro­posed reg­u­la­tion.

Do pas­sen­gers want that? You bet. The DOT re­cently re­ceived a let­ter signed by more than 50,000 pas­sen­gers ask­ing it to man­date air­fare and air­line fee trans­parency. But this might also be a good time for air trav­el­ers to re­mind their elected rep­re­sen­ta­tives that they don’t like the pric­ing games that are be­ing played be­hind the scenes and that air­fare trans­parency should be re­quired by law.

If it isn’t, then the win­ner of this ar­gu­ment won’t mat­ter, just the losers. Which will be all of us.


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