Sun Sentinel Palm Beach Edition

Airline industry changes could shape ticket prices

Among them, new ‘rule’ may force domestic fares up

- By Max Bearak

For those of us who aren’t jetting around on expense accounts, price and convenienc­e are what matter most.

But airfareolo­gy is a tricky science. How are prices set? How do I find the best prices? Who is fighting on behalf of the consumer? Every so often, clues to the answers arise when airlines change their rules or the government tweaks its regulation­s and approvals. Both happened recently, and the changes could make internatio­nal travel cheaper and domestic travel more expensive, depending on your shrewdness.

One change was the preliminar­y approval granted to Norwegian Air Shuttle by the U.S. Transporta­tion Department to expand its operations between the U.S. and Europe by using an Irish subsidiary.

Norwegian is a low-cost, no-frills airline that already flies from New York to five cities in Europe and two in the Caribbean that are on French-administer­ed islands. The carrier wants to run 37 nonstops between the continents by summer, including flights that would start at $175 one way.

Norwegian will take advantage of Ireland’s low taxes and limited labor protection­s, which could allow it to use cheaper crews from places such as Thailand. The firm also has subsidiari­es in Denmark, Sweden, Finland, the U.K. and Singapore.

Transatlan­tic routes are dominated by the three American “legacy” airlines — United, Delta and American — and the partners with which they have essentiall­y merged on the other side of the pond.

The airlines have fought tooth and nail against Norwegian. They accuse it of “labor dumping” and claim that it is violating “open skies agreements” that the U.S. signed with over 100 countries and that stipulate certain degrees of labor protection­s.

Executives at Norwegian deny the charges.

“The four factors that go into ticket prices are supply, demand, fuel costs and competitio­n,” said Rick Seaney, of Farecompar­e.com. “From a consumer perspectiv­e, competitio­n is now the only thing keeping fares artificial­ly high.”

With a spate of mergers in the U.S., the field is down to three legacy carriers from seven. As a result, both domestic and transatlan­tic competitio­n have drasticall­y reduced. By way of its aggressive low-cost model, Norwegian is pushing the boundaries as to what will be allowed in pursuance of the lowest possible airfares.

The second change was a new “rule,” implemente­d in what seems like a coordinate­d move by the three legacy carriers, that can result in “multicity” tickets being advertised at rates two or more times what they used to be.

Anytime a trip involves a domestic stopover of more than four hours, it becomes a multicity booking. The old rule allowed travelers to combine two available fares on each leg, but the new one implements a new fare structure for those combinatio­ns that results in a much higher fare when booked on the same ticket. It turns out that the only way to avoid the new fares is to book each segment separately.

 ?? KYRRE LIEN/GETTY-AFP ?? A recent preliminar­y U.S. approval granted to Norwegian Air Shuttle to expand its operations between America and Europe could lead to cheaper internatio­nal travel.
KYRRE LIEN/GETTY-AFP A recent preliminar­y U.S. approval granted to Norwegian Air Shuttle to expand its operations between America and Europe could lead to cheaper internatio­nal travel.

Newspapers in English

Newspapers from United States