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http://www.chron.com/cs/CDA/printstory.mpl/headline/biz/3700785
March 4, 2006, 7:41PM
Airlines seek refuge in deception
By LOREN STEFFY
Copyright 2006 Houston Chronicle
COME fly the friendly lies.
That could become the new motto for many of the older airlines if they're allowed to follow through with a plan that may effectively squash comparison shopping for air fares.
In what is already one of the least consumer-driven industries in America, an effort is under way to allow airlines to advertise fares that don't actually reflect the price that they charge customers.
The Air Transport Association, which represents most older airlines — American, United, Continental and their ilk — is lobbying the U.S. Department of Transportation, which regulates the advertising of airfares, to loosen restrictions so that they can advertise one fare and essentially charge another.
That already happens to some degree. Most advertised fares — the prices airlines promote on billboards, print ads and Web sites — omit government levies, such as airport taxes and security fees, not to mention a special charge if you want your ticket printed on paper.
That's allowed under current rules set by the DOT, which regulates airline advertising to the exclusion of all other federal and state agencies. However, the rules require that prices include any charges imposed by the airlines.
In that way, airlines are no different from, say, an electronics store that advertises a color TV without including sales tax.
The push for looser rules
Under their lobbying effort, though, the major airlines want to change the rules so they could exclude other "charges" of their own making, according to a report recently in the New York Times.
It's one thing to exclude taxes in an advertised price but quite another to exclude expenses you simply don't want to recognize.
Fuel surcharges
One popular target undoubtedly would be fuel costs. Many airlines have tacked fuel surcharges onto their prices to offset the soaring price of jet fuel. Now they'd like to remove that from their advertised fares.
For the uninitiated, "fuel surcharge" is an airline term that means "fare increase."
Fuel prices, which have more than doubled in the past three years, remain a cost of doing business in the airline industry. Omitting fuel costs from advertised prices is almost as ridiculous as breaking out labor costs, the airlines' other big expense. Come to think of it, many carriers might want to do that, too.
It's like the Chronicle advertising subscription rates that don't include the cost of paper or ink.
It's deceptive. Even worse, it may make it difficult to compare fares. Customers would have to add and subtract charges that may or may not be included, and those charges may vary from airline to airline.
Bankrupt vs. upstarts
So that's where we're at in the airline business. Having failed to find profits even after taking away food and leg room and free printing of tickets and anything else they could think of, the old money-losing airlines are simply trying to trick people into flying on them.
Not surprisingly, the industry is divided on this issue the way it is on most others: Southwest and the upstarts like JetBlue on one side, the battered and bankrupt carriers on the other.
Southwest and the upstarts — not to mention a coalition of business travelers, travel agents and other passengers — don't like the plan because it will make it easier for the battered and bankrupt to make it appear as if they're matching discounters' fares. The money-losers can simply exclude the costs that make up their competitive disadvantage.
Creating their own troubles
As with so many airline industry problems, this one is of the industry's own
making.
The battered and bankrupt carriers spent more than a decade squeezing travel agents, supplanting them with online ticket sales through their own Web sites and Orbitz, which the five biggest airlines created in 2000. They sold it to Cendant Corp. in September 2004.
That very system has backfired, allowing customers to see how poorly their fares compete with rivals like Southwest, which never did much business with travel agents.
It's just one more example of how the battered and bankrupt airlines constantly undermine themselves.
If the government allows the plan to go through, good luck trying to figure out the real fares.
Of course, the airlines will probably charge a decoding
fee.
Loren Steffy is the Chronicle's business columnist. His commentary appears Sundays, Wednesdays and Fridays. Contact him at [email protected]. His blog, Full Disclosure, is at blogs.chron.com/fulldisclosure/.
March 4, 2006, 7:41PM
Airlines seek refuge in deception
By LOREN STEFFY
Copyright 2006 Houston Chronicle
COME fly the friendly lies.
That could become the new motto for many of the older airlines if they're allowed to follow through with a plan that may effectively squash comparison shopping for air fares.
In what is already one of the least consumer-driven industries in America, an effort is under way to allow airlines to advertise fares that don't actually reflect the price that they charge customers.
The Air Transport Association, which represents most older airlines — American, United, Continental and their ilk — is lobbying the U.S. Department of Transportation, which regulates the advertising of airfares, to loosen restrictions so that they can advertise one fare and essentially charge another.
That already happens to some degree. Most advertised fares — the prices airlines promote on billboards, print ads and Web sites — omit government levies, such as airport taxes and security fees, not to mention a special charge if you want your ticket printed on paper.
That's allowed under current rules set by the DOT, which regulates airline advertising to the exclusion of all other federal and state agencies. However, the rules require that prices include any charges imposed by the airlines.
In that way, airlines are no different from, say, an electronics store that advertises a color TV without including sales tax.
The push for looser rules
Under their lobbying effort, though, the major airlines want to change the rules so they could exclude other "charges" of their own making, according to a report recently in the New York Times.
It's one thing to exclude taxes in an advertised price but quite another to exclude expenses you simply don't want to recognize.
Fuel surcharges
One popular target undoubtedly would be fuel costs. Many airlines have tacked fuel surcharges onto their prices to offset the soaring price of jet fuel. Now they'd like to remove that from their advertised fares.
For the uninitiated, "fuel surcharge" is an airline term that means "fare increase."
Fuel prices, which have more than doubled in the past three years, remain a cost of doing business in the airline industry. Omitting fuel costs from advertised prices is almost as ridiculous as breaking out labor costs, the airlines' other big expense. Come to think of it, many carriers might want to do that, too.
It's like the Chronicle advertising subscription rates that don't include the cost of paper or ink.
It's deceptive. Even worse, it may make it difficult to compare fares. Customers would have to add and subtract charges that may or may not be included, and those charges may vary from airline to airline.
Bankrupt vs. upstarts
So that's where we're at in the airline business. Having failed to find profits even after taking away food and leg room and free printing of tickets and anything else they could think of, the old money-losing airlines are simply trying to trick people into flying on them.
Not surprisingly, the industry is divided on this issue the way it is on most others: Southwest and the upstarts like JetBlue on one side, the battered and bankrupt carriers on the other.
Southwest and the upstarts — not to mention a coalition of business travelers, travel agents and other passengers — don't like the plan because it will make it easier for the battered and bankrupt to make it appear as if they're matching discounters' fares. The money-losers can simply exclude the costs that make up their competitive disadvantage.
Creating their own troubles
As with so many airline industry problems, this one is of the industry's own
making.
The battered and bankrupt carriers spent more than a decade squeezing travel agents, supplanting them with online ticket sales through their own Web sites and Orbitz, which the five biggest airlines created in 2000. They sold it to Cendant Corp. in September 2004.
That very system has backfired, allowing customers to see how poorly their fares compete with rivals like Southwest, which never did much business with travel agents.
It's just one more example of how the battered and bankrupt airlines constantly undermine themselves.
If the government allows the plan to go through, good luck trying to figure out the real fares.
Of course, the airlines will probably charge a decoding
fee.
Loren Steffy is the Chronicle's business columnist. His commentary appears Sundays, Wednesdays and Fridays. Contact him at [email protected]. His blog, Full Disclosure, is at blogs.chron.com/fulldisclosure/.
