DOMESTIC AIR FARES DEFY logic.
Advertised discounted fares that are here one day are gone the next and back again days or weeks later.
The sudden changes overwhelm airline reservationists and frustrate travel agents, who issue 80 percent of the tickets. Passengers can only go along for the flight.
Everyone, of course, hunts for bargains, which can be elusive even when they are advertised. For example, within a week after Iraq invaded Kuwait on Aug. 2, threatening the flow of oil out of the Middle East, U.S. airlines said they would raise their fares by as much as 10 percent, citing increased jet-fuel costs.
That action by carriers triggered the entry of 1.2 million fare changes into airline computerized reservations systems on Aug. 10-11, a new record in fare changes, according to Neil Cleary, president of the Airline Tariff Publishing Co. The company, owned by 29 domestic airlines, records an average of 160,000 pricing information changes a day.
Before the 1.2 million changes were to become effective on Aug. 15, two carriers-Eastern Airlines and Trans World Airlines-decided to lower fares. This caused other airlines to delay their increases and subsequently drop fares a few days later. The combined flood of changes generated an estimated 400,000 to 500,000 computer entries.
Official Airlines Guides says it tallied a record 2.4 million changes over the three-day period around Aug. 15. The Oak Brook-based company provides data on worldwide flight schedules and fares.
Whatever the numbers, the changes caused travel agents to reissue many thousands of tickets to provide their clients with the lower fares, all the while losing commission income on every change.
When fare increases coincide with cuts, it`s no wonder that passengers begin to wonder about the sanity of airlines. The travel agents wonder too. Nowhere else in the marketplace can consumers find such inexplicable price swings. Add to the fares myriad restrictions and the number of discounted seats actually available, and passengers can do little more than shake their heads, hand over their credit cards and accept what`s offered.
It`s no surprise, then, that a Chicago businessman who is called to Los Angeles for a hastily called meeting could pay $1,114 for his full-fare coach seat, while the woman sitting next to him, going from Chicago to Los Angeles for a week`s vacation, has a 14-day advance-purchase ticket that cost her only $384.
That`s a difference of $730, and other passengers on the same flight could, in fact, have paid half a dozen different fares. Or they could be paying nothing if they have redeemed frequent-flyer mileage coupons for a free flight.
The multiple fares for any given flight in the United States reflect the freedom granted airlines to set fares under the Airline Deregulation Act of 1978 and the competition and confusion the act has created over the years.
”If you like orderliness and you always want to know what the fare is, continue to regulate, because there will be one fare and it will be high,”
says Alfred E. Kahn, who was chairman of the Civil Aeronautics Board in the Carter administration. Kahn fathered airline deregulation at the time the board regulated both routes and fares, and the proliferation of fares comes as no surprise to him.
”I can`t assure you that I knew exactly how confusing the fare structure would be,” says Kahn, now a professor of political economy at Cornell University, ”but I certainly knew that fares would be much more flexible and that there would be a lot more experimenting. But the important thing is, what I predicted was that average fares would be a helluva lot lower. And they are.”
There are a lot of reasons for the multiple fares, Kahn says. One is competition; the other is the peculiarity of the industry.
”An airline seat is very perishable,” Kahn explains. ”Once a plane is loaded and ready to go, seats that are empty are just totally wasted. Airlines have gotten cleverer and cleverer with these computerized reservations systems, developing different kinds of discounts.
”Airlines get the highest possible price from travelers who have to travel-mostly business travelers-and there`s little doubt there`s an element of monopoly there,” Kahn admits. But to fill the bulk of seats, he continues, the airlines ”open and close the spigot on discount fares,” which carriers can do from one hour to the next for thousands of flights within their own computerized reservations systems.
For travel agents, day in and day out, it means searching the computer for the lowest fares between city pairs.
One key word with all discounted fares is ”restrictions,” which, of course, travel agents and airline staffers do not ”read” to ticket buyers the way a police officer must read certain constitutional rights to a suspect. Instead, the usual spiel, as included in some ads, goes like this:
”Fares are one-way coach requiring a round-trip purchase. Advance-purchase requirements vary. Tickets are non-refundable and a Saturday-night stay is required. Fares may be higher when you travel at peak times. Seats are limited and may not be available on all flights when you call. Tickets must be purchased within 24 hours of booking. Significant restrictions apply.”
What makes the Saturday-night stay so important?
”The magic of Saturday is that it effectively cuts out the business traveler. That`s the intent,” a travel agent explains. ”The airlines, however, put it a positive way: `to enhance leisure travel.` ”
Thousands of times every day, travel agents and reservationists look at airline alphabets to answer the question, ”What`s the cheapest fare between Chicago and Los Angeles (or Miami, New York, Phoenix . . . ?)”
”YOU REALLY DO get used to this stuff, believe it or not,” says a veteran travel agent as she reveals the meaning of the many codes she sees on her computer screen. She requests anonymity for herself and her agency, explaining that airlines tend to bully travel agents, despite the millions of passengers that agents feed to them.
Scanning the screen for fares between Chicago and selected cities on July 19, she finds nine fare structures for Los Angeles, 15 for Miami, 11 for Phoenix and nine for New York. On Aug. 22 she finds 28 fare entries for Miami, 24 for Phoenix, 20 for New York City and 24 for Orlando. No wonder that the traveling public-and travel agents and airline reservationists themselves-get mired in the search for ”bargain fares.”
Further complicating the issue is the matter of seat availability, which varies with each of the many different fare structures. Data on seat availability is also available on the airlines` computerized systems, but the travel agents never know how many seats are actually available in discount-fare inventories.
”American Airlines` Sabre Reservations System, for example, shows a maximum of seven seats in each class of service, and off-line carriers on Sabre such as United, Delta and TWA, which have their own systems, show four seats in any given class of service,” an agent explains.
”So I know on this basis that there are at least seven or four seats available, even though there really may be 20 seats available. But if the computer shows three seats, it really means there are only three seats available.
”Airlines can play with the numbers. In their dream of dreams, they want to have 100 coach seats filled with `Y` (full-fare) passengers or the next highest-paying passengers. If the airline knows a flight is soft, it can just keep showing seven seats available. The travel agent doesn`t know how the airline is juggling the inventory.”
AIRLINES ARE RELUCTANT to discuss the pricing of seats, known in the industry as ”yield management.” As Kahn points out, the airlines have become very sophisticated in monitoring the amount of revenue each seat produces on every flight. The goal, of course, is to fill each flight with passengers paying the highest fares. Failing that, yield-management departments simply increase the number of discounted fares available on any given flight to get every seat filled-with the next highest yields, if possible.
Thus the agent who books the seven discounted seats he or she finds one day in a certain fare inventory on a given flight could, on the very next morning, find that seven more seats are available on the same flight in the same category.
To ensure that an agent can book a discounted fare at the same time that perhaps 50 other agents are trying to do the same thing, travel agencies use computer programs that give them access to all flights to a given destination. ”Direct Access is a bypass system that puts us directly into the other carriers` inventories,” the agent explains.
In the case of a passenger wanting a discounted round-trip fare between Chicago and Los Angeles on a morning flight on Oct. 1, Direct Access shows that between 7 and 10 a.m. two American flights and four United flights have discounted seats available in almost all categories. The screen also shows 22 different fare entries with dates indicating when one inventory ends and a new one kicks in.
So what advice does a travel agent offer to a client looking for the lowest fare? What should the consumer ask and what should the agent do?
”It`s a combination of what the travel agent should ask and what the traveler is willing to do,” the agent says.
”If you`re not tied to a specific day or time of day, and if you have enough lead time, can stay over Saturday night and are willing to be flexible in terms of airports and taking connecting flights (as opposed to nonstops), then you stand the chance of getting the lowest published fare,” the agent continues.
”You really do have to be willing to meet some or perhaps all of those conditions. You might have to depart at 2 a.m., change planes and have two-hour stopovers. Some people are not willing to do that and decide they would rather pay an extra $100.”
To the travel agent, the spate of fare changes during this past summer indicated once again that anything can happen in the airline industry.
”It means you have to develop a sense of judgment in terms of where a client has the best chance of clearing a lower fare. It means you can have more of a counseling role in working with a client,” the agent says.
”To the consumer, it means that if you want low fares, you have to be flexible. It also means real annoyance for business travelers who have to make a next-day flight. They will pay 70 percent more than passengers on the same flight who bought their tickets two months earlier. Business travelers have every right to be angry. They are being victimized because circumstances will not permit them to make advance reservations.”
And what does Prof. Kahn see in his crystal ball?
”With the perishability of seats and the strong desire of airlines to fill seats and the marginal dollars that that brings in at practically no cost, I think that the unruliness (in fares) is probably going to continue.” Although travel agents often swear at the chaos that deregulation has spawned, Kahn insists that ”this competition has created a greater need for travel agents. I need my travel agent.”
