Semi-Automated Business EnvironmentAirlines are in a battle to change the way you purchase tickets. Frankly, they hate the free market and price competition. Airlines don’t want passengers comparing prices among airlines. After the Internet disaster (from their point of view) that allowed passengers to compare prices easily, the airlines want to get their marketing power back.
Airlines want to return not only to the days when travelers had to call each individual airline to find prices and then compare prices, they want even to make it difficult for travel agents to easily compare prices. That would push price transparency back more than three decades.
Airlines battle against multi-airline competition
Let’s look at the lay of the land. Wherever there are multiple airlines flying in and out of cities, the prices are lower. That’s because of competition. The airlines have been excellent at limiting competition initially by forming hubs and most recently, by mergers. What was once a strong airline system across the USA with almost a dozen airlines competing, has been reduced to 5 major carriers — American, Delta, Southwest, United, US Airways — and a handful of smaller airlines.
Internationally, the verdict is worse. Three airline alliances, each armed with antitrust immunity, now control something like 80 percent of all international airline traffic. It cannot be good for consumers in the long run, especially should these three groups begin to carve up the world with their own profits in mind.
Already the major hubs on Europe are in the grip of the alliances. Frankfurt is firmly planted with United and Lufthansa. London Heathrow is in the hands of British/Iberia and American Airlines. Paris and Amsterdam are controlled by Air France/KLM and Delta.
Airlines battle against price comparisons
Now, in Congress and with the Department of Transportation (DOT) the airlines want to put another nail in the consumer price transparency coffin. They want to keep hiding their ancillary fees under the guise that these fees allow them to create distinct markets for their product.
Already, travelers must go to each individual airline to figure out the different baggage fees they must pay. Now the airlines, led by American Airlines, are trying to foist a “direct connect” product on the industry. The offer is simple. Work directly with us without the ability to easily compare prices and we will offer you better deals.
Ironically, the same airlines that claim they will lower consumer prices if the central reservation fees are reduced are the ones who hoarded the taxes that the FAA didn’t collect. The same airlines that eliminated travel agent commissions, now want to promise travel agents a better deal if they embrace “direct connect.” Of course, anything is better than nothing, which is what the airlines are providing travel agents today.
Hopefully, the DOT is carefully watching these developments and will insist on a method of direct comparison of prices for consumers when it comes to airfare purchases. Left to their own devices, airlines have demonstrated time and time again that they will work against customer good, the good of the nation and attempt to line their own corporate coffers.
Today’s system of strong computer reservation systems that span all airlines and serve all travel agents and, hence, all consumers, are becoming the airline passengers’ best friend. These massive computer networks are the only way that virtually every passenger can have the ability to compare prices before purchasing tickets.
Left up to the airlines, only a handful of airlines would control the skies and there would be no easy way to make airfare price comparisons.
Photo Credit: Smithsonian, National Museum of American History