Question # 8 -- Fares! Is it time for a new structure?

Oliver Twist

Aug 20, 2002
Raleigh, NC
Is it time for a revamping of the pricing structure we now have in place in this industry? I remember the TV interviews years ago about airline ticket pricing when the reporter asks a dozen folks on the same plane what they paid. He got a dozen different answers.
Most have called the practice of having as many as 50 or more different fares in the same market insanity. Without powerful computers, no one would be able to keep up with the rapid changes and complexity of the ticket prices and their rules. But is it really making the industry money or is it penalizing one group to the benefit of another. I know I for one find it nuts to sell a business ticket at 500.00 to a single destination one way only to have the next couple with a round trip to that same city for 400.00 combined.
What about the rules for these fares? Can''t travel on Fridays or Sundays but Saturday night stayover required. Only valid for a 2 week period and only on 1 single flight per day in V class. Why not just make it simple, show up in a red hat, umbrella and tap dance for your preferred fare??
To the public, such illustrations are not that far fetched. They think our industry''s rules are totally ridiculous and many on both sides of the counter agree. American tried its 4 fare structure and held on for a few months, maybe a year and then abandonded it. Many other airline (OA) airline folks secretly hoped it would succeed and put an end to the maddnes of revenue enhancment. A system that takes an hour of research at the counter just to see if a passenger can change his ticket to Monday instead of Saturday and will it cost him an arm or an arm and a leg- exageration I know but to the passenger, it''s gospel.
Peolpe are tired of being nickeled and dimed to death and I have little doubt the business man/woman is unhappy knowing they subsidize the family of 4 next to them on their way to Orlando. Mickey likes it, but few other business''s do I suspect. They are just dying to find an alternative. Is it time for one from the majors???
Oliver - Bob Crandall tried something like this back in 1992...Value pricing is what he called it. The fares went something like 21, 14, and 7 day advance and full fare. 21 day was a bit more than existing advance purchase fares, and walk up was considerably LESS than the $1,000+ many airlines feel necessary to charge the business traveller to fly a couple of hundred miles. I remember when it was introduced - I had to go to DFW for a company emergency, and the fare was almost $1,000 round trip. After value pricing went into effect, the round trip fare dropped to the neighborhood of $600. And those were the days when $100 change fees and use it or lose it weren't a part of the airline lexicon. But, other airlines felt in necessary to be viewed as the value leader and fired the first shot over the value pricing bow and implemented the 21 day, fly on a Tuesday with a full moon, return on the first Wednesday after the third Sunday of a month, with a Saturday stayover required. All the other airlines capitulated, and we've had this stupid pricing structure in place ever since.
KC, this fare structure and it's complexities has been in place long before '92.

Crandall's ego kept Value pricing going as long as it did, but you are correct. It made great sense at the time.

We as an industry are our own worst enemy. The industry response to that plan was to cut each others hearts out. We are so cut-throat as to cut off our own noses. Heaven help us all.
The 7 day max stay is to keep from doing back to backs. But the piece de resistance is the trvl agt business fare is higher than direct rez or dot com fare, so if you call to change your bizness fare ticket with rez, it turns out cheaper and you might get a partial refund. trust me, I have done several partial refunds already. Where it used to be even or a small add collect for no advance changes, you can now get back up to 40 or 50 ea way in rfnd if you rebook via rez. Either No one has caught on to this in UM, or they're too stupid to figure out an alternative with the new fandangled 2 tier biz price structure.Sure keeps the rez folks busier despite the fact hundreds of furloughs are expected to be announced in the next 2 weeks in rez. VOTE YES CWA. OOPS too late!
[P]Its long past time. I was looking at fares this morning to see about an ED20 and found out today we have 23 fares showing from TPA-BWi. This includes fares that are effective 30JN. Is this January or June? I tried to find a fare and fare it out, but I kept getting a fare different than I was trying to compare so I gave up looking. Either way, why are we showing fares effective in Jan or Jun? Why wait so long to increase the fares (they were higher than the current fares). Anyway, in the TPA-BWI market WN shows 7 fares. OK, add in F for us and we should have about 8 or 9? Ours range from about $165 or so RT to $1000 rt. WNs is about $160 rt to $360 rt if memory serves correct. [/P]
[P]We need First/First Discount (A)/Full Coach/Discount Coach/3 day/7day/14day/and 1 category for anything special they want to throw out there. Fare of the day per say. Call today and we are having a special, if its there, its yours otherwise, here is the price. No more having 3 different 14 day advance fares depending on what class is available. If its 14 days out and there are seats in the class for 14 day fares, you can get it. If not, you get whatever the next fare is available. Everything one way. You change your ticket less than 21 days out and thats what you bought, you upsize the fare to whats available and what you qualify for today and pay a change fee ( I also think this should be lowered to $50 and not waived for anything). Standby on discount fares either allow standby for $50 or make it upgrade to cheapest nonref (like WN). [/P]
[P]A revamping of the fares and restrictions on tickets would save so much time and energy trying to figure them out that this could lead to more productive agents. Less problems with fare complaints, less time with supervisors, less complaints to consumer affairs. Wow, what a concept. A user friendly service where even the novice flyer could understand the rules. (And the agents for that matter.)[/P]
I really hate to keep saying this, but look at Southwest's contract of carriage:

[blockquote]When a roundtrip or multi-segment reservation has been made and the passenger fails to claim his or her reservation for the first portion of the trip, Carrier will not routinely or automatically cancel the return or continuing portions of the passenger’s reservation. However, Carrier reserves the right to do so for reservations having specific flight requirements or if necessary for purposes of reservation inventory management. Carrier does not prohibit or penalize what is commonly known as back-to-back or hidden-city ticketing. [/blockquote]

Want to know why they don't prohibit hidden city ticketing??? Because you CAN'T SAVE ANY MONEY doing them. They have about 10 fares - refundable (reasonably priced), advance, child, youth, senior, rountrip, discount roundtrip, internet special, and Tue/Wed/Sat promotional. Stay over one night (any night) to qualify for a discount fare. No $100 change fees and no use it or lose it. Customer friendly. What a concept.
On 9/24/2002 3:15:46 PM RealityCheck wrote:

The 7 day max stay is to keep from doing back to backs.

The concept of a back to back is a symptom of the problem. So long as the cartel takes the POV that it is necessary to gouge business travelers the system will be broken.
tadjr hit it right on the head here -- what AA tried with Value Pricing and what the network carriers absolutely need to move to is the system which WN has been using for years and years. Simplify the fare structure so that it makes sense to the average American, and stop penalizing the people who are your best customers!

All the rules about throw-away and back-to-back ticketing are there to keep business travelers from taking advantage of the absurdities in the pricing structure. Take one example: You want to fly from BNA to ATL tomorrow morning. If you buy a non-stop one-way ticket on DL, it will cost you $408.10. If you buy a one-way ticket from BNA to MCO connecting through ATL (using the SAME BNA-ATL flight) and then back-track from MCO (you have to book two separate itineraries) to ATL, the total cost is $368.50. Is there a good reason why AA charges $880 for a walk-up round-trip from DFW to MEM, while they charge $350 for a walk-up round-trip from DFW to JAN, aside from the fact that WN is permitted to provide service between DAL and JAN?

Your customers (i.e. passengers) are fed up with the crazy fare structures and inconveniences imposed by both the airlines and the federal government. People don't like buying something and feeling that they've been cheated because the guy in the next seat paid a fraction of what they did. I think this is part of why Southwest (and by the same token, Wal-Mart, Sam's, Target, Costco, etc. are successful). They aren't always the cheapest, but they are generally a good value. Southwest's website is so popular because it's easy to understand their fares AND because people feel that they're getting a competitive price.