Wednesday, 26 January 2011

Airline ticket price transparency

If I weren't busy writing a book, I'd have much more to say about the complex disputes between airlines (especially American Airlines), computerized reservation systems (including Sabre, which ironically was founded by and used to be a division of American Airlines before being spun off as a now-competing company), and online travel agencies (including Travelocity.com, which is is a division of Sabre).

As a result of this spat, some online travel agencies weren't selling American Airlines (AA) tickets for the last couple of weeks. And the current industry "truce" is only temporary.

The reasons are fascinating and too complex for me to explain in full here. But my bottom-line opinion was summed up in this quote in the Washington Post (also syndicated in the Kansas City Star and elsewhere):

This is a dispute over which company or travel industry sector controls price information," says Edward Hasbrouck, a consumer advocate. "But consumers' interest is in price transparency, which nobody in the industry really wants."

In other words, airlines and travel agencies are squabbling over how they show you ticket prices. Agencies want to display it their way; airlines want to show you the prices the way they want. Neither necessarily has your interests in mind, in Hasbrouck's view.

For now, I'll mostly leave it to my friends Chris Elliott in the Post and Charlie Leocha of the Consumer Travel Alliance to explain what's going on and what would be best for consumers.

But I can't resist a few notes about both this dispute within the travel industry and the closely related dispute over Google's proposed acquisition of ITA Software. The latter would be a bad thing, I think, but more for reasons related to transparency than those of competition.

Mostly, Google's competitors are worried about whether Google would be able to monopolize information about travellers, collected through their use of query systems enabled by ITA Software. But travellers don't want to be "owned" or to have their queries logged by any travel company. What travellers want is open access to prices.

There's plenty of hypocrisy in the claims being made by all the industry parties to this dispute -- with travellers the losers on all counts:

At the PhoCusWright conference in 2008, as I reported at the time, Sabre demonstrated the ability to provide integrated displays of prices including fees. As I reported from the PhoCusWright conference the next year, and as is still true today, Sabre still hasn't deployed that capability yet because AA (and others) won't give Sabre the data in any usably standardized form.

AA should be careful, lest they reap what they sow. If they argue that "ancillary fees" constitute "fares" for purposes of their contracts with CRS's like Sabre, they might also find governments treating them as fares for purposes of requirements for tariff filing and, in international markets where fare approval is required, government approval of fares.

On its part, Sabre is complaining that AA isn't giving Sabre equal access to its fares (including fees). But AA is allowed to do that only because of the deregulation in the USA of the computerized reservation systems for which Sabre lobbied so hard. The GDS regulations used to require equal participation and access. Now Sabre is only getting what they asked for with deregulation. Question for Sabre: Do you really want GDS re-regulation in the USA? I didn't think so.

Interestingly, CRS regulations still require equal participation and access in Canada and the European Union. One of the more bizarre, unnoticed, but significant aspects of the current situation (CRS regulation and mandatory unbiased displays in Canada and the the EU but complete CRS deregulation in the USA) is that the only way for a consumer or travel agency to get a comprehensive unbiased price comparison, even for domestic flights within the USA, is to go through a travel agency in Canada or the EU!

Sabre, AA, Orbitz, and others are protesting (and rightly so) Google's attempted purchase of ITA Software as an attempt to monopolize ticket price information. But none of them want to make that information fully accessible to travellers. Some but not all of their Web sites let you lookup the rules applicable to a particular booked itinerary, but none of them lets you do what real travel agents do: search all the rules and published fares regardless of availability.

This is why, as I said to Chris Elliott in the Post, this is a dispute over which company or travel industry sector controls price information. But consumers' interest is in price transparency, which nobody in the industry really wants.

The simple way to enforce transparency and protect consumers is to enforce the existing law that requires tickets to be sold according to a published tariff available at each place tickets are sold -- which for online ticket sales means making the full tariff available online. I made this point in the comments I filed with the USA Department of Transportation in their latest, still ongoing, rulemaking on enhancing airline consumer protections. It remains to be seen if the DOT will act to enforce the law.

At the PhoCusWright conference in November 2010, I asked a panel of executives from airlines including AA, "What do you really want? Do you want to repeal the requirement for tickets to be sold in accordance with a published tariff? Do you want to enforce the tariff requirement? Or do you really prefer the current system, under which the tariff and tariff publication requirement is on the books but universally ignored?"

None of them even tried to answer the question. They laughed at me, then moved on. But the issue won't go away. The current disputes provide further evidence why consumers need the full airline ticket price transparency that can best be ensured through enforcement of existing laws requiring them to publish all their fares and adhere to that published tariff.

Link | Posted by Edward on Wednesday, 26 January 2011, 16:57 ( 4:57 PM) | TrackBack (0)
Comments

Hello,

I recently compiled a list of the Top 100 Travel Blogs, and I wanted to let you know that you made the list!

Posted by: Maria Magher, 31 January 2011, 19:24 ( 7:24 PM)

I was reading your Blog and have a question. American Airlines is negotiating with a European Aircraft Manufacturer to purchase a bunch of Aircraft. Since Airbus is in Europe and AA is buying foreign should we not protest and request the US Government stop subsidizing AA and tell them to get their subsidies from Europe I say 'cut em off now'. As a taxpayer why should I support a company who is buying foreign aircraft.

Posted by: Jim Allen, 26 July 2011, 11:14 (11:14 AM)
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