Monday, 28 February 2011

Would you like a side order of speculation with your airline ticket?

Today Chris Elliott reports on a bizarre proposal by Allegiant Air to sell tickets at prices that would be subject to change even after you buy them, on the basis of changes in oil prices between the date of ticketing and the date of travel.

Allegiant is a low-fare airline that specalizes in secondary routes underserved or unserved at all by larger airlines. (Its routes from the San Francisco Bay Area, for example, include flights from Oakland to Bellingham, WA; Oakland to Eugene, OR; and from Stockton, Fresno, and Monterey to Las Vegas.) In a recent regulatory filing with the U.S. Department of Transportation, Allegiant claimed that existing DOT rules would allow it to sell such variable-price tickets.

It might make sense for airlines, but not for travellers:

"It's easy to understand how airlines can rationalize this," says Edward Hasbrouck, a consumer advocate and author of The Practical Nomad: How to Travel Around the World. "They want more money, and they want to shift the risk of fuel price increases to passengers."

But air travelers want clear, simple, fixed prices -- not more uncertainty about the cost of a trip. "If people want to speculate on future oil prices, there are commodities markets for that. If airlines want to lock in future fuel prices, they too can go to the markets and pay to buy futures or hedge against price increases," he adds.

DOT should shoot this bad idea out of the sky.

Link | Posted by Edward on Monday, 28 February 2011, 15:17 ( 3:17 PM) | TrackBack (0)
Comments

I agree. So what happens if the oil prices, etc. decrease. Will they give you refund? Doubt it.

Posted by: Shevonne, 2 March 2011, 08:56 ( 8:56 AM)

While I agree that this is a bad idea and I personally wouldn't buy such a ticket, perhaps other passengers might. As long as there's transparency, I don't see the harm in allowing more choices in the market.

Posted by: Bob, 24 March 2011, 21:43 ( 9:43 PM)

I can only see this working if something else is offered alongside this to compensate for the additional risk. It seems ridiculous that this airline thinks it can pass along the risk to consumers without offering something else to even it out? How else would this work... consumers won't accept the change if it puts them at a disadvantage from previous pricing policies.

Posted by: Jessica, 27 March 2011, 09:51 ( 9:51 AM)
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