Want the Lowest Airfare? You May Need to Work Harder

Ed Perkins, June 08, 2015
Fares from Washington DC:

    Even the cleverest airfare search system can't find the lowest airfare if important lines won't release their fares and schedules. But that's what's happening—and it's the latest development in the giant lines' ongoing drive to put a stranglehold on the U.S. airline market. If the big airlines have their way, you'll have to go back to checking many sources, not just one, to find the price of any trip.

    Last week, the Travel Technology Association released a report showing that comparative airfare displays by big online travel agencies (OTA) such as Expedia and Priceline, and metasearch engines such as TripAdvisor and Google Flights, have resulted in substantial consumer benefits. And the report warns consumers of substantial future harm resulting from the actions of some airlines to restrict access to their fare and schedule information. It goes on to conclude that, in the report's words, the result "is likely to lead to higher average airfares, increase consumers' search costs, make entry into city-pair routes by smaller airlines more difficult, reduce transparency, and strengthen the market power of the major airlines."

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    The report starts by calculating that consumers would lose about $6 billion a year if they were denied access to comprehensive and rapid fare comparisons by third-party OTAs and metasearch systems. It goes on to demonstrate that current domestic airline markets are highly concentrated, and that concentration has led to higher fares. The researchers cite the many consumer advantages that big search systems provide, including those that go far beyond simple airfare displays. It also notes the reasons airlines want you to use their own websites rather than comparison sites, even when you first use a metasearch site that links you through to the airline's own site to buy.

    Impetus for the report came, at least in part, by the Delta's recent action to remove its fares and schedules from more than 20 important search systems, including Fly.com, Hipmunk, OneTravel, Farecompare, CheapOair, Routehappy, and TripAdvisor. Where Delta leads, there's a good chance others will follow.

    The report clearly has an advocacy element. The Travel Technology Association's main backers are big players in Internet travel, including Expedia, HomeAway, Priceline, and TripAdvisor. But the authors, Dr. Fiona Scott Morton of the Yale School of Management and R. Craig Romane and Spencer Graf of Charles River Associates, are analytical heavyweights, and their economic treatment of monopoly pricing and the consumer benefits of price comparison is convincing.

    All in all, the report does an excellent job of explaining how the airline distribution system works, the extent to which four giant lines, with their 80 percent share of domestic air travel, have concentrated the market to an unprecedented degree; and the potential harm to consumers as a result. But it falls short in one critical area. It lacks the punch line: What should be done about this situation?

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    Charles Leocha, chairman of Travelers United, has one answer. He has called on the Department of Transportation to mandate that all fares and fees charged by every airline be made available to the public. Airlines should certainly retain control over where they sell their flights, but the public has a right to know the full cost of travel by air, including airfares and fees, for any flight. If the FDA can require major food manufacturers to label products with grams of carbs, fat, calories, cholesterol, sodium and more, says Leocha, DOT certainly has the power to get airlines to release their full airfares and fees. Consumers should not have to play hide-and-seek with the carriers to comparison shop the prices of a trip.

    As a consumer, you'll have a tougher time. If Delta prevails—and other lines copy—instead of relying on the usual side-by-side price comparisons, you will now have to check each line, separately. Southwest has always refused to go along with comparison systems. So, as a result, you're faced with a double whammy: Airfares will keep going up as competition decreases, and you'll have to work harder to find the best deals. Hey, nobody said life was fair.

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    Read the original story: Want the Lowest Airfare? Work Harder by Ed Perkins, who is a regular contributor to SmarterTravel.

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