Agents Call for Transparent Airline Merchandise Pricing
by Michael Billig |
Business Travel Coalition (BTC) chairman Kevin Mitchell set out to gauge the temperament of the corporate travel marketplace regarding the proliferation of ancillary airline fees and found that, by and large, corporate travel managers and travel-management agents alike don’t trust the airlines to “fix the problem” without input from the industry ranks and/or mandated direction from Washington.
Invited to testify on the matter before a U.S. House of Representatives Committee on Transportation and Infrastructure Subcommittee on Aviation, Mitchell said, “BTC [as well as the industry in general] is not against unbundling as a matter of principle, but rather, is opposed to the absence of disclosure of all fees and charges such that consumers [including travel agents and travel managers] cannot fully benefit from comparative shopping.”
Referring to findings gleaned from a recently conducted survey of 188 business-travel industry professionals concerning airline fees and unbundling, he maintained the top-line results underscore deep concerns and the need for government oversight. In particular, the survey revealed:
* 100% of corporate travel managers indicated that unbundling and these extra fees have caused serious problems for their managed travel programs.
* 86% of travel managers believe that airlines, absent government regulation. will not make fair, adequate and readily accessible disclosure of their extra fees and charges so that travel managers and/or their travel-management companies (TMCs) can do comparison shopping of the all-in prices for air travel across carriers.
* 95% of travel managers support the proposal that the U.S. Department of Transportation (DOT) require airlines to make ancillary-fee data available and easily accessible to the travel agency channel through any GDS in which that airline has agreed to participate.
* 95% of travel managers do not support an airline distribution model wherein access to airfare and ancillary services content is available only on airlines’ Web sites, or through direct connections to multiple airlines’ inventory systems.
As for resolving the matter of industry trust vis-à-vis the airline sector’s willingness to “do the right thing,” Mitchell pointed out: “These [survey-participating] industry experts lived through 10 years of airline stonewalling and broken promises and finally realized the airlines were never going to take extended tarmac delays seriously until made to do so. Travel managers and travel agency executives do not want to wait 10 years- or even one more year- to see if the airlines will properly disclose their ancillary fees in all channels in which they sell their products, and thus already make their published, but now incomplete, fares available.”
Most assuredly, such incomplete airfare information works against the effective and efficient travel-management efforts of corporate managers and affiliated agents alike. As underscored by Mary Jo Craft, global program director – Travel for Morrisville, NC-based Lenovo, this lack of full disclosure “makes it more difficult to figure out the total cost of getting the traveler from Point A to Point B. It’s just that much harder to calculate the actual cost [of the trip].”
Adding to this assessment was New York-based Pro Travel senior vice president/Airline Sales and Marketing Peter Vlitas. While viewing the problem of ancillary-fee proliferation as neither insurmountable nor especially annoying, he did size up the situation as it exists today as “one with which we have to learn to live and work.”
In his estimation, the airlines were “wrong when they decided to pull apart the very fabric of the air ticket [in their quest] for increased revenue and profitability. But we [agents] have to understand this is part of a new reality; a reality in which we still have to provide service to our clients as best we can. So we really have no choice but to offer ticketing services in this manner to our corporate clients.”
As Vlitas suggested, the current ancillary-fee scenario similarly raises a host of other concerns, including: how best to go about presenting it; how to compensate agents for the extra work involved; and examining whether agents really have any other choice but to comply with the airlines’ offerings as laid out. On this note, he added, “I fully expect the airlines to recognize the growing worth of the agency community (regarding this extra service provided and effort expended) and compensate us accordingly in the very near future.”
Meanwhile, hearkening back to the likelihood as well as the desirability of governmental involvement — in particular any action spurred by U.S. DOT’s Notice of Proposed Rulemaking (NPRM) — Vlitas asked: “Are we [the agency community as well as airline passengers] any better off since the advent of deregulation? Despite all the expectations and promises made [at that time], it’s obvious something went terribly wrong.”
Voicing support of Mitchell’s [and the industry’s call] for Congressional involvement and oversight in the ancillary-fee arena, the Pro Travel executive offered some additional food-for-thought. “Congress would do well to consider all the tax monies being lost [in line with the prevalence of these ancillary fees],” Vlitas said. “Don’t they [i.e. Congressional members] realize the U.S. is losing out on a sizable amount of sorely needed revenue?
“Moreover,” he added, “if these fees are ultimately taxed, then I can’t see why the airlines wouldn’t fold these charges back into the published price of airline tickets.”
However, Mitchell’s testimony pointed out that such a move would not allow airlines to market via their most basic, stripped-down fare levels, and thus would offer no inducement to post ticket prices as Vlitas suggested.
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Chiming in with her corporate travel manager’s perspective [although heavily influenced by previous industry experience within both the airline as well as agency ranks] was Stacy Collins, director of Enterprise Travel for The Delta Companies in Dallas, TX. “The reality we face today,” she said, “demands that we find ways to manage these fees.”
Finally, she also agreed the airlines would probably need to be forced to address this ancillary-fee conundrum. “I definitely see the need for some pressures to be brought to bear to get the carriers to effect any meaningful change [in this less-than-transparent scenario].”
Accordingly, in line with these sentiments as well as those contributed during the course of his industry survey, Mitchell summed up his presentation in the Nation’s Capital by stating unequivocally: “Congress can make a difference!”
As he explained: “The single-most important step this committee can take is to urge the DOT, through its NPRM, that in addition to requiring airlines to make add-on fee data available and easily accessible on their websites, they should be required to make that same fee data available to the travel agency channel through any GDS in which that airline has agreed to participate.
“Congress could also provide this relief in the Federal Aviation Administration (FAA) Reauthorization Act through Senator Menendez’s (D-NJ) sensible disclosure proposal,” Mitchell concluded.
See related story: BTC’s Kevin Mitchell was far from alone when making his case before Congress; in addition to pushing for transparency, the National Business Travel Association (NBTA), in its testimony, offered to spearhead a standards task force.
