DECEPTIVE AIRLINE PRICING is coming

[Tigger_Magic]

Comments from four legacy airlines about this proposed change as presented in today's USA Today. I've emphasized some pertinent points in bold.

American: Fare-setting by the federal government ended long ago under the Airline Deregulation Act. The department's price advertising rule ... should similarly be terminated in favor of the competitive market. Airlines should be treated the same as other industries with respect to advertising, without a federal rule that applies only to air transportation.

United: United advertises in one of the most open, transparent and non-deceptive manners, and we will continue to maintain this high standard. We strongly support the Transportation Department's vigorous enforcement of fair advertising standards. We are in favor of ad hoc enforcement that will protect the consumer's right to know what it costs to fly without the need for a rigid set of antiquated, fill-in-the-blank advertising rules that cannot be adapted to changes in technology like Internet sales.

Delta: The department's current rule and enforcement policy ... was developed in an era when access to information concerning air carrier fares was much more limited than it is today. Detailed prescriptive regulation of carrier fare advertising is no longer necessary or appropriate when consumers can quickly and easily obtain direct access to and compare carriers' fares through a wide array of sources, including the Internet. ...The department's general enforcement powers ... are sufficient to police any abuse.

Continental: Continental supports amending (federal advertising rules) to require simply that the total price of air transportation be disclosed before the consumer makes the purchase. This would permit sellers ... an appropriate amount of flexibility in developing and implementing price advertisements, while at the same time informing the consumer of the actual price of air transportation received by the carriers.

To me what Continental said is all this rule does. I don't see any deception going on. But there is a lot of whining about trying to protect the consumer. If the customer can't figure out what something is going to cost, they probably shouldn't be making the purchase in the first place.

 

[k&a&c'smom]

I rarely post here anymore, but I had to respond. I'm really shocked at the amount of posts defending a company's right to fool the consumer! Would everyone supporting this change be OK if Best Buy and Circuit City both advertised the same TV for, say $2,000 - but when you get in the check-out line of Best Buy, the clerk says "Ok, sir, your total comes to $3,000, will that be cash or check?"

I can't see any difference between this scenario and what the airlines are advocating. Allowing a company to advertise a low price, then tell you at purchase that, in reality, it is a much higher price is bait-and-switch, I don't care how much you try to explain it away with "others do it" and "that's advertising, baby!"

 

[Tigger_Magic]

I rarely post here anymore, but I had to respond. I'm really shocked at the amount of posts defending a company's right to fool the consumer! Would everyone supporting this change be OK if Best Buy and Circuit City both advertised the same TV for, say $2,000 - but when you get in the check-out line of Best Buy, the clerk says "Ok, sir, your total comes to $3,000, will that be cash or check?"

I can't see any difference between this scenario and what the airlines are advocating. Allowing a company to advertise a low price, then tell you at purchase that, in reality, it is a much higher price is bait-and-switch, I don't care how much you try to explain it away with "others do it" and "that's advertising, baby!"

 

[Pedler]

I rarely post here anymore, but I had to respond. I'm really shocked at the amount of posts defending a company's right to fool the consumer! Would everyone supporting this change be OK if Best Buy and Circuit City both advertised the same TV for, say $2,000 - but when you get in the check-out line of Best Buy, the clerk says "Ok, sir, your total comes to $3,000, will that be cash or check?"

I can't see any difference between this scenario and what the airlines are advocating. Allowing a company to advertise a low price, then tell you at purchase that, in reality, it is a much higher price is bait-and-switch, I don't care how much you try to explain it away with "others do it" and "that's advertising, baby!"

Actually the sad thing is that Best Buy does something similar. They will advertise some software at a low price or for free. Of course that low price is after mail in rebates. OK, not a problem you just get your money back with the rebate. But wait, many times on software some of the rebates are only good if you already own a previous version of the software and then only if it was a purchased copy not a bundle with a computer. I was at Best Buy the day after thanksgiving and an employee was going around with a basket asking people if they wanted a free version of Pinnacle Studio. That was free after rebates only to owners of a previous version. I told the few people near me that took the software what the deal was and they put it back. Still I wonder how some people felt when they got home and installed the software, no returns after opening it, and then tried to fill out the rebate form only to find that they couldn't do it because they didn't have a previous copy.

As much as I don't like it I have come to accept that deceptive advertising of prices is becomming much more common. As the saying goes "let the buyer beware".

 

[salmoneous]

What the legacy carriers seem to want - and what Tigger seem to think is perfectly OK - is the right to put whatever price they want in their ads, billboards, website etc. That price doesn't have to have anything to do whatsoever with the price they will actually charge. So long as at the last second, they tell you the actual price, they've done nothing wrong. (I think the TV example is a good one - it's exactly the same as Best Buy being able to advertise a $3000 TV for $2000, so long as the cashier tells you it's $3000 before ringing you up.)

If this is how the legacy carries want to treat their customers, then I will shed no tear as they go out of business and are replaced by airlines that believe in being honest with their customers.

 

[Lewisc]

To me what Continental said is all this rule does. I don't see any deception going on. But there is a lot of whining about trying to protect the consumer. If the customer can't figure out what something is going to cost, they probably shouldn't be making the purchase in the first place.

If a supermarket scans an item for a higher price than the shelf/item is priced at the store honors the lower price and in some cases give you the item for free. In some areas it's store policy and in other areas it's by law.

The purpose of the proposed change is to allow airline to promote a phony price. A price that won't be honored when the customer goes to book the flight. The only purpose of this change is to deceive the customer into thinking the price is lower and to deceive them into thinking the surcharges are uniform between carriers.

 

[Tigger_Magic]

What the legacy carriers seem to want - and what Tigger seem to think is perfectly OK - is the right to put whatever price they want in their ads, billboards, website etc. That price doesn't have to have anything to do whatsoever with the price they will actually charge. So long as at the last second, they tell you the actual price, they've done nothing wrong. (I think the TV example is a good one - it's exactly the same as Best Buy being able to advertise a $3000 TV for $2000, so long as the cashier tells you it's $3000 before ringing you up.)

If this is how the legacy carries want to treat their customers, then I will shed no tear as they go out of business and are replaced by airlines that believe in being honest with their customers.

I believe this board should be renamed "The Chicken Little Transportation Board." Any perceived threat to the precious status quo (or even the hint of trouble with any airline) sends this board into a state of panic and frenzy, which feeds on itself (just consider this thread and the Delta threads).

Yes, I see nothing wrong with this rule change as I don't see it making any significant change to what happens today. But then I don't link my destiny so tightly to the status quo that it becomes hopelessly entangled and strangled.

 

[Tigger_Magic]

If a supermarket scans an item for a higher price than the shelf/item is priced at the store honors the lower price and in some cases give you the item for free. In some areas it's store policy and in other areas it's by law.

The purpose of the proposed change is to allow airline to promote a phony price. A price that won't be honored when the customer goes to book the flight. The only purpose of this change is to deceive the customer into thinking the price is lower and to deceive them into thinking the surcharges are uniform between carriers.

The reality is that this will promote more competitive pricing between airlines providing consumers with better pricing choices. You will still know what the final price of your ticket is before you click purchase, which is no different than today. It gives the airlines the same level playing field any other industry enjoys.

It's sad that some people can't handle the concept of a capitalist economic system.

 

[Pedler]

The reality is that this will promote more competitive pricing between airlines providing consumers with better pricing choices. You will still know what the final price of your ticket is before you click purchase, which is no different than today. It gives the airlines the same level playing field any other industry enjoys.

It's sad that some people can't handle the concept of a capitalist economic system.

Actually this goes against one of the basic tenets of a free market economy. Consumers having access to information to easily compare products and pricing is a basic requirement for a free market economy. The proposed change and other accepted practices in retail do not promote competive pricing or better pricing choices. What they do is obscure the actual final price and make it difficult to compare pricing. Note I said difficult but not impossible. Still the goal is to make it harder to comparision shop and be an accurately informed consumer. In essence they are extracting a cost in terms of time to gain the information to properly compare pricing. They would also hope that by showing an initial low price that you can not actually buy at they may have an effect on how less sophisticated consumers do thier research.

The reality is that the legacy carriers don't like that the airline business has moved towards a more competitive market. They don't like a larger number of sellers, (Also a basic tenet of a free market economy), they don't like the loss of control of information, (that you can sit at home and comparision shop), and they don't like the evolution in consumers that value price and reward low cost operators. Obscuring the price of thier product to make it more difficult to comparision shop is one way to counteract the effects of a free market to the detriment of consumers.

 

[Tigger_Magic]

Actually this goes against one of the basic tenets of a free market economy. Consumers having access to information to easily compare products and pricing is a basic requirement for a free market economy. The proposed change and other accepted practices in retail do not promote competive pricing or better pricing choices. What they do is obscure the actual final price and make it difficult to compare pricing. Note I said difficult but not impossible. Still the goal is to make it harder to comparision shop and be an accurately informed consumer. In essence they are extracting a cost in terms of time to gain the information to properly compare pricing. They would also hope that by showing an initial low price that you can not actually buy at they may have an effect on how less sophisticated consumers do thier research.

The reality is that the legacy carriers don't like that the airline business has moved towards a more competitive market. They don't like a larger number of sellers, (Also a basic tenet of a free market economy), they don't like the loss of control of information, (that you can sit at home and comparision shop), and they don't like the evolution in consumers that value price and reward low cost operators. Obscuring the price of thier product to make it more difficult to comparision shop is one way to counteract the effects of a free market to the detriment of consumers.

It is not the role or purpose of the government to protect or coddle "less sophisticated consumers". Like I said before, if you don't know what you are doing, you probably should not be in public making purchases.

The charges of deception or obstruction are allegations with no substance, because no one knows for certain how this would actually work if implemented. However, given the way most market forces operate, it would behoove those carriers who wish to survive to do as some do now and give you the final price upfront.

The general public can be a demanding lot. Carriers realize that they must accommodate some legitimate consumer demands if they are to remain in business. Given those factors, I strongly doubt that any carrier would attempt what some of this thread are overly afraid of lest they end up losing a big chuck of their business (something none can afford to do).

In short, this is much ado about nothing, but par for the course for the "Chicken Little Board."

 

[Pedler]

It is not the role or purpose of the government to protect or coddle "less sophisticated consumers". Like I said before, if you don't know what you are doing, you probably should not be in public making purchases.

Actually one of the accepted purposes of government is to keep the rules fair in the market place. This is why things like predatory pricing are illegal, we have antitrust laws and there are requirments for accuracy in product labeling. The goal is to make companies compete fairly with other companies on thier merits and not by how well they can confuse the consumer.

 

[bicker]

If this is how the legacy carries want to treat their customers, then I will shed no tear as they go out of business

Yes you will, as you see your tax bill skyrocket to cover the costs the nation will incur, assuming debt liabilities and such. That's not to mention the cost of having so many folks unemployed, and the costs associated with skyrocketing airfares that would come from losing so much capacity in the system.

and are replaced by airlines that believe in being honest with their customers.

That's a pipe-dream. As soon as the new airlines become the legacy airlines, with a legacy airline's debt load and seniority system, they'll act just like the majors are acting now.

 

[Lewisc]

Actually protection against fraud and unfair competion is the role of government in the free market system. It is certainly unfair competition for any business to quote one price for the purpose of motivating a customer to make a purchase and then charge a higher price at checkout.

I have no problem with airlines charging extra for items that are currently free but are optional. Charge for drinks, charge for assigned seats and even charge for checked luggage. A customer can still fly for the price quoted.

It is not the role or purpose of the government to protect or coddle "less sophisticated consumers". Like I said before, if you don't know what you are doing, you probably should not be in public making purchases.

The charges of deception or obstruction are allegations with no substance, because no one knows for certain how this would actually work if implemented. However, given the way most market forces operate, it would behoove those carriers who wish to survive to do as some do now and give you the final price upfront.

The general public can be a demanding lot. Carriers realize that they must accommodate some legitimate consumer demands if they are to remain in business. Given those factors, I strongly doubt that any carrier would attempt what some of this thread are overly afraid of lest they end up losing a big chuck of their business (something none can afford to do).

In short, this is much ado about nothing, but par for the course for the "Chicken Little Board."

 

[Pedler]

.That's a pipe-dream. As soon as the new airlines become the legacy airlines, with a legacy airline's debt load and seniority system, they'll act just like the majors are acting now.

It will be interesting to see how they react but I don't think they will become just like the legacy airlines. Southwest has been around for quite some time now and they show no signs of acting just like the legacy airlines. I think it will all depend upon how the management acts just like any other business.

 

[Lewisc]

I agree pricing will increase. I certainly think some of the very low ($120 R/T from the NE to FL) may vanish. I don't think the LCC carriers will act like the majors.

As an example none of the LCC carriers base their pricing model around charging business travelers huge price premiums via rules such as a Saturday stay or prohibitive one way fares.

Legacy carriers are in a no-win position with first class seating. They need it to attract their business flyers but those same flyers are getting free upgrades are are using a variety of techniques to avoid paying full fares.

Yes you will, as you see your tax bill skyrocket to cover the costs the nation will incur, assuming debt liabilities and such. That's not to mention the cost of having so many folks unemployed, and the costs associated with skyrocketing airfares that would come from losing so much capacity in the system.That's a pipe-dream. As soon as the new airlines become the legacy airlines, with a legacy airline's debt load and seniority system, they'll act just like the majors are acting now.

 

[Tigger_Magic]

Actually one of the accepted purposes of government is to keep the rules fair in the market place. This is why things like predatory pricing are illegal, we have antitrust laws and there are requirments for accuracy in product labeling. The goal is to make companies compete fairly with other companies on thier merits and not by how well they can confuse the consumer.

And no one on this thread has offered a single shred of evidence to show that "predatory pricing", "fraud", "deception", or "deceptive pricing" is or will be practiced or tolerated by the airlines, the consumer or the govt. All I am reading is more "the sky is falling" hysteria over a simple rule change. Change is not necessarily bad, but it is inevitable and it's rarely easy. If this change happens, I feel certain the world will not come to a screeching halt, the airlines will continue to operate as they do now and little if anything will change. But maybe I have more trust in how a free market operates than you do.

 

[Tigger_Magic]

Actually protection against fraud and unfair competion is the role of government in the free market system. It is certainly unfair competition for any business to quote one price for the purpose of motivating a customer to make a purchase and then charge a higher price at checkout.

I have no problem with airlines charging extra for items that are currently free but are optional. Charge for drinks, charge for assigned seats and even charge for checked luggage. A customer can still fly for the price quoted.

Please provide any evidence you have that this change will promote fraud and/or unfair competition. Note that I am not asking for your speculation, but solid evidence that proves this is the intent of any airline.

Short of that, this is simply "the sky is falling" hysteria.

 

[bicker]

Not even Southwest has the kind of seniority burden as the majors yet. The pilots are happy to have jobs, sure, but as they gain more leverage, they'll become a bigger thorn in Southwest's side.

Thank goodness for unions, eh?

 

[Pedler]

And no one on this thread has offered a single shred of evidence to show that "predatory pricing", "fraud", "deception", or "deceptive pricing" is or will be practiced or tolerated by the airlines, the consumer or the govt. All I am reading is more "the sky is falling" hysteria over a simple rule change. Change is not necessarily bad, but it is inevitable and it's rarely easy. If this change happens, I feel certain the world will not come to a screeching halt, the airlines will continue to operate as they do now and little if anything will change. But maybe I have more trust in how a free market operates than you do.

Actually the proposed change as outlined in the articles would allow the airlines to advertise a price that, excluding government mandated fees, you would not be able to purchase the ticket at.

For example if a fare is advertised as $250 from airline A for a flight from NYC to Orlando and airline B advertises the same flight for $225 from the same airport it is assumed that even when government mandated fees are added at checkout that airline B would be less than airline A. In the current situation that is the case so a consumer can do some comparision shopping of advertised prices. In the proposed situation Airline B could have an additional fee of $100 for fuel, $80 for laber and so on. In reality thier fare is signifigantly larger than airline A. So how is this deceptive if they do disclose the fees at the point of purchase? Its deceptive in that there is no way you could purchase the base ticket, excluding government mandated fees, at the advertised price.

Taking this to an absurd extreme Airline B could advertise a price of $99 for the ticket and have $150 in hidden fees. The intent of the $99 advertised price is just to get you to look at them first and not look at airline A. This puts the airline without the hidden fees at a competitive disadvantage.

In general when a business advertises a price of a product you have to be able to go in a purchase the product for that price not including government fees. Even if they only stock one item at that price someone has be able to purchase it at that price otherwise it is considered deceptive advertising.

When the airlines say that they are limited in thier pricing they are not talking about what they can charge but how they can package the price and hidden fees to obscure the true cost of a ticket.

Bringing this back to a free market economny it is not my lack of faith in a free market economy that is the companies lack of faith in thier ability to compete in a free market and thier desire to manipulate the market to thier best advantage at the detriment of the consumers. I am all for capitalism and a free market but I also realize that companies will try to do all that they can to adjust the rules in thier favor. Or as one of my economics professors once said: The only people against monopolies are those that don't have one. Its not the same as a free market but you get the point. The last the these airlines really want is a free market.

This reminds me of the arguments back when food labeling became standardized and companies complained. The only argument they had was that it would be harder to sell their product if they had to provide uniform and accurate information to the consumer. This appears to be what the airlines are saying.

 

[Lewisc]

Not even Southwest has the kind of seniority burden as the majors yet. The pilots are happy to have jobs, sure, but as they gain more leverage, they'll become a bigger thorn in Southwest's side.

Thank goodness for unions, eh?

SW has more productive work rules than the legacy carriers, has some savings from only flying one type of aircraft, avoids some of the most expensive airports, has better aircraft utilization via faster turnaround times and has some savings from not booking against projected schedules. They also don't have a first class section that ties up part of the plane.

I agree the real cheap fares may become history but I still think we'll see fares that informed consumers such as yourself will find reasonable.