Ed Perkins on Travel
9:30 AM EDT, September 30, 2013
The upcoming Ides of March is an appropriate time to look for bad news, and you don't have to look very far. But beware: Although some popular travel worries are red herrings, others are on target.
Popular Worry: The standard for distributing airfare information recently adopted by the International Air Transport Association -- to which most of the world's big airlines belong -- will lead to massive invasions of privacy.
Real Worry: That's a red herring: Airlines and online agencies already have most of that information. Instead, the real worry is that airlines, which want you to buy through their own websites instead of third-party agencies, will use your information to "tailor" fare displays specifically for you. That could lead to three real problems:
-- Airlines could offer discounts and bundled deals you don't see unless you provide personal details.
-- Alternatively, airlines could quote higher fares to you if their algorithms say you'll pay more.
-- Independent third-party agencies and information sites could no longer be able to display airfares from different lines on an apples-to-apples basis.
Obviously, these outcomes would seriously damage consumer interests. Moreover, I'm not sure that any consumer regulations would prevent such a development.
Popular Worry: Southwest will start charging for checked bags and initiate stiff ticket exchange fees.
Real worry: Another red herring -- maybe. The real worry is that Southwest will morph into a conventional giant line. Once the innovative maverick, the worst-case scenario is that Southwest will -- like the pigs in "Animal Farm" -- become indistinguishable from the "oppressors" it once challenged.
The popular worry arose following an announcement by Southwest's CFO that the line would tighten restrictions on its lowest priced fares later this year. Now, in true airline-ese, baggage and exchange charges aren't "restrictions," they're "fees." My worry is that Southwest will do as the CFO said and implement real restrictions.
The most onerous potential restriction is a return to the pre-Southwest standard of requiring round-trip purchase and a Saturday-night stay on the cheapest tickets. That was standard for the legacy lines before Southwest jumped into the market with cheap one-way fares. The idea, of course, was to make cheap tickets unattractive to business travelers -- who like to get home on weekends -- but retain their allure to vacationing leisure travelers. Sadly, that restriction was a pretty blunt instrument, and it made travel more difficult and/or expensive for lots of consumers.
So far, the no-fee policies have apparently been very good for Southwest's market position. Of course, maybe that CFO really meant fees.
Popular Worry: The merger of American Airlines and US Airways will lead to increased fares.
Real Worry: It will. Merger apologists say that reduced competition is not a problem because the two lines overlap on only a dozen or so routes. Sadly, that's an excuse, not a reason. They overlap on hundreds of anywhere-to-anywhere one-stop routes connecting over their various hubs.
But the problem goes beyond overlap. I should probably say "when," not "if," the merger is completed, a full 85 percent of the domestic market will be controlled by just four giant lines, and that's far too concentrated for the public good:
-- Each of the remaining four giants will join the unhappy company of giant banks that are too big to fail. That permits them great arrogance in the way they deal with customers.
-- Just think of the chaos if any one of them should go out on strike for more than a day or two.
-- Fewer viable competitors mean that the remaining giants can more easily raise fares and resist fare cuts.
No other line is even close to being big enough to challenge the four-way oligopoly.
Popular Worry: Frequent Flyer Programs Will Get Worse.
Real Worry: Frequent Flyer Programs Will Get Worse. It's already started: Look for reduced mileage earnings on cheap tickets and increased mileage requirements for award tickets. Even at higher mileage values, you'll probably face tougher odds than ever in scoring a "free" seat at the lowest award levels. Those miles you have won't get any better: "Use 'em while you can."
(Send e-mail to Ed Perkins at eperkins(at)mind.net. Perkins' new book for small business and independent professionals, "Business Travel When It's Your Money," is now available through http://www.mybusinesstravel.com or http://www.amazon.com)
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