In a shocking reversal of common sense, sorry, revelation of the obvious, a recent survey found that 94% of travelers using online travel sites want all airline fee information freely available to them in the online booking process.
The survey, carried out by Harris Interactive on behalf of the Interactive Travel Services Association, asked 2,310 adults aged 18 and older about their recent summer 2012 travel experiences.
Among those in the cohort that used an online travel company to book their travel agreed to the statement, “All airline fee information should be available to travel agents and online travel websites.”
In addition, 95% of online travel purchasers agreed that “it would be easier to comparison shop if all airline fee information was available on online travel websites and to travel agents.”
David Kelly, the executive director of Open Allies for Airfare Transparency, points out that consumer expectations should drive government action.
“These results should be a wake-up call for the Department of Transportation. Consumers do not like to be held captive by the airline industry, whether stuck on the runway or shopping for a summer vacation. The survey data demonstrates that consumers expect airlines to share fees in a transparent and purchasable format in all the channels where they sell their fares, and if the airlines will not do this on their own, then the Department of Transportation should exercise its authority to require it.”
The desire to see, compare and purchase the full, actual cost of an airline ticket is massive, and the DOT has been taking steps to require airlines and travel agents to fully disclose all fees during, rather than at the end of, the booking process.
However, the DOT stalled on requiring airlines to distribute all fees to all GDSs, meaning that the OTA system that millions use to book travel does not fully disclose all fees for a particular flight. The only fees required for display on OTAs are any related baggage fees, meaning that consumers looking to comparison shop according to change fees, preferred seating fees, or any other fees are not currently able to do so. There is no way to see the total cost of a trip – especially if you are a group traveling together who wants to sit together - in the current system.
Consumers booking on OTAs are not getting a complete picture of their trip costs, with a final fare including flight, taxes and fees unavailable for comparison. Most fees do not even become visible until after the ticket has been purchased and the consumer has checked the reservation on the ticketed airline’s website, leading to an aggravating feeling of being taken advantage of.
With such opacity frustrating consumers and challenging their ability to accurately budget for travel, the survey found that 31% of respondents agreed that they “paid for fees that were not fully disclosed when I initially purchased my ticket for my flight this summer.”
With nearly 17.5 million OTA bookings, that means that a whopping 5,420,000 customers had some sort of unexpected fee – a massive consumer fairness issue that is without precedent. Where else do 5 million+ customers get slapped with unexpected fees after purchasing a product online?
But most importantly, the survey demonstrated that a majority – 57% – were ready and willing to purchase additional services if they were available for purchase in-line on the OTA websites. This is a gigantic market opportunity to sell extra leg room, early boarding, checked bags, and all the other ancillary services airlines profit from. By taking these products off the table, airlines are losing the chance to sell to consumers already in a buying mindset – when they get closer to their trip, they may be much less willing to purchase ancillary services.
The survey also offered a free-form write in, which elicited some completely rational responses from consumers seeking full fee transparency in the OTA booking process. Reasons consumers want to know their fee-inclusive fares:
• To know the total cost up front
• No unexpected expenses
• Dislike hidden fees/charges
• Ability to compare airlines/fees
• So consumers can know exactly what they’re paying for
• To get the best deal
• To make informed decisions
Seamlessly displaying all ancillary fees is not a technological problem. So why don’t airlines and OTAs just set aside their differences and work it out themselves without the burden of government regulation? They would be creating a better, more transparent product that would deliver more satisfied customers. Statistics like the ones in this survey just highlight the fact that regulation will come – it’s just a matter of when.
NB: Covert money grab from Shutterstock
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About Nick Vivion
This is such a popular talking point, but I think it’s worth looking at what it really means. First, let’s call a duck a duck. The GDSs want the DOT to require the airlines to give them all of their fees so they can maintain their monopoly power over the airlines. Let’s not forget the GDSs are under investigation by the DOJ. Also, travel agents receive an awful lot of monetary “incentives” from GDSs, so of course they want the GDSs to stay powerful. Gotta feed the monkey. Plain and simple, it has nothing to do with consumer protection.
Second, let’s look at from a technology standpoint. The GDSs cannot support personalized shopping, meaning if I’m a frequent flyer on an airline, I’d get a bag and seat reservation at no charge on my preferred airline, but not other airlines. How would this work? They say they can do this today, but they ain’t. If they can, why not do it? Same goes for seats. Seats are not all the same, nor are they the same price on all flights. If you can’t dynamically price the seat or anything else, then it’s not really helping anybody.
Third, what if a checked bag charge is bought at the time of booking, but by the time the traveler gets to the airport, he or she has ending up not bringing a bag? Now they need a refund. That’ll really speed things up at the airport.
Finally, I think it’s time for a little personal responsibility. There are plenty of sites, including some OTA ones, that list service fees for airlines. Leisure travelers spend something like 2+ hours shopping for flights. Take another 10 minutes and look up the service fees then do some old-fashioned arithmetic. $300 + $25 = $325. Bam. Done. And if you really don’t want to go through all that work, fly Southwest.
***I work for a travel technology company, but these opinions are my own.
Ben
All valid points. Most frequent fliers most likely do all their bookings on the airline’s own site (especially as you can get a points bonus by doing so with their branded card), bringing added value to the airline from the loyal traveler.
So, as you suggest, is the average leisure traveller sophisticated enough to understand the various fees involved in a particular flight, and does the responsibility lie with them to determine the various fees on their own?
What happens if a consumer is looking at 4 different flights on 4 different airlines? Should they be expected to go to each airline’s site to figure out what their fees are, write them down, and then go back to calculate the full fare to be paid on each flight? And should consumers just accept this as “the way it is?”
I personally think that amounts to a hidden tax, and don’t think it’s too much to ask that the consumer be presented with the real cost of the flight, no matter what platform they are on. Consumers don’t care about the technology, or the politics, or the entrenched business interests. They care about the lowest price delivering the best value for their money. From the consumer perspective, transparency as far as fees is a valid, straightforward request.
Granted, no one is paying the same for each seat anyhow, so some scoff at the idea of “price transparency.” Nonetheless, fees are one of the most complicated areas of air travel for many, and many consumers are making choices without full and complete information. This going to get regulated somehow, it just remains to be seen who’s going to make the rules.
And if the airlines make more money via ancillary to offset the loss in direct bookings to OTAs, is there really a reason for airlines to oppose offering full fee transparency in the GDS?
N
Nick,
What I failed to mention in my original comment is this: I definitely agree that consumers should be able to understand the price of travel whether they are checking a bag or not, or want to reserve a seat with extra legroom or not. But, what the industry doesn’t have to do is continue to use an outdated model that commoditizes airlines and does not allow them to sell their products the way they want to. It is, after all, their product.
The good news is there are different alternate technologies available to get ancillary service fee information to consumers. I’m just saying airlines shouldn’t be forced to do it in a way that they don’t want to and in a way that is not best for their business strategy.
A former Tnoozer, Dennis Schaal, just wrote an article over on Skift that says what I’m trying to say, but just in a much more eloquent way.
I definitely understand where you’re coming from. I also know that this is going to be regulated in some form soon, so it’s up to the airlines to try to come to a compromise with the OTAs so they can at least negotiate some of the terms. Once the government gets involved, it gets much messier – so the time is now to at least maintain some autonomy and control.
Airlines are not going to be able to sell their products the way they want to – if that were the case, they would cut out the middlemen in favor of direct bookings (as some have tried). Many consumers aren’t interested going to each airline’s site to search for fares, so these fees need to get to the consumer wherever they prefer to book.
I think we’re totally on the same page here – consumers should get access to all fee information and airlines should have a reasonable amount of control over how their product is displayed and purchased across channels.
N
Consumers will answer ‘yes’ to any question posed that asks if they want something that will make their shopping life easier, so I take anything published by ITSA with lots of grains of salt.
But Ben, if you work for a travel technology company then you would know that the GDS can easily support personalized shopping – it’s not rocket science. EDIFACT as a distribution technology, while heavy and expensive, has been the backbone of airline distribution for 40+ years, so the GDS’ understand how to extend the system.
And as you rightly point out, there are lots of other less expensive and lightweight technical solutions available to the GDS’, OTAs and any other party that might be interested in distribution.
So technology isn’t the obstacle – the politics of revenue and power are the obstacles.
The GDS’, understandably, want to ensure that if they build this new functionality with any technology, they will make a return on it. No software company builds out systems without understanding the ROI.
The airlines, understandably, want to push pax to their own sites to keep their distribution costs down, so they have no incentive to get ancillaries onto intermediary sites, as that would totally undermine their own revenue forecasts (and make Wall Street unhappy). The airlines’ argument that “intermediaries don’t have the technology” is a total red herring (no matter what Dennis Schaal at Skift says).
So right now the GDS’ have no financial incentive to build out their existing capabilities because the airlines don’t want them to, even though the airlines largest customers are asking them to make ancillaries available for reporting and negotiation.
Unfortunately for the GDS and other intermediaries, they have not been able to intelligently and articulately voice this argument, and instead are funding these silly advocacy groups to speak for them, often in hysterical tones.
ITSA (or whatever it’s calling itself now) is no better than the Take Travel Forward group on the airline side. Until the airlines and intermediaries stop fighting proxy battles through these heavily biased sham organizations and through the courts, all travelers, leisure and corporate, will continue to suffer.
That is the real story.