We've all seen the advertisements. Airlines announce incredibly low air fares, followed by a disclaimer: "Seats are limited."
Do you ever wonder how many seats qualify for the low fares? Earlier this year in Denver, during a notorious airline fare war shoot-out, the question was asked by none other than the state's attorney general.
The Denver fare wars bordered on ludicrous. At one point, Frontier Airlines lowered its fare between Denver and Colorado Springs to $9. The airline also slashed fares between Denver and Albuquerque to $19 and to Los Angeles the fare was dropped to $39. Of course, the seats at those fares were "limited." Other airlines rushed to match the fares.
The fare war drove travel agents, and airlines, a little crazy. Donald Burr, chairman of People Express, later labeled the war "a spasm of competitive excess."
He was right. "Everyone knows that an airline can't make money at these fares," said one Denver travel agent. "But at these fares everyone also wanted to fly."
Lots of folks in Denver tried to get seats at these fares, only to be told that seats had been sold out.
Decided to Complain
Some travelers complained to the state's attorney general. "We got lots of complaints about the unavailability of advertised fares," said Garth Lucero, Colorado's assistant attorney general. "Even people working here at the state Capitol had difficulty getting those seats."
Lucero decided to check further. State investigators started clipping airline ads. They called the airlines. Sure enough, the seats had been sold out at the low fares.
The next day they bought the daily newspapers as soon as they were printed and immediately called the airlines to make reservations at the low fares. "It was incredible," Lucero said. "The airlines told us the fares were already sold out and the newspapers had been circulated for only an hour. We decided to intervene because it was a matter of significant public interest."
As a result, Attorney General Duane Woodward sent letters to 14 major airlines serving Denver, questioning the appearance of a potential bait-and-switch situation, the possibly deliberate attempt by some airlines to advertise a fare that doesn't exist in order to get passengers to call and make a reservation for a higher fare.
The state wanted to know whether or not these low fares existed and, if so, it wanted the airlines to identify the number of seats available at those fares.
The airlines, some of whom told the attorney general that the fare war had gotten out of hand, still balked at the request to list numbers of seats available at discount fares.
The reason: It's all part of what the airlines call capacity control--their ability to raise or lower the number of discount seats available on each flight on a daily, sometimes an hourly basis, depending upon passenger demand.
"How can we list the number of available discount seats on every flight?" asked Chuck Novak, United Airlines spokesman. "It's an impossibility for us. The numbers change all the time. Besides," he argued, "nobody requires a theater to show how many discount tickets they sold to groups or up in the second balcony."
Indeed, airlines such as United monitor their inventory of seats on a daily, sometimes hourly, basis. They also study advance 14- and 30-day projections of passenger reservations by time of day, day of week and time of year. "As a result," Novak said, "it's no great secret that we have more discount seats on Tuesdays and Wednesdays than we do Fridays at 5 p.m."
"The key for us has always been full disclosure," said Paul Jasinski, chief counsel for Republic Airlines. "You can only offer what you have to sell, and on the buying side, the passenger is only really interested in the one seat he'll occupy.
"We're trying to keep our airplanes full," Jasinski said, "and so we manage our inventory in off-peak periods to fill seats. No one is out to fool anyone on this."
"We've always abided by the law," said Adam Aron, Western Airlines vice president of marketing programs. "But we hope this incident will encourage other airlines to have a responsible attitude toward price advertising.
"Those levels of available cheap seats do change," Aron said, "but the availability levels aren't messaged that often. In setting the number of discount seats per flight, it's likely that we'll set a number in advance and stick to it. Still, we set different levels for the same flight on different days of the week. That's not bait-and-switch. It's good business practice."
Bruce Hicks, Continental Airlines spokesman, agreed. "It's the law of supply and demand," he says. "That's why bathing suits are put on sale in November instead of June. Every industry uses price to stimulate sales in off-periods. If we've got an empty flight on Tuesdays, we're going to try to fill it. We don't often have that problem on Fridays."