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Wading Through 'Wacko' Airline Prices or the Perils of Not Reading Fine Print

November 22, 1987|Gregg Easterbrook | Gregg Easterbrook is a contributing editor to Newsweek

One useful effect of funneling the discount flyer into off-peak periods is that it reduces rush-hour strain on airport facilities, currently the biggest bottleneck in the system.

Where wacko pricing becomes totally exasperating is when flights aren't selling as projected and airlines post surprise discounts at the last minute, hoping travel agents will funnel passengers onto an undersold plane. This may result in a discount traveler who has studiously abided by many paragraphs of rules--paying for his ticket with Treasury bonds in the presence of a notary public--getting the same deal as someone who waltzed up 10 minutes before departure. Such "blue light specials" have a component of business logic but cannot help making consumers feel ripped off.

The dawn of deregulated fares has taught an interesting lesson, namely that air travelers catch on to kinks in the system quickly. In the kind of theoretical markets economists postulate, consumers exploit corporations as much as vice versa. Real markets rarely clear so elegantly, partly because consumers often lack enough information to figure out who has the best terms. But in the airline business, information flows at the speed of light, or at least of newspaper advertising. Few bargains go unnoticed.

Last winter American Airlines was puzzled when some buyers of a particular class of SuperSaver were using just one segment of their tickets and throwing the other away. It turned out that restrictions had been written in such a way that flyers came out ahead by buying two round trips and using half of each.

I won't attempt to explain the details; you'll have to see your travel agent, county zoning commission, or anyone who understands the infield fly rule. The telling point is that thousands of consumers caught on to the quirk before the airline did. Perhaps a market counterbalance of the new system may be that when air travelers are stuck twiddling their thumbs at the gate, they have plenty of time to read the fine print and plot revenge.

The cultural transformation brought on by market-set fares is a thing to behold. Prior to deregulation, air travel was a preserve of the affluent and the business elite. Now it's the dominion of the common man. In 1978, some 55% of airline trips were billed to an expense account. Today the majority are personal. And the new distribution applies to a much larger base. In 1978, 274 million airline trips were taken in the United States; this year the figure is expected to hit 460 million.

Congress, author of airline deregulation and nucleus of American populism, has lately grown cranky over the very democratization it hatched. Re-regulation threats are becoming a standard component of political boilerplate.

Congressional grumpiness originates in the passenger cabin; congressmen fly constantly. Most go home nearly every weekend at public expense and they often jet to resort locations for speeches to trade associations, enjoying free vacations and collecting honorariums. Congressmen may love the people, but they don't want to wait behind people at ticket counters.

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