While many airlines now offer “unbundled” fares, it is easy for travelers to confuse advertised low prices with cheap plane tickets. But for consumers eager to get the best deal on flights as the summer season approaches, it’s helpful to learn how “trickle pricing” can make plane tickets more expensive.
Indeed, according to travel experts, choosing the cheapest base fare is no longer the best way to get a good deal. Indeed, airlines now regularly charge more money for “extras” such as seat assignments, checked baggagesnacks or wifi.
“No one likes to feel depressed, like the price of a flight is a bait and switch,” Scott Keyes, founder and CEO of travel site Going.com, told CBS MoneyWatch.
Here’s what to consider. At first glance, the upfront price of a flight you find on an online travel site may seem tempting. But after factoring in the cost of selecting your seat, checking bags and other options, the fare can end up being much higher, or even more than an all-inclusive fare.
This model, commonly known as trickle-down pricing, can certainly increase an airline’s revenue, and its proponents say it benefits consumers by allowing them to pay only for the benefits they actually value. For their part, critics say it is more difficult to determine the true cost of flying and to compare prices between airlines.
Keyes dates trickle-down pricing to 2008, when airlines began charging passengers to check a second bag. This allowed full-service carriers to offer a cheaper, no-frills ticket in order to compete with low-cost carriers.
“That lower overall price attracted people, and then they started adding seat selection fees,” Keyes said. “It’s a low-cost airline innovation that the entire industry has copied and full-service airlines have adopted for themselves.”
“It makes things very difficult”
For consumers, however, the problem with unbundled fares is that it becomes harder to compare what different airlines charge for tickets, experts told CBS MoneyWatch.
“It’s very difficult to determine what the all-in price will be,” said Vicki Morwitz, a marketing professor at Columbia Business School who wrote a report on consumer reaction to trickle-down pricing.
Its research shows that consumers tend to book the ticket option that seems cheaper initially, but costs more once add-ons are taken into account. “Consumers make a mistake and spend more money than they need to,” she said.
Jay Sorensen, president of IdeaWorks, a consulting firm that has advised U.S. airlines, agrees that incremental pricing makes comparing airfare prices more complicated. But he still thinks it can benefit consumers by allowing them to pay for the extras they want, while leaving behind the ones that aren’t important to them.
“The result of course is that it is more difficult to compare between different products and airlines,” he said. “Even if this is true, airlines, as for-profit businesses, have no obligation to facilitate comparison with their competitors.”
Sorensen compared the experience of booking a plane ticket today to buying groceries.
“You come in with your shopping cart, and as you go through the aisles, you throw things into your shopping cart,” he said. “You purchase a base fare and, as you go through the booking process, you add items to the cart, such as a checked bag, seat assignment or pay to reserve a meal or other services” , did he declare. “It’s radically different from the way travel was once sold in the United States”
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