Airlines are constantly looking for new ways to make money, but their favorite trick is imposing a surcharge without us even knowing it. Allegiant Air, with its sneaky $8.50 “convenience fee” for flights booked on its site, comes to mind. But now two major carriers, US Airways and Continental Airlines, have joined the fun, according to to a respected travel analyst.
Both carriers now have what amounts to a hidden booking fee for tickets bought through their Web sites, according to Henry Harteveldt at Forrester Research.
Go price out a domestic ticket for any of their routes except the northeast (Boston-NY-Washington) shuttles, contrast the total price with Expedia, Orbitz, etc. The US Airways/Continental price will be equal to Expedia, maybe $1 less than Orbitz, and either the same as or $2 less than Travelocity.
Then, go price the same itinerary at Priceline using the retail channel, not name your own price. The ticket will likely be $5 less.
What’s going on?
US Airways and Continental have implemented “fuel surcharges” of $4.65. Why that number? Because when you tack on the federal excise tax, it equals $5. The reason for doing this as a fuel surcharge is that it doesn’t affect the base price listed when doing low-fare searches on metasearch sites like Kayak.
Why are they doing this? Because the airlines feel that if the online travel agencies can collect the $5 service fee, why shouldn’t they – the airlines – get more money too? Now, forget the fact that the agency isn’t paid a “commission” (though the online travel agencies all get some form of remuneration to sell air tickets.
Harteveldt’s conclusion: “Airline sites can no longer be viewed as the absolute best place to buy a ticket.”
If these fees stick — and it’s still to early to tell if they will — I think they could easily spread to other parts of the industry, including hotels, car rental companies and cruises.
This is fascinating. These companies have spent years and perhaps tens of millions of dollars convincing the traveling public that their sites are the best places to buy their products.
Are they about to cash in on our collective ignorance?
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{ 8 comments… read them below or add one }
Hotels are already getting into the “fuel surcharge” game — at least in Jamaica (according to media reports and travel industry news). In fact, the UK Foreign and Commonwealth Office even made a note in its travel advice warning guests to call ahead and confirm costs to “avoid misunderstandings”.
The good news is that some hotels are opting for energy conservation measures rather than implementing the surcharge. It will be interesting to see if these “surcharges” become the latest point of differentiation between hotels and other travel services.
Convenience fees are insane in themselves. Because what you are being charged for is the ‘convenience’ of being allowed to buy a product. In other words: you are paying to pay!
Now everybody pay attention: a ’service fee’ with Expedia, or Travelocity is actually a rightfull fee, as you are paying for them to have a great website that makes searching easy. A ‘convenience fee’ is just a fee for the ‘convenience’ to pay. It is ridiculous.
How stupid do they think we are?
Or
How stupid are they?
You are eluding to the fact that they’ve tried hard to get trraffic to their websites, but I think they’ve figured out that maintaining a good website is expensive, and they now jsut want to farm their sales out to the Orbitzes.
it’s insane — “Hi I’d like to buy from you”
“OK but you’ll have to pay”
“I know, here’s $300 for the flight from XXX to YYY”
“no the total is $305″
“Why?”
it’s ridiculous.
They get you know matter what. If you use a travel agent, you pay a fee. If you book with the airline via phone, they charge a fee.
I couldn’t make reservations for my daughter on line (different last name and a 1 way ticket, mine round trip), so I HAD to call, and even though the web wouldn’t let me do the reservation on line they charged me to make the phone reservation.
I am sure they will soon be charging you to print your boarding pass at home, using your own printer, ink and paper!
Ticketmaster is the leader in convenience fees. They can turn a $50 ticket into $65 or $70 with all their convenience and order processing fees. I’m really sad to see airlines follow suit.
@ Mike: There is a significant different between the ‘convenience fees’ of Ticketbastard and the airlines. The airlines are *selling their own product* and they make you pay for buying it. That’s twisted logic. Ticketbastard is not the origin of the tickets. They “resell” the tickets, and that is a service that they can reasonably charge you a price for. Big fundamental difference. Ticketbastard pretty much functions as an agent for you.
What the airlines are trying to do is equivalent to the supermarket charging you for “the convenience” of standing in line and using their awesome self-check-out cashier register.
[Now, never mind that Ticketbastard is usually the only place where you can buy tickets and that their fees are ridiculously high and that it's outragous that they charge you something like $9 to post mail you a couple of tickets that will cost them $0.29 an envelop to send. But it's a very different problem. Ticketbastard is exploiting their monopoly position so rip their customers of.
The airlines are charing their customers to buy something. It's insane.]
Where does this end?
Surcharges for items essential to do business should be outlawed.
What next? Jetway maintenance surcharges?
Waiting lounge usage surcharges?
Passenger announcement, both on and off the airplane, surcharges?
Engine oil surcharges?
Tire inflation surcharges?
Computer surcharges?
Fuel surcharges have been around for years. When I worked in reservations for TWA, Q prices were $10 each way after tax in some markets. Now I work part time as a Customer Service Agent for US Airways and full time for Orbitz so I see fare calculation breakdowns just about every day. Fuel surcharges are part of the fare calculation line (preceded by a Q) but service fees are not. Agency fees are applied on top of fare calculations. Agency fees at Orbitz begin at $5.99 and rise according to the cost of the ticket so a ticket should cost at least $5.99 more than the same US Airways fare unless you lucked into a discounted bulk fare. As you know, bulk tickets are wholesale tickets purchased by travel agencies, like buying a crate of tickets from Sam’s Club and selling them at your own price, high enough to turn a profit but lower than retail from the airlines. Except for bulk fares, agencies online and off sell tickets for the airlines at airline prices abiding by airline-imposed rules and restricktions, then tack on their service fee. But it is worth it to check an online agency for those bulk fares when you are booking at least two weeks in advance and certainly a great place to compare prices.