Ups and Downs of Those Fluctuating Air Fares
Weâve all seen the advertisements. Airlines announce incredibly low air fares, followed by a disclaimer: âSeats are limited.â
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 stateâs 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 âlimited.â 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 âa spasm of competitive excess.â
He was right. âEveryone knows that an airline canât make money at these fares,â said one Denver travel agent. âBut at these fares everyone also wanted to fly.â
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 stateâs attorney general. âWe got lots of complaints about the unavailability of advertised fares,â said Garth Lucero, Coloradoâs assistant attorney general. âEven people working here at the state Capitol had difficulty getting those seats.â
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. âIt was incredible,â Lucero said. âThe 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.â
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 doesnât 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: Itâs 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.
âHow can we list the number of available discount seats on every flight?â asked Chuck Novak, United Airlines spokesman. âItâs an impossibility for us. The numbers change all the time. Besides,â he argued, ânobody requires a theater to show how many discount tickets they sold to groups or up in the second balcony.â
Monitor Inventory
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. âAs a result,â Novak said, âitâs no great secret that we have more discount seats on Tuesdays and Wednesdays than we do Fridays at 5 p.m.â
âThe key for us has always been full disclosure,â said Paul Jasinski, chief counsel for Republic Airlines. âYou can only offer what you have to sell, and on the buying side, the passenger is only really interested in the one seat heâll occupy.
âWeâre trying to keep our airplanes full,â Jasinski said, âand so we manage our inventory in off-peak periods to fill seats. No one is out to fool anyone on this.â
âWeâve always abided by the law,â said Adam Aron, Western Airlines vice president of marketing programs. âBut we hope this incident will encourage other airlines to have a responsible attitude toward price advertising.
âThose levels of available cheap seats do change,â Aron said, âbut the availability levels arenât messaged that often. In setting the number of discount seats per flight, itâs likely that weâll set a number in advance and stick to it. Still, we set different levels for the same flight on different days of the week. Thatâs not bait-and-switch. Itâs good business practice.â
Bruce Hicks, Continental Airlines spokesman, agreed. âItâs the law of supply and demand,â he says. âThatâs why bathing suits are put on sale in November instead of June. Every industry uses price to stimulate sales in off-periods. If weâve got an empty flight on Tuesdays, weâre going to try to fill it. We donât often have that problem on Fridays.â
In the hot Denver-Los Angeles market, Hicks reports that during peak travel periods between 10% and 25% of all available coach seats are offered on Q fares. During off-peak travel periods, Hicks said, the number of Q fare seats can jump as high as 60% of all coach seats. âAnd in some cases,â he said, âwe might open up even more seats, depending on demand.â
âEveryone tries to control capacity,â said David Palmer, Alaska Airlines assistant vice president of marketing. âYou are constantly looking at the market, the day of the week and the flight. And then you adjust. Every carrier does it, but because we donât know what every other carrier is doing, or how many discount seats theyâre offering, this floating inventory becomes a crap shoot for the passengers--and for us.
âHowever,â he said, âif people are the least bit flexible in their travel plans they can usually get the discount seats, if not on one of our flights, then on our next one. And we try to minimize the misunderstanding in our ads that mention discount fares.
Why Fool Consumer?
âAnd when fares are substantially discounted, the passenger knows heâs getting a good deal, and he also knows there will probably be restrictions. Why try to fool the consumer? Let them know the limited availability and the restrictions.â
In the Colorado case, many airlines have agreed to change their advertising tactics.
âOur preliminary conclusion is that it seems the airlines have allocated a significant number of discount seats for their flights,â Lucero said.
Thus, capacity controls will continue. âCapacity control in selling seats is not a science,â said Unitedâs Novak. âItâs barely an art.â
Still, United continues to add to its capacity control definition. Just recently the airline said that it will no longer pre-assign seats on most of its advance-fare discount tickets, adding to the possibility that Q fare buyers may get stuck with center seats even if theyâve booked and paid for their tickets months in advance.
Thus, when it comes to buying a discount seat, the only rule is that there may be no rules at all.
The level of available discount seats on each flight rises and falls based on demand reflected in an airlineâs computers, so donât just take âIâm sorry, that fare is sold outâ as the final answer. Itâs possible that the special Q fare you wanted for a flight next month that wasnât available yesterday may be available today.
As long as youâre within the usual advance time purchase restrictions, it can pay to keep calling the airline.
For example, a friend recently called TWA to make a reservation for a discount seat to New York on the airlineâs $198 round-trip special fare. The fare required 30 days advance purchase. He had called 36 days in advance but he was told that the fare was no longer available.
Undaunted, he called the next day. And the next. Finally, on the fourth day, two seats opened up, and he got the requested flight. Thus, when it comes to capacity controls and the limiting of seats, donât take no for an answer unless and until you simply run out of time.
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