On the Spot: Book early flight, pay more?

Question: On May 12 I booked three tickets on a Singapore Airlines flight from Los Angeles to Singapore for travel on July 21, returning a month later. Two days later, the fares dropped $200. When I called its customer service to ask for a refund, it said that because my flight bookings were nonrefundable, it could refund me only the difference in taxes, which worked out to $2 each. Although it is no secret that passengers pay different amounts for tickets, why would I be penalized for making a booking early?

-- Carol Y. Wong, Los Angeles

Answer: In Wong’s case, she will not be penalized — at least, not as severely as she first thought. She’ll get dinged a $20 reissue fee, but the difference will be refunded, James Boyd, a spokesman for Singapore Airlines said.

“If our customer purchases a ticket and later finds a lower advertised fare for their dates and destination of travel, they may wish to contact the party that sold the ticket … and ask to be rebooked at that lower fare,” Boyd said in an email to me. “If seats are available at the lower fare in the original booking class for those dates, we will be happy to refund the difference in fare and reissue the ticket, less a $20 reissue fee.”

The agent with whom Wong spoke “was in error in only offering a refund of the taxes,” he said. “We have contacted Ms. Wong to offer her a refund, as outlined in our policy above, with our sincere apologies.”

Which raises the question of why tickets are priced differently. You can blame (or thank) airline deregulation for that. The demise of regulation at the end of the ‘70s opened the way for airlines to practice yield, or revenue, management. That means that demand and need drive price. The greater the demand, the higher the ticket price. The more you need the ticket (as a business traveler, for example, paying at the last minute), the more you’re going to pay.

A ticket price is “all according to probability,” Richard Gritta, an economics professor at the University of Portland in Oregon, said of the prices that are set (but clearly not set in stone). But, he added, yield management probably is going to anger some people because of the price disparity.

Early ticket booking usually gets you a better price, said George Hoffer, an economics professor at the University of Richmond in Virginia. But, he added in an email, “unpredictable events can also result in subsequent price reductions. For example, booking deviations (i.e. a plane filling up too fast or too slow) and reacting to competitors’ pricing adjustments can result in downward price adjustments.”

Singapore’s reissue fee charge is not as harsh as many airlines’ change fees, which can be as much as $150 for a domestic ticket (Southwest being an exception), a definite disincentive to try to get money back. But should we feel entitled if the price drops? Hoffer used this comparison: “Individuals who purchased Dodgers tickets in February before the season became a train wreck will not receive refunds/future credits if later in the season the team runs promotions.”

Point taken. But maybe Southwest should buy the Dodgers.

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