“Avoid fees—just pay more.” That’s the perverse logic of American’s new system of presenting prices, and it may make some sense. A few days ago, American unveiled some major changes to its online booking system—changes designed to steer you toward arranging your American flights through its own website rather than a third-party online travel agency (OTA) such as Expedia or Travelocity. Although American’s approach isn’t revolutionary—it borrows from fare display systems already used by Air Canada, Frontier, Southwest, and several overseas lines—it represents American’s latest move in its ongoing fight with OTAs for “ownership” of its customers.
Now, when you log onto aa.com and enter an itinerary, the initial presentation is a matrix of flight options with three tabs of fare options:
- The “Lowest Fare” tab presents you with up to four options for each trip—”choice,” “choice essential,” “choice plus,” and “business/first.”
- The “Refundable” tab adds a “fully flexible” column.
- The “Business/First” tab shows “instant upgrade” (refundable), “first class,” and “first-class flexible.”
Let’s say you select the lowest-fare “choice” option. The next screen displays the all-up round-trip fare and urges you to consider three options:
- Upgrading to “choice essential,” which allows you to change your ticket without a fee, one no-fee checked bag, advance seat assignment, and Group 1 boarding.
- Upgrading to “choice plus,” which gives you the “choice essential” benefits plus 50 percent bonus frequent-flyer miles, same-day flight change, same-day standby for an earlier flight, and a premium beverage.
- Or upgrading to “business/first,” which moves you from the cattle car to the front of the plane, plus three no-fee checked bags, bonus miles and other goodies.
You can make separate choices for your going and returning flights.
When I checked, on December 14, not all trips offered all the options. Overseas trips and connecting itineraries provide fewer options.
American claims that the upgraded “bundles” are priced below what you’d pay in fees, separately. And, at least for one test booking, that claim seems justified. On a round-trip from Portland, Oregon, to Dallas-Ft. Worth, the base fare was $450, “choice essential” added $68, “choice plus” added $88, and moving up to first class added $398. Given American’s usual fees of $25 each way for one checked bag, $25 exchange fee, $75 same-day fee, and $9 priority boarding, the upgrades can look attractive to lots of travelers. That $398 upgrade to first class looks attractive for anyone seeking to move up front without paying the usual huge fare differences.
American has several motives here. Clearly, it wants to lure you into paying more for its extras. My guess is that it has priced those bundled upgrades to be “revenue positive,” encouraging you to buy at least some extras you might otherwise forego.
But it has an even more important objective: weaning you away from OTAs. For now, as far as I can tell, no OTA website is geared to presenting those upgrade options during a simple fare search. American claims that it is providing those options to at least two of the big global distribution systems (GDAs), those computer-based data sources the OTAs rely on for fare information, but displaying them as conveniently as American does will be a big programming challenge.
I look for other legacy lines to adopt similar approaches. They really want you to use their own websites, both to avoid the fees they pay to the OTAs and to be in a position to upsell you to more expensive tickets. They also want to be able to present you with dynamic pricing, where they will tailor prices to your known preferences.
But I look for the OTAs to fight back with improved systems. Now, they’ll be playing catch up, but they can’t afford to offer you deals that are less attractive than those you can get directly from airlines. This will be an interesting struggle, and one in which we can at least hope that an optimum solution will provide a win for consumers, as well as for the industry.
Ed Perkins on Travel is copyright (c) 2012 Tribune Media Services, Inc.
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