It used to be so simple: The price you were quoted for an airline ticket, rental car or cruise used to be the price you actually paid.
Ah, the good ol’ days.
Today, the rate you’re given is almost never the final price. It’s considerably more.
Travel companies stripped away many of the items that used to come with their products and began charging extra for them. They insist these fare games are legal, which, by and large, they are.
But does that make them right? It depends on your perspective.
As a business, the answer is often “yes” — they’re following a mathematical model that assures they’re making more money while only upsetting the customers who are expendable. But as a traveler, these practices — euphemistically referred to as “unbundling” and “a la carte pricing” — are unconscionable.
But don’t take my word for it. Talk with Arizona State University’s Marianne Jennings, a renowned business ethicist. She says there are two reason companies go a la carte. “It makes them more profitable,” she says, “and it’s not as transparently comparable with competitors’ flat fares.”
In other words, unbundling confuses customers and makes travel companies more money. Maybe it makes companies more money because it’s confusing.
There is a way to avoid this a la carte anarchy. But let’s define our terms first. What do customers expect from prices?
Airline ticket. When travelers pull up a price quote, they expect their ticket to cover the basics. They want to be able to pay for it with a credit card, and it should include the cost of a carry-on bag and a checked bag. Soft drinks and snacks on a longer flight. Ideally, it would also include taxes and all fees, including any fuel surcharges.
Car rental. Rates should include all taxes and government surcharges, plus those annoying stadium fees. Also, travelers don’t care about the cost to the car rental company of renting facilities or providing transportation to and from the airport terminal. Ditto for license plates and tire disposal. It should all be included.
Cruise. If it’s billed as an “all-inclusive” cruise, it should include everything. If not, passengers expect basic room and meals. Soft drinks shouldn’t cost more. The best food on the ship should be designated as “premium,” forcing those on a budget to eat gruel. No surprises. And no mandatory tips, please.
Hotel. When travelers go price shopping, they expect no gotchas, such as mandatory parking fees or so-called “resort” fees. It’s not that they want these fees to be disclosed before, during or after the transaction — it’s that they don’t want them. Period. They expect their room will have a bed and a daily change of linen, and that having the room serviced won’t cost extra. Ideally, it would also include taxes, particularly any state- or county-imposed bed taxes.
Just as important, there are items that shouldn’t be a part of the price. For example, insurance for rental cars, or restaurant meals at a hotel or spa treatments on a cruise ship. Travelers expect these items to be priced separately, and you’ll get no argument from me on that.
But that isn’t the direction the travel industry is moving in. In fact, according to Mike Simonetto, the principal and global leader of Deloitte Consulting’s pricing and profitability practice, travel companies are inching closer to a “zero” fare, in which the base price is free and everything is added on to it. “Free is not necessarily bad,” he told me. “If you think of the comp model in Vegas, you’re getting the room for free, but [the resort is] making money from gambling.” You can read my entire interview with Simonetto here.
Given that travel companies want to unbundle more, not less, and given the fact that they don’t care what we think, what are we to do?
Buy travel that’s bundled
I’m not just talking about booking a ticket on Southwest Airlines or JetBlue Airways, two of the a la carte holdouts. Online travel agencies like Orbitz, Travelocity and Expedia offer packages that wrap airline tickets, hotel rooms and rental cars into one convenient and inexpensive package. That can save you money, because agencies are buying the items in bulk and then marking them up, but still undercutting the normal price. What’s more, they can include amenities or activities that would otherwise be sold a la carte.
Complain when something is unbundled without disclosure
You don’t have to look too hard to find a hotel that charges a mandatory resort fee or a car rental company that insists you buy its overpriced insurance before you can leave with one of its vehicles. And finding one that doesn’t tell you before you show up is not too difficult, either. Any fees that are required must be quoted as part of the price before you make a booking decision. When confronted with a customer who has that information, a company will almost always cave in and remove the charges. They know these a la carte fees are wrong, after all.
Avoid the worst unbundlers
I could name names — Spirit Airlines, Allegiant Air and AirTran Airways come to mind — but why bother? The worst offenders are perfectly obvious to anyone from the moment they log on to the company’s Web site or call their reservation number. They’re the ones that charge “convenience” fees for using your credit card to pay for the ticket. Or that make you pay another fee for a confirmed seat reservation. Come on! If that’s not nickel and diming, then what is? Still wondering which companies I’m talking about? Here’s a recent list that might be helpful.
Just say ‘no’
What do you say when an airline demands an extra $15 for a “confirmed” seat reservation? What do you tell it when it asks you to shell out more money to check in luggage? You say “no.” You pack a bigger carry-on or you ship it. You accept the middle seat when you get to the airport. But you’ve done a commendable thing. You’ve denied the airline its so-called “ancillary” revenue opportunity, and if enough people say “no” then the airline won’t see a point in charging for these items a la carte. Don’t believe me? Talk to US Airways, which reversed its unpopular decision to charge $2 for soft drinks.
If you’re a frequent flier, renter or hotel guest, you’re better off concentrating your business on one company to qualify for an elite designation. Why? Because companies let their elites off easy when it comes to fees, waiving everything from checked baggage charges to fees for making reservations. But don’t drink too much of the Kool-Aid, otherwise you’ll start doing foolish things like taking mileage runs and making unnecessary credit card purchases to rack up more miles — miles you’ll either never be able to redeem or that will expire before you can.
Is there a better way to quote a price than to offer a ridiculously low or “zero” fare and then pile on the extras? Sure. If travel companies quoted a reasonable price and allowed us to uncheck any of the options at the time of purchase, I can’t imagine anyone opposing that kind of a la carting. The technology exists to let us do it, but travel companies don’t want to because they believe it could put them at a competitive disadvantage and they believe there’s more money to be made from confusing us.
Until they’re proven otherwise, we’re on our own.