Many travelers had headaches when trying to rebook flights purchased through third-party companies like Kayak and Orbitz early in the pandemic. These agencies were overloaded and had to constantly change airline policies. Many travelers opted to book directly with the airline to avoid any future problems.
As the dust settles on this pandemic, travel is returning to normal. However, passengers flying directly with airlines are now faced with a new reality. They have to navigate a maze filled with fees, add-ons, and confusing choices for their seats. The final price you pay at check-out is often much higher than the advertised price.
This issue has become so complicated that even President Biden is joining the fray. He stated that you should be able to compare prices on your tickets and know exactly how much it costs. This was in response to a Department of Transportation initiative which requires airlines to disclose such fees. So you can choose the best ticket .”
There are no new efforts to reduce airline fees. Similar regulations were attempted by the Obama administration, but failed to be enacted. The bottom line is that airline customers will continue to pay the price unless meaningful changes are made. This is especially true if they use their own apps and websites to make purchases.
The fee period
U.S. airlines have drastically changed how they make their money since the advent of budget airlines like Spirit and Frontier. Airlines are now focusing more on “ancillary revenues” rather than profit margins on airfare, which is extremely competitive.
According to an IdeaWorksCompany report, the percentage of total revenue at major U.S. airlines as ancillary fees jumped six percentage point between 2019 and 2021. It rose from 16.1% to 22,2% according to an airline industry reporting company. This follows a steady drumbeat in increased revenue from ancillary fees since at least 2007.
Customers can save money on air travel by avoiding add-ons and paying less for the ticket. While some add-ons such as fees for carry on bags are easy to avoid, others such as the difference between regular economy and basic economy (or “main economy”) can prove more difficult.
Priorities mismatched
Customers should book directly through the airline’s website and app. This is because they tend to spend more on ancillary fees. American Airlines stated this preference in a Security and Exchange Commission filing. They cited its dependence on online travel agencies as a risk factor.
The filing stated that “We also depend upon the ability of these distribution channels, to expand their ability and willingness to collect revenues for ancillary goods (e.g. fees for selective seating)”,
American Airlines has admitted that it makes a lot from ancillary fees and is concerned that third-party vendors won’t push for these fees as aggressively. This mismatch is precisely what offers savvy customers an opportunity.
Third-party service providers have an incentive to make it clearer than confusing for customers, stated Melanie Fish, spokesperson for Expedia (a third-party travel booking site).
Fish sent an email explaining that when they search for flights, they can choose a fare to see the details of the airline’s ticket price. This includes seat selection, cancellations, changes and the cost for checked luggage, if any.
Airlines’ interests can be misaligned with their customers by offering basic economy or main cabin fares. In order to encourage shoppers to upgrade to main cabin fares at checkout, airlines want to show lower basic economy fares in search results. This increases the price of the ticket and makes it difficult to compare prices. These differences can be clarified online and customers can save money by using an online travel agency.
“Travelers have the option to scroll through the different fare options such as economy, basic, or economy and see all the options, costs, or add-ons side by side, making it easy for them to choose the best fare.” Fish explained.
Online travel agencies can add additional charges such as trip protection or rental cars. Online travel agencies have their own incentives to add on additional charges, such as trip protection or rental cars. Customers should be aware of these costs even when booking through them. Travelers can save money by booking through third-party booking agents, even though airlines are continuing to push ancillary charges and travel booking sites have greater incentive to display the cost of flights upfront in search results.
This article was written and published originally by The Associated Press by NerdWallet.
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