FOR IMMEDIATE RELEASE

CONTACT: Peter Splingaerd
Off. (415) 362-0209 Fax. (415) 362-0524

WHY MUST BIG BUSINESS PAY SO MUCH FOR AIRLINE TICKETS?
In no other industry does the big customer pay more than the small customer. Aside from being able to afford $2,000 for tickets that are worth only $330, the main reason big business cannot avoid paying these higher fares lies in the way their tickets are bought. They isolate their travelers from the rest of the world that pays one third as much, by forcing them to buy their tickets exclusively through one big corporate travel agency. Actually, these are not travel agents at all. They are only booking agencies.

Travel agencies - the real ones - used by individuals spending their own money, will use everything they know, to help passengers pay the lowest possible fare. When a traveler needs to go to New York from San Francisco, the corporate agent will have you pay $2,000 less whatever token discount the travel department negotiated off this full fare. The same employee, if allowed to go to his own travel agent -a real travel agent -will pay between $330 and $800 for the same trip and perhaps the very same flights. Nobody in his right mind would go to his corporate agent for an airline ticket if he had to pay for it himself. By yearend, the cost of using one exclusive large agency is around 50% of the total airline ticket expense. This is exactly what airlines want large accounts to do. It separates other people's money travelers from own money travelers.

If big business allowed their travelers to mingle with the rest of the world paying one third as much, the airlines would not have such a high range of prices any more because nobody would buy the higher fares. A large corporation will pay around 50% less for airline tickets if it allowed employees to buy tickets from their personal travel agents. Remember that every rule the airlines create has only one purpose: to separate the own money (leisure market) spender from the other people's money (corporate market) spender. As long as they can maintain this separation, they will gouge the corporate spender.

We are in a period when all major airlines are doing their utmost to persuade business travelers to book directly with the airline through the internet. They are offering double miles, lower prices, and many other enticements. The purpose of course, is to divert corporate travelers from genuine travel agents who are specialists at finding lower fares. The less you know about their complex and ever changing airfares, the more you will pay. The gap between low and high is so large and there are so many fares in-between, that the only way to defend yourself against airline gouging is to learn the rules of the game yourself.

A new seminar offered by a division of ALL TRAVEL of San Francisco, TRAVEL EDUCATIONAL SEMINARSä, (800) 362-4305, is designed to train travelers at large corporations. They will send airline ticketing experts to corporate offices to conduct 2 to 3-hour training seminars, teaching travelers the basics of airline faring rules and practices, and how to use them to their own advantage.

Travelers must learn the rules of the game before booking directly through the internet. Otherwise, they are playing a game against an opponent who wrote the rules and changes them to his own advantage at whim. Paying three times more than any person spending his own money is like losing. Remember, all faring rules are airline-created. Large corporate booking agencies obey them. Leisure agents, who deal with people spending their own money, do not. That is why the airlines are trying to put them out of business or at least, to drastically reduce their numbers. The sole purpose of these rules is to make corporate spenders pay three times more than the personal spender.

Considering that the basic product is transportation, any premium over the lowest fare paid to fly on a plane, is for terms only. When a round-trip ticket between New York and San Francisco can be bought for $330, employees of big corporations will pay between $1,300 and $2,000, but what are they getting for the additional $970 - $1,670? Terms will vary with each passenger and trip, but here are the more significant terms being bought by big American corporations:
1) Departure time convenience.
2) Frequent flier status - resulting in a cornucopia of benefits like upgrades, preferred seating, bonus miles, free tickets and other benefits.
3) Fare refundability. 4) Freedom from any penalties.
4) Freedom from airline-created limitations to block return days and times.

Is it really worth the money? Sometimes, but mostly it is not. Certainly nobody spending his own money would pay the equivalent of two extra tickets, for those terms. We can buy a new laptop for $1,670, or quite a nice suit or dress or piece of jewelry, which would yield much more pleasure over a longer period of time. Big business however, with all their expertise in manufacturing, purchasing, and pricing, seem to have accepted the role of silent victims when it comes to buying airline tickets.

Small businessmen with more time restrictions than people on personal trips, will usually pay half, or less, than big business travelers, for the same trip, if not the same time or plane. They use small, real travel agencies. The price range for airline tickets on most routes controlled by a major airline, is between 300% and 500%. Corporate travelers pay in the higher ranges, and own money fliers pay in the bottom range - even when the same person does both. But, if a person knows how to travel for less, why does he spend so much on airline tickets when someone else pays? The answer is not as simple as you may think.

Even a very frugal person may find himself flying on a $2,000 ticket from Los Angeles to Washington D.C. if his employer or client handed him the ticket. If he had to buy the ticket himself, he probably would have done it for $330 - $800, through his personal travel agent, depending on how restrictive his itinerary was. Small businesspersons usually prefer to find ways to beat the system. They will try anything to avoid those full fares. They are the most frequent users of the famous back-to-back (buying two round-trip tickets when they are cheaper than two one-way tickets) and hidden construction point (using only part of a ticket) tickets. These are the two loopholes in the convoluted airline faring system that airlines cannot control.

The airlines have been punishing travel agents for doing these tickets for clients but airlines do these tickets themselves. In fact, before deregulation, agents were trained to use these very techniques to help reduce airfares! Travel agents have started to fight back recently, by suing American Airlines under RICO laws (Racketeering Influenced and Corrupt Organizations Act). American corporations should seriously consider lending them a hand in this fight, which benefits none other than the business traveler. Actually, travel agents don't make a penny more for writing a $2,000 domestic ticket, than one for $700.

However, travel agents are losing the battle with the recent substitution of a good consumer bill by one actually drafted by the airlines themselves, thanks to presidential hopeful, Sen. John McCain (R. Arizona), of Keating Five fame. Airline lobbyists had a chat with him. The original bill protected people who used back-to-back and hidden city tickets. The new bill doesn't.

The airlines have focused attention on improved passenger services and thus have successfully dodged the fare issue, their principal concern. Perhaps lobbyists for all other American businesses should have lunch with Sen. McCain and put an end to this gouging by the airlines. Even big oil cannot raise prices 50% without a Senate investigation. Airlines, amazingly, can change fares all day long, by 100% or more, with impunity, and in lock step with one another. They are exempt from antitrust laws and can only be sued in federal court.

Airlines are more than "deregulated" they are "unregulated". They understand the value of good lobbying. If a shift to making individual travelers responsible for buying the lowest possible fares through their personal travel agents is too traumatic, corporations might consider the 7-DAY NUMBERä system. Travelers call a certain number whenever they want to book less than 7 days before departure or, are stuck with a fare of over $1,000 or, whatever other threshold the company may choose.

A company employee (as opposed to an agency employee) at the other end of this number will either book the traveler or farm it out to a local, real travel agent, who will ferret out the lowest fare. All tickets costing more than $1,000 must be issued or authorized by the 7-DAY NUMBERä department.

Do not allow the big corporate booking agency to issue any full fare tickets. i.e. No approval needed for cheap, restricted tickets, but all full fare tickets must be checked for alternatives. It is also important to add incentives, like the loss of airline preference if booked by this department. This would encourage the learning of airline ticketing rules and could save $1,000 or more, per ticket, creating an automatic review system for all high fare tickets.

The gouging is so outrageous that no matter how many people are assigned to the task of reducing the cost of airline tickets, the company will be rewarded with a hefty dividend. This is a fat plum that needs to be plucked.

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Peter Splingaerd is Partner, in charge of corporate bookings, at All Travel, creator of the 7-DAY NUMBERä system, and founder of TESä (Travel Educational Seminars).