In the Face of All These Mergers, Will Airline Fares Become Unfair? And Will The Consumer Even Know?
It was President Eisenhower who famously spoke of “unwarranted influence.” At the time he was talking about the military-industrial complex. But if he were around today, we suspect he would have included the aviation business, specifically passenger airlines, especially in light of the spate of recent mergers.
Mergers are not new, of course, but consumer and economic trends have accelerated those in the airline industry in recent years. We measure airlines in our annual Customer Loyalty Engagement Index, and can’t have helped but notice that there are fewer National carriers showing up in the survey now than a decade ago. Ten years ago there were 10 airline brands, this year there are only six. American Airlines merged with U.S. Airways, Northwest merged with Delta, United merged with Continental, so fewer airlines and, perhaps, consumers fear, “unwarranted influence” on the parts of those that remain.
Along with the normal fears of flying, lost luggage, and cancelled flights, with competition significantly reduced, passengers fear that there is a greater likelihood of fare increases. A decade ago – when it came to the cost of a ticket – the brands shook out pretty much as you might have expected; budget airlines were seen to be low, everyone else was seen to be, well, higher than budget airlines, but certainly not meeting passenger expectations for Ideal Airline brand value. Those expectations haven’t abated. If anything, they’ve increased – along with airline fares and fees. So when it comes to fares being fair, here’s how consumers currently rank airlines:
- U.S. Airways (this assessment was collected before the merger with American was announced and is extraordinarily interesting, we think, given its consumer ranking)
Anyway, there’s been a lot of attention paid to the case the Supreme Court declined to weigh on Monday having to do with a regulation that requires airlines to advertise the full cost of tickets. Aren’t they doing that, we hear you ask? Well, according to the Department of Transportation, they’re supposed to advertise “the entire price to be paid by the customer.” Meaning they’re not supposed to leave out taxes and government fees and any extra fees. So, basically, the full cost of the ticket to you.
Spirit airlines (joined with Allegiant and Southwest airlines) challenged the regulation, which had been upheld in the U.S. Court of Appeals last July. The airlines – perhaps best known for budget flights – say that the regulation infringes on their rights of free speech. The government POV is this is just part of the Transportation Department’s “longstanding authority to prevent consumer confusion in airfare advertising.” Not being lawyers we can’t comment, but being frequent flyers we believe that the majority of airline passengers would welcome all the facts. Although you know what they say about lawyers? To some lawyers all facts are created equal.
Too cynical? Oscar Wilde noted that a “cynic is a man who knows the price of everything and the value of nothing.” But airlines should be careful because today, you know that they call a man (or woman) who knows the value of everything? A consumer.
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