n case you missed it, the world's
largest airline has come up with a new distribution wrinkle: A
booking fee that consolidators are expected to pay to the airline
for the privilege of filling the airline's cheap seats. The fee,
set at $12.95 per reservation, went into effect Feb. 1 on
transatlantic consolidator fares. That's right, the consolidator
pays the airline.
Of course, in real life this also means the consolidator
collects an additional $12.95 from the agent and the agent collects
an extra $12.95 from the passenger, so it's really just a fare
increase and nothing to worry about.
Well, it is and it isn't.
If American wanted to raise its net fares, all it had to do was
raise its net fares. There are ways to do that. But why bother with
the rigmarole of adding the odd number $12.95 "per reservation" and
calling it a "booking fee?" We tried to ask American that very
question, but American officials decline to discuss pricing when it
So we are left to our own devices to figure out why American did
what it did. We can think of a half-dozen reasons:
1. Sheer perversity.
2. It disguises the fare increase.
3. It creates an accounting entry called "booking fee revenue" that
makes it look like the airline is doing something about those
dreadful "distribution costs" that we keep reading about.
4. This is a test.
5. They want you to get used to the concept.
6. They're desperate.
• • •
he major airlines last year set
new highs in on-time performance, turned in their best year on
record in terms of handling passenger baggage and reduced the
incidence of denied boarding to an all-time low.
But the records that really count are these: The airlines lost
more money in the last two years than anybody thought possible, and
lost more passengers, more rapidly, than at any time since World
According to the Air Transport Association, passenger boardings
in domestic service fell 7.3% in 2001 and dropped another 5.2% last
year, to 472.5 million passengers.
That's the lowest headcount since 1995.
Domestic boardings peaked in 2000 at 537.9 million. The carriers
ended 2002 about 12% below that.
It will take years to undo this damage, more if there is
This may explain some of the desperate measures coming out of
the airlines these days, like American's "booking fees."
It may not justify the desperate measures, but it may help to