orthern Europe is proving to be
fertile ground for what could be a quiet revolution in airline
pricing. We refer to the net-fare system that SAS introduced in
Scandinavia at the beginning of last year. It's spreading.
We've cautioned before that the system might be too civilized to
work in the U.S. market, but we think it still looks interesting
enough to warrant a fair test.
Here's how it works. The airline's base commission goes to zero
(been there, done that) and the travel agency recoups its costs by
imposing a service fee on the client (ditto).
The added wrinkle in Europe is that the airline also imposes a
service fee on the passenger, reflecting the cost of booking
through the carrier's Web site, call center or ticket counter.
The airline, in effect, unbundles the cost of transportation
from the cost of processing the booking, so that the agent has a
reasonable chance to compete with the airline for the business of
handling the reservation.
It has worked well enough for SAS in Scandinavia that several
airlines have matched in those countries. Variations have been
adopted by Finnair in Finland, and are to be implemented by
Lufthansa in Germany on Sept. 1 and by KLM in the Netherlands on
Jan. 1. Swiss will introduce the concept in its home country next
year, as reported in our news pages today.
None of these markets is as wild and wooly as the U.S. airline
market, but we still think some brave U.S. carrier should figure
out a way to try it here without getting slaughtered.
• • •
hen British Airways and Air
France retired their supersonic Concordes last year, the air was
full of regrets. It seemed that the evolution of commercial
aviation had stalled. For the first time, the "best" was being
retired and there was no "better" on the drawing boards.
For the future, Boeing and Airbus were talking about bigger
airplanes or more efficient airplanes. Boring. Aviation, always
about speed as much as anything, seemed to have lost a cutting
Today, we are reminded that the evolution of aviation technology
did not stop with the Concorde. Although commercial jet aircraft
today fly at the same speed they did 10 years ago, with roughly the
same payload, they are able to fly longer and longer distances, and
are rapidly closing in on the 10,000-mile mark.
As aviation editor Andrew Compart reports today, the longest
commercial flights are now routinely exceeding elapsed times of 14
hours. Singapore Airlines is pushing the envelope to over 18 hours
with its new nonstop route to New York.
This doesn't bring New York any closer to London or Los Angeles,
but it brings everybody closer to the burgeoning economies of Asia,
and in that sense, the economic impact of these new, long-haul
flights may prove to be far more lasting than the ability to chase
the sun across the Atlantic.