By now, many travel managers have accepted that their airline suppliers may charge fees for various services and product attributes, including infamous checked baggage fees. But as they consider travel policy changes and attempt to negotiate deeper fare discounts to offset those fees, they remain vexed by an inability to track, manage and determine the scope of the extra charges. Speaking here last month at The Beat Live, airline representatives seemed surprised by the extent of that frustration and were asked to discuss solutions. Those solutions may be airline-specific or, perhaps more promisingly, industry standards; either way, no system has yet been deployed that broadly addresses the challenge.
"We have acknowledged that [airlines] needed to put a model in place to help cover their costs," said Rita Visser, global travel operations manager for Oracle, "but when their problem becomes my problem and I can't reconcile it, that’s when it becomes an industry issue."
Visser indicated that it would be difficult to review and validate every charge for each of tens of thousands of travelers, and said generally to the airlines: "If the technology isn’t there yet, why did you put something in place that is going to negatively impact your buyers to make you whole?"
Northwest Airlines vice president of distribution and e-commerce Al Lenza said that "as a bridge" to electronic data solutions that would help with tracking, his airline (like others) exempted from paying bag fees those purchasing unrestricted airfares designed for businesses. "Maybe I am misinformed about how many corporate travelers are buying restricted fares or how many are committing fraud in your businesses, because it seems like it is a much bigger concern than we realized," he said.
Lenza added that ancillary charges are printed on boarding passes or receipts "at the option of the traveler. I realize it is not optimum. It is not an electronic fee to the credit card, but it does get done."
United Airlines also provides an identifying receipt for bag fees and the like, according to director of distribution Kathleen Bennett. "We did not carry that through with credit card companies, but that is something that we will take and see what can be done."
Continental Airlines intended to have a tracking mechanism in place before its fees for checked baggage took effect this week. "We are just saying to American Express or [other credit cards], 'Here is what we feed you on all of the other [airline charges] so here is what you are going to get, and it is supposed to say baggage fee, upgrade, etc.," said Dave Hilfman, the carrier's senior vice president of worldwide sales. "We know it is an issue. We can't put our heads in the sand; we have to fix it."
Continental staff vice president of North America sales Monisa Cline this week told Management.travelthat the airline has "the ability to provide data for our corporate customers where Continental is a preferred carrier. We continue to focus on this area."
Oracle's Visser said she had spoken with American Express about a solution, "but since it was such a gunshot approach from the airlines, we are now behind the eight ball instead of working to a cohesive agreement."
Mike Premo, ARC vice president of marketing, sales and customer care, this summer proposed using the automated miscellaneous charge order, which is a document that can be "printed on garden-variety ATB ticket stock and easily processed by agencies and airlines as payment for services." It has garnered virtually no support. "Everybody hates it," Premo acknowledged.
Instead, Premo said the industry "is beginning to coalesce" around the International Air Transportation's electronic miscellaneous document. Designed to serve as an industry standard, the EMD "is essentially an e-ticket with electronic coupons for each leg of the trip that will enable you to sell and service fees at the individual flight level," said Premo. "Whatever it is (bag fee, etc.), there is a specification that exists that says how this document is issued, handled, processed, utilized by the carriers and resold by travel agencies."
"The good news about EMD is that it was designed to do everything," Premo continued. "It really is a functional document. If Northwest decides not to sell certain types of services via EMD, they have every ability in the world to do that. If United decides to sell everything through agencies via EMD, they have every ability to do that."
EMD is a ways off from practical application. Because it "doesn’t have a paper equivalent," Premo said, "people do not have an intuitive sense of what it is." And while some airlines use it for their own kiosk sales, "no programming has been done to date on the agency-facing EMD. The EMD solution is probably 12 to 24 months away from being a reality. The industry really ought to put a stake in the ground and say, 'It’s going to be EMD; we know it’s complicated, we know it’s going to take time to get there, but let’s run as fast as we can and maybe get there in 12 to 18 months.' "
The Airline Tariff Publishing Companyis developing another potential solution. Called "optional service fees," the new functionality would enable carriers to broadly file fees for ancillary services through the U.S. market's central air pricing clearinghouse, making them bookable at the point of sale. ATPCo president and CEO Bill Andres in June told The Beatthat the first release should be ready by year-end, although global distribution system operators also have work to do on their end.
According to Bennett, United has been active on committees at both ARC and ATPCo to support industry standard solutions. "The industry working group for optional fees has been in place for about two-and-a-half years, and it’s only now that carriers are launching or introducing differentiated products and services," she said. "So we need to take a step back and meld the two. As we explore bringing those servces and options to the point of sale, it introduces a whole series of issues for reconciliation for the carriers. It's independent companies constrained by technology resources trying to catch up with the train that’s really out of the station."
For most managed travel industry participants, an industrywide solution is much more preferred than those provided by individual carriers, but the trick, nonetheless, is allowing airlines to differentiate and uniquely position their offerings.
"All the fees are not necessarily the same," said Northwest's Lenza. "For example, on a seat assignment, even if there is the most elegant solution to sell it in every distribution channel, I think we'd be reluctant to sell it outside the check-in window, just because we don’t want to create a customer service problem with reaccommodation--particularly if a customer bought a seat that he or she has high expectations that we're going to deliver." But he also acknowledged that by telling customers about bag fees at the point of sale, they "can behave around the fee by repacking or doing something else, which avoids confrontation at the airport. There are a lot of variables. We certainly support that idea of allowing corporate accounts to know electronically what each expense entails. But from our selfish perspective, we look at each fee in a different way and try to avoid complicating airport processing, reaccommodating and other hassles."
Meanwhile, ARC's Premo said "one-off" solutions proposed by global distribution system operators "are all very nonstandard solutions, and most of the carriers are saying 'that’s not quite right for me.' "
Chris Kroeger, Sabre Travel Network and GetThere North America senior vice president, said the key is preserving efficiencies. "It is complex because Continental has a view on how it wants to do it, United has a view, Qantas has a view and Air Canada has a view," he said. "There has to be a coming together of consistency and simplicity so that this can be accomplished across a variety of different airlines and suppliers."
Meanwhile, American Airlines next year will follow Air Canada by instituting a fully a la carte pricing structure, according to the Associated Press.