BA Automation Aims To Eliminate Cross-Border Ticketing

British Airways has launched a crackdown on cross-border ticketing by U.K. travel agents after introducing comprehensive fare auditing technology. With savings of 50 percent or more possible through this form of creative ticketing, the move could raise fares considerably for corporations that ask their agents to resort to this controversial practice.

Agents are strongly advising clients against cross-border ticketing but also have spoken out against the crackdown, believing it to be a restraint on a technically and morally legitimate manipulation of fare tariffs. An example of cross-border ticketing, usually used in business class, is booking a Paris-London-New York-London-Paris itinerary, which is much cheaper than a simple London-New York-London return. Agents remove the first Paris-London coupon before giving the ticket to the traveler and the London-Paris coupon is not used at the end of the trip. Whether this is an illegal action has remained a moot point, but it does contravene airlines' conditions of carriage.

Until now, BA has policed cross-border ticketing mainly through spot-checks, such as asking passengers boarding at London what the weather was like in Paris. It also audited 4 percent of all tickets. New automation has increased that level to 40 percent and BA plans to move to 100 percent. BA will not crack down as hard on back-to-back ticketing—the purchase of multiple tickets to circumvent Saturday night restrictions—as long as all coupons are used and surrendered in the correct sequence. The practice was very much discouraged in the United States in the mid-1990s and essentially deemed illegal by the carriers.

BA head of industry affairs Mike Ryan said a simple return and a multi-leg itinerary are different products and, therefore, are priced differently. "People who transit through London expect to buy a lower fare than those originating from London because of the inconvenience of traveling indirectly," he said. Ryan added that the U.K. Office of Fair Trading ruled in 2001 that BA's condition on the sequential use of coupons was necessary so it could sell different flight products. However, critics of airlines said carriers use such conditions to impose artificially high fares. This is especially true in the United Kingdom, where the cost per mile of a business class ticket across the Atlantic can be 70 percent higher than from other major European destinations.

Louise Innes, chairman of the Institute of Travel Management of the United Kingdom & Ireland, said low-cost carriers already have demonstrated that the fares set by mainstream carriers are artificially and unreasonably high. "Our budgets are being hit by extortionate fares, so until the airlines come out with some creative pricing, buyers will carry on with creative ticketing," she said.

"I am not sure I would call it creative ticketing," Ryan said. "People are buying tickets with the express intent of not using them. I wouldn't call it fraud, but it borders more on that. If people wish to take advantage of the low fares, they should fly to Paris" and start their journeys from there.

That comment incensed Mike Bor, managing director of London-based travel management company World Travel. "BA does not mind diluting revenues as long as the traveler makes the trip but does mind if the traveler pulls out the coupons without making the journey," he said. "It proves the whole pricing system is ludicrous. Creative fares would not have a market if airline pricing was simplified and not targeted at forcing business travelers to pay maximum rates."

The dispute over the legitimacy of cross-border ticketing could be settled finally by the European Commission. The Commission is planning to publish a consultation paper on airline conditions of carriage at the end of April or beginning of May. BA is hoping the Commission will adopt the OFT ruling on sequential use of coupons, but transport commissioner Loyola de Palacio has positioned herself as a champion of consumers and free trade.

"There is doubt as to whether cross-border ticketing would be judged illegal within the European Union, given its single market status," Bor said.

Charles Petruccelli, international president of global travel services for American Express, lent his support to regulatory change on this issue when addressing the Guild of European Business Travel Agents annual conference in Lisbon on March 21. "The International Air Transport Association requirement that tickets be bought in the country of origin greatly restricts our clients' ability to manage their airfare expenditure," he told delegates. "We want this to be lifted because we believe that clients should be free to buy tickets wherever they are cheapest. This is a freedom they have for all the other supplies they purchase. Why should travel be any different? We need transparency in European cross-border fare structures."

Meanwhile, BA may start to dismantle some of its own pricing restrictions. Under pressure from low-cost carriers, it soon will announce a new short-haul fare structure to take effect June 1. One casualty could be the Saturday night rule, which low-cost carriers do not impose.