Op-Ed: SimpliFares Now Just Framework For Raising Prices

S impliFares were good news at the time of implementation, especially for business travelers, but continued evolution has morphed SimpliFares into a pricing scheme that is rapidly increasing your travel expenditures, as much as doubling your airfare costs. No matter what catchy marketing name is used, corporations and their purchasing teams need to look at the facts.

The raising of the $499/$599 one-way fares, the continued raising of fares throughout the system, and a general cost escalation has passed the cost of travel to the corporations and continues to pass on increases to the corporations and consumers. Let's also understand that the airlines raised the caps by $100 for fuel costs and did not raise the fuel surcharge by that amount, resulting in a direct cost increase that will remain long after the fuel crisis changes, just like the airlines did before. For example, the evolution from the start of SimpliFares to today has pushed roundtrip fares between Cincinnati to Portland, Ore., and Seattle from $418.20 to $654.40—a 56 percent increase; Cincinnati to Ontario from $425.39 to $758.80—a 78 percent increase; and Cincinnati to Denver from $398.20 to $704.40—a 77 percent increase.

In 2004, Delta implemented their SimpliFares in Cincinnati and then went on to other cities, then nationwide. The other carriers responded favorably to these fares, and matched or became competitive to the Delta offer. This was in contrast to the ValueFares that Bob Crandall and American Airlines tried 20 years ago. The business and world climate is quite different than two decades prior.

SimpliFares were implemented to "provide our customers with an affordable pricing structure with fewer restriction." The essence of these changes were the end of the Saturday-night stay, the reduction of the ticket-change fee to $50 from $100, a $499 cap on one-way coach fares and a $599 cap on one-way first class tickets, and four levels of advance-purchase coach fares of 3, 7, 14 or 21 days.

Sounds good, right? But Delta apparently couldn't bring itself to keep SimpliFares truly simple, as pointed out by The Brancatelli File. Here are the lowlights:

•Advance-purchase tickets still require a roundtrip and most of them require a one-night stay in place of a Saturday stay.

•SimpliFares does not include international travel and doesn't even cover the entire United States.

•Exempt from SimpliFares: Delta codeshare flights operated by Continental, Northwest and Alaska airlines and even Delta Connection commuter flights operated by SkyWest.

•SimpliFares adopts the vile ticketing surcharge added last year by other Big Six carriers: An at-the-airport ticket purchase incurs a $10 fee and a ticket booked by telephone costs $5 more.

Corporate travel managers and consumers need to understand that airfare schemes, no matter how they are marketed, are growing and will continue to grow at an accelerating rate. The airlines can and will change the published fares and the number of seats available to maximize their revenues, and maximize your cost of travel. This is called yield management. The corporations need to continue to watch their costs and increases by the carriers. This includes where they put the fuel surcharges, and ignoring the 1,000-mile bonus that may be offered if you buy the ticket through their Web sites.

The airlines need to make money and get a reasonable return on their money, but raising their fares without changing their overall price structure, including management structure, salaries and overhead is not going to fix the overall problems of the mega-airlines. Just look at the cost per mile of the megas versus the lower-cost airlines and you will see some of their problem.

As we continue to move in the new fare structure, you need to monitor your monthly costs and analyze your city pairs and airfare costs before and after SimpliFares. These monitoring activities need to be done on a monthly basis and then you should be communicating this activity to your direct and senior executives. You need to use this information with your airline relationships and do business with those airlines that are making it easy for you. Continue to proceed in your quantitative data gathering and continue to listen to the "real" messages being communicated to you by the suppliers.

Robert Langsfeld, a partner with travel management consulting firm The Corporate Solutions Group, is based in Lake Tahoe, Nev.