A Behind-The-Scenes Tectonic Shift In the Airline Industry Is Creating New Opportunities For Premium Travelers
It’s time for a current events class. Two things happened back in December that are premium-travel game-changers, harbingers of how we’ll purchase airline tickets in the near future.
First, American Airlines went to war with Orbitz and Expedia over the costs it gets charged to book through the two intermediaries. The result: American severed its relationship with Orbitz in December and was first demoted on Expedia, and then, on New Year’s Day, expelled. The shift is meant to drive traffic to its own website, allowing American to reduce costs, and present “upsell options” to travelers.
Second, on Dec. 13, Continental announced “FareLock”, which is offered online and on the phone. It gives travelers on Continental flights the option to “lock in” a fare and itinerary for either 72 hours for a non-refundable fee (typically $5 to $29 in my research) or 7-days ($9 to $29), with the cost depending upon departure date, route, and ticket availability.
After test-driving Farelock, I think there are tremendous opportunities to fly better for less, if you know how to use it.
Here’s The Back-Story
The air travel distribution industry is complex, and so it’s nothing new that the airlines and distribution partners (Global Distribution Systems, GDSs) are locking horns. Airlines are trying to change the way customers buy their tickets.
Airlines want more control of what can be sold by online agencies and optional travel fees are escalating the situation. Airlines who now live on fees have dreams of bypassing GDSs like Sabre, saving enormously on distribution fees imposed.
Upsell options are more complicated to communicate through GDSs, and are not fun “merchandizing” tasks for individual travel agents. As for online agencies, they would need to make significant infrastructure investments to automate the processes.
What’s The Bottom Line For You?
Well, right now you’ve just been handed a new buying opportunity in Farelock offered by Continental—a scheme that, if indirectly, pushes you into buying at the airline’s site (not any others), which in turn exposes you to this and many other upsell options, which can be delightful!
Here’s How To Use It To Your Advantage
Example Opportunity 1 – Buy Indecision Time
Not sure if you want to visit London or Paris, or depart on May 5th or the 10th? Lock-in a 50-day advance-purchase fare and, for the small fee, use the 7-day Farelock window to finalize the rest of your travel arrangements—which could range from “Where do I want to go?” to “When do I want to go?” or “Who do I want to take with me?” In effect, the Farelock can trump the much-despised advance-purchase requirement.
I booked a 50-day advance-purchase Business Class ticket from New York to London on Jan. 10 for a departure on March 1 for $2,729.30 (including taxes) and then purchased the 7-day Farelock, which gave me until January 17 to confirm my ticket. The next day (now I’m within the 50-day window), I priced the same flights and dates and received a rate of $7,110.30, a 61% increase ($4,381). All I paid was $19 to get some extra time to finalize my plans!
Example Opportunity 2 – Buying Discounted Fare Inventory
The problem I often face with domestic travel is finding discounted First Class seat availability. As with all published fares, each airline only allots a certain amount of inventory for discounted First Class fares and once gone, the fare can double even if booked in advance. For example, on LAX-NY Continental offers a $1,898 round-trip fare in Z class, but it’s usually gone three or four weeks out on the non-stop flights and the full fare is $1,260 more ($3,158, booked in F class).
With Farelock, I can lock in a few different itineraries at the lower First Class fare while I finalize my travel plans. Granted, I might spend $100 to do it if I want to protect four or five different itineraries, but the lower fare more than offsets that.
[aside headline="Calling United" alignment="alignright" width="half" headline_size="default"]Given the recent merger between Continental and United, you would think that the latter would be offering Farelock or something similar. However, when queried, United responded via e-mail that it was “not able to provide an answer, as doing so could be deemed commenting on a future pricing action.” So here’s our suggestion: Offer Farelock on Continental/ United code-share flights; or even better: offer it for alliance airline flights.[/aside]
Example Opportunity 3 – Buy Upgrade Clearance Time
Upgrade not cleared yet? Increase your odds of clearing a mileage-award waitlist by purchasing the 7-day fare hold, giving you time to find a mileage-award seat on another airline or employ another ticketing strategy.
Example Opportunity 4 – Buy More Shopping Time
Buying airline tickets always feels like shopping on Christmas Eve, meaning you’re out of time to shop with no return privileges. With Farelock, use the extra time to shop around for a lower fare or a better flight schedule.
Example Opportunity 5 – Buy Mileage-Transfer Time
Use Farelock to gain time to transfer points when booking award travel. Putting a 7-day hold on a ticket to Europe starts at $29. (Continental also offers a free 72-hour hold on award reservations, which is second best to American’s fiveday hold and better than Delta’s two day hold.)
Farelock Rules and Caveats
- Use Farelock for an itinerary you would hate to lose.
- It’s not useful for last-minute trips: The program becomes available on most itineraries 18 days out it seems.
- Do not use the option to “automatically purchase the ticket at the end of the lock.” Instead, go for the other option, and go back in on your own. You want to stay in control right up to the second you buy the ticket.
- I doubt that all destinations are offered under the paid Farelock program: I have never found mileage award tickets to Hawaii for instance.
Final Farelock Thought: Fees … Big Deal!
Since almost everything that used to be free to the average traveler (checked baggage and meals) is now for sale, it’s great to see a new trend: selling things that allow premium air travel strategy execution. I’ll take a 7-day Farelock most any day.
Coach Travelers Pay Their Fair Share
Let’s face it, for years the airlines made money primarily off the premium traveler. This has changed over the last two years with the drop in First and Business Class travel, which forced the airlines to find ways to make money on discounted coach tickets. With LAX-NY costing as low as $200 in economy (as it has for the past 20 years), coach travelers are finally having to pay their fair share.
I’m a believer in paying for what you get and getting what you pay for (if not much more). I’m glad to see the idea finally taking root in the airline industry.