With many airlines now selling “unbundled” fares, it's easy for travelers to confuse advertised fares with cheap plane tickets. But for consumers looking to get the best deal on flights heading into the summer travel season, it's worth knowing how 'trickle down prices' can make airline tickets more expensive.
In fact, according to travel experts, selecting the cheapest base fare is no longer the best way to get a good deal. This is because airlines now routinely charge more money for “extras” such as seat assignments, checked bagssnacks or wifi.
“No one likes to feel like they're being nickeled and dimed, like the price they saw for a flight was bait and switch,” Scott Keyes, founder and CEO of travel site Going, told CBS MoneyWatch .how.
Here's what to consider. At first glance, the starting price of a flight you find on an online travel site may seem very low. But after factoring in the cost of selecting your seat, checking bags and other extras, the fare can end up being much higher, as much or more than an all-inclusive fare.
This model, commonly known as drip pricing, can certainly increase an airline's revenue, and proponents say it benefits consumers by allowing them to pay only for the benefits they truly value. For their part, critics say it is more difficult to determine the true cost of the flight and to compare prices between airlines.
Keyes traces trickle pricing back to 2008, when airlines began charging passengers to check in second bags. This allowed full-service carriers to offer a low-cost, no-frills ticket to compete with budget carriers.
“That lower headline price brought people in, then they started adding seat selection fees,” Keyes said. “It's an innovation from budget airlines that the entire industry has copied and that full-service airlines have adopted for themselves.”
“It makes it very difficult”
For consumers, however, the problem with unbundling fares is that it makes it more complicated to compare what different airlines charge for tickets, experts told CBS MoneyWatch.
“It's very difficult to figure out what the total price will be,” said Columbia Business School marketing professor Vicki Morwitz, author of a report on how consumers react to drip pricing.
Their research shows that consumers tend to book the ticket option that seems cheapest upfront, but costs more once add-ons are factored in. “Consumers make mistakes and spend more money than they should,” he explained.
Jay Sorensen, president of IdeaWorks, a consultancy that has advised US airlines, agrees that trickle-down pricing makes comparing airfares more complicated. But it still believes it can benefit consumers by letting them pay for the extras they want, leaving behind those that aren't important to them.
“The result is, of course, that it's harder to compare across different products and airlines,” he said. “While this is true, airlines, as profit-seeking businesses, are under no obligation to facilitate comparison with their competitors.”
Sorensen compared the experience of booking a plane ticket today to grocery shopping.
“You roll up with your shopping cart, and as you walk down the aisles, you throw things into your cart,” she said. “You buy a basic fare and as you go down the booking path add things to your cart, such as a checked bag, seat assignment or pay to book a meal or other services,” he said. “This is very different from how travel was sold in the US”
