Back in December American Airlines revamped their fares structure to offer fares that included bundled services and benefits.
There are now three ‘categories’ of fares — outside of premium fares — at American:
- CHOICE: these are akin to American’s current fares. They’re the lowest price, come with a change fee, and continue to offer full mileage accrual. They haven’t taken anything away at this fare level.
- CHOICE ESSENTIAL: No change fees (although you’d still pay any difference in fare when making changes), one included checked bag, and group 1 boarding(+$68)
- CHOICE PLUS: All of the items included with Choice Essential plus 50% bonus miles, no fee same-day changes, no fee same-day standby, a premium beverage onboard (+$88)
Except… Pizza In Motion discovered that the official line about fixed pricing seemed not to be quite true.
He detailed examples where Choice Plus was adding $176 or more to the cost of a roundtrip, instead of the advertised fixed price of $88.
I asked American about this, and there isn’t any sort of glitch, nor has there been a change in strategy. Instead, it reveals something a little bit inside baseball for those of us interested in how airfares are filed so I thought I’d pass along the solution to the mystery Pizza in Motion identifies.
With these Choice, Choice Essential and Choice Plus options American isn’t selling add-ons. That’s what I would have expected them to do, because ancillary fees aren’t subject to the federal government’s 7.5% excise tax… so doing so would shift a whole bunch of revenue outside the jurisdiction of that tax.
Instead they have filed Choice Essential and Choice Plus as airfares themselves. They believe it’s worth eating the tax to, in their telling, fundamentally change the way that airfares are distributed.
Currently airfares are sold pretty much as commodities, with price as the predominant leading factor (and sortable by schedule, of course).
American is trying to package and sell different elements of the travel experience as part of the initial fare selection, rather than as an add-on. Anecdotally they suggest that there’s quite a bit of pressure on third party travel agents to go along — corporate customers are asking them why Choice Essential and Choice Plus fares can’t be booked through those portals.
Since American sells these as separate fares, any booking agency can issue tickets. But most aren’t set up to do so. Time will tell if this gambit is successful in getting online travel agencies in particular to change their sales patterns — though it would certainly be nice if one could figure out how to sell a ‘total trip’ rather than just the base airfare.
Spirit Air — the carrier with a fee for everything including carry on bags and online ticketing (web convenience fee!) — has said that nearly all of the complaints they get are from customers booking on other sites, rather than their own, since booking at SpiritAir.com hits you over the head with disclosures (and upsell opportunities). Customers would be a whole let less confused. (Google to the rescue?)
But since these are airfares, the $88 fixed price applies to a single roundtrip Choice Plus fare — constructed fares will add more to the cost of a Choice Plus ticket.
I might fly Washington National – St. Louis – Los Angeles and back, and price it as a single roundtrip ticket. But the pricing could be done as DC – Los Angeles roundtrip, or as a DC – St. Louis roundtrip plus the cost of a St. Louis – Los Angeles roundtrip. Sometimes the former wouldn’t be possible due to a fare’s routing rules (perhaps the regular roundtrip fare allowed connecting in Chicago or Dallas only) or because adding together the two roundtrip fares could actually be cheaper.
In cases where a fare is presented that is constructed from “the sum of local” fares, Choice Plus will be a more expensive add-on. That’s not a change in strategy from fixed price, and it’s not a glitch. It’s a function of the way that the additional services are being offered as actual fares.
[…] Gary of View From The Wing took it upon himself to contact American about the apparent issue. And, since he’s got a smidge more readership than I do he got a response from American on this issue. […]