Tuesday, February 10, 2009

Baloney Watch (Cont'd)

A reader e mailed me suggesting that I follow up on a news article elsewhere today that got all worked up over the fact that people who buy nonrefundable tickets and then don't fly on the appointed date can't in turn donate those unused tickets to charity.

Sorry, but at the risk of sounding like my friend Terry Trippler (stalwart defender of the airlines in all matters), I'm on the airlines' side here. It's nonsense to expect an airline to re-adjust complicated fare and yield-management distribution systems because someone raises a faux-populist issue about bereft charities.

An airline ticket is priced in an intensely competitive environment. A nonrefundable ticket, which is purchased at a discount to a fully refundable ticket, actually has some refundable qualities, in that it retains value for one year from the purchase date -- provided the holder cancels the trip in advance.

Within a year, that ticket can be re-booked -- by paying a "change fee." Now here is where I think the airlines are behaving like roadside bandits in Baja, in that the typical change fee has now been jacked up to $150. (Southwest doesn't play this game, incidentally, and that's one of the reasons people are very loyal to Southwest. But Southwest also doesn't operate with the degree of requisite complexity that, say, Delta does).

But the issue raised wasn't change fees, it was a half-baked notion that the airlines should go to the extraordinary trouble and expense of allowing unused nonrefundable tickets, purchased at a significant discount and under specific fare rules, to become transferable -- to whoever and wherever. For charity.

Baloney. The logistical costs of doing this would certainly drive up the overall prices on all tickets. Far better to use the ticket and write a check to that charity, or donate frequent flier miles, which is simple to do and doesn't involve the complexity and potential fraud.

And if you can't use the ticket in a year, well, them's the rules. It's why it was way cheaper than a refundable ticket.

And double baloney to a statement in the source cited by my e-mail friend that "spoilage" -- that is, unused tickets -- encourages airlines to overbook flights.

That's a shaky assertion riding in cahoots with a largely nonexistent problem, overbooking. The Transportation Department's most recent statistics on overbooking, released today, show that 1.10 of every 10,000 passengers were bumped in the last quarter of 2008.

So overbooking is statistically minuscule. Secondly, if you cancel a flight on a nonrefundable ticket -- and canceling it is the only sensible thing to do once you know you aren't going that day; otherwise you lose full value of the ticket -- the airline knows that you are not showing up, and that seat returns to inventory. You have to be pretty dumb not to cancel if you have a ticket that you know will retain a certain value.

And you can't fix dumb.


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