The price is right: under pressure from Web competitors, airlines guarantee their prices online are lowest

Latin Trade, April, 2005 by Forrest Jones

Flying has never been more complicated. Security lines at airports are tighter, it's tougher to get visas, and then there are expensive cab rides to costly hotels. Even something as mundane as buying an airline ticket has become a pain: Online travel sites battle for business in an estimated US$115 billion market worldwide, claiming to be the cheapest. And they're everywhere. It's hard to tell where the deals are, even if you understand the Web.

The airline companies want you to forget about all that. American and Continental now guarantee that you won't find anything cheaper than on their Web sites. If a customer finds a cheaper ticket for the same flight and for the same cabin class within one day of having bought a ticket through American, the carrier will make up the difference and add on a $50 travel voucher. They're hoping customers will buy tickets, manage their frequent-flier miles and even book hotel and car reservations on American's site, making it a one-stop-shop.

"From soup to nuts," says Rob Friedman, managing director of interactive marketing at American Airlines in Fort Worth, Texas. The carrier expects its new guarantee to bring in more business, which has been growing. Last year American's Web site, aa.com, reported a 33% hike in revenues, Friedman says, although he would not provide details. By the end of 2004, American's online presence had become the single-largest channel for ticket sales for the airline.

Continental Airlines is also in on the trend. If a passenger finds a lower published retail price online, the company refunds the difference and provides a $100 certificate toward a future flight. Like American Airlines, Continental's passengers also will earn 1,000 bonus miles when they fly on tickets purchased at the carrier's Web site in addition to the miles earned for the flight itself. "We guarantee that passengers will find the lowest Continental fares at Continental.com, and we're willing to back up our guarantee with a travel certificate" Christy Rodgers, senior director for Latin American sales, said in a statement.

Still, analysts say, there are a lot of resellers in the market who drastically slash prices when they buy too many tickets. That's especially true in the international air-travel market, where there are more resellers. In the U.S. domestic market, however, the cheapest flights are often found on the carriers' Web sites. "It's always best to look around," says Stuart Klaskin, an aviation analyst in Miami.

Some sites display what's available. Others, like Priceline.com, let you bid on flights. Punch in what you want to spend and see if the airlines or third-party ticket distributors will sell you a ticket at your bidding price.

Hotel chains, for instance, in the past have promised that their Web sites list their cheapest rates, although that has not always been true, says Rudy Maxa, an expert on the travel industry. It's hard to find out where the cheapest rate will be in any given moment.

Hassle. Airlines themselves cut deals with online travel agencies or with resellers to move excess inventory, making it difficult to boast that they have the cheapest prices. "You know neither hotels nor airlines can be completely sure of that," Maxa says. Plus, getting the airline to make up the difference within a day's time can be a hassle, Maxa says. "God knows who you have to go to, to get $50," he says.

Online travel agencies like Expedia.com and Travelocity.com are delving more and more into package travel. They'll offer airline, automobile and hotel combos, although the buyer will unlikely know where he or she is saving money--whether the rental car is at cost or the hotel room is discounted. "You don't know who is giving who a break," Maxa says.

Guarantees notwithstanding, customers are still shopping around for the cheapest tickets. Thomas Jahnes, a business development manager in Fort Lauderdale, Florida, travels frequently from South Florida to South America. Often, Jahnes says, looking through the newspaper helps. Some local travel agencies often offer nice savings in the smaller-circulation newspapers that generally serve immigrants, Jahnes says. "I get the idea they must be buying sections of an airline's cabin at a certain date," he says.

SHOP AROUND

Online travel sites abound, but their offerings vary.

EXPEDIA (5) $884-$961 Traveler tools: Quick links to info on currency, driving, flight status, airports, travel documents, as well as e-mail alerts

HOTWIRE (0) Flex-saver fares: Name your price and a.m. or p.m. departure; site chooses connections, carrier and times, then charges you

ORBITZ (5) $889-$955 Deal detector:. Name your price and the site finds a match and alerts you by e-mail

PRICELINE (2) $936-$955 Bid for travel: Give credit card and approximate travel times; site chooses carrier and charges you

TRAVELOCITY (3) $882-$948 Travel info center: Travel updates to your phone, handheld computer, pager and fax

(number of flights) economy roundtrip non-stop flight from New York's John F. Kennedy to Sao Paulo's Guarulhos airports, and price range