Search for a flight on Expedia or Priceline and you’ll likely see an “opaque” fare: a price, but no carrier or even the exact time. How does this help you, one may ask? Well it’s not meant to help you – it’s meant to help the airlines.
These mysterious fares are a tool that can help carriers move seats they have a hard time selling. This strategy is turning even more complex with “secret fares”, the next evolution in the airline quest to more tightly control ticketing inventory, and the costs imposed by companies that distribute their fares. It even involves an app.
On Wednesday, the mobile-only travel seller Hopper began offering these “secret fares” from a half dozen airlines, including Air Canada, at prices that could be as much as 35 per cent below what the same carriers publish elsewhere.
The initial 60,000 routes covered will be international, and mostly long-haul. The minimum discount is 5 per cent below fares offered with full details elsewhere, according to Hopper. Air China, Panama’s Copa Holdings, Chile’s LATAM Airlines, Turkish Airlines and WestJet Airlines are the other carriers participating in Hopper’s secret offerings.
“This is the first time in years that these airlines have actually allowed someone” to offer fares lower than what they offer publicly, said Dakota Smith, Hopper’s head of growth and business. “Because we’re mobile-only and don’t have a website, airlines are not seeing us as direct competition to their web fares.”
Canada-based Hopper plans to add another six airlines in coming weeks and predicts that the US Big Four (American, United, Delta, Southwest) will be interested because of the “closed” selling environment, one that’s invisible to online search engines such as Alphabet’s Google and Baidu. They “can’t scrape our web site to see what we’re doing,” Smith said. “You also can’t link to these fares.”
Carriers the world over are keen to differentiate themselves, and the experience of flying with them, from rivals. This is part of an industrywide move to train travellers to assess their flights on attributes beyond price, which has long been the key criteria for consumers when deciding which airline to fly. A customer who selects a secret price may find themselves on an airline they never considered before. Who knows, they may like it.
These obscured fares also point to a day when airlines will be better able to dynamically price tickets. Right now, carriers load their fares several times a day into a central clearinghouse, which then publishes them across global distribution platforms such as Sabre, Travelport Worldwide and Amadeus IT group.
Airlines have battled these companies for years over costs. In 2011, efforts by American Airlines to elude the distribution firms by providing its own schedule and fare data directly to larger online travel agencies triggered a series of lawsuits over access to such data. In October, JetBlue Airways yanked its flights from 12 online ticket sellers to cut US$20 million (NZ$28.5 million) from its annual distribution expenses.
For an airline, however, the true value of a secret fare is the chance to snag a rival’s customer with a lower price-secretly. The platform is “completely private and doesn’t spark a competitive reaction,” Smith said.
Airlines see mobile as their most important way of selling tickets, according to a 2016 report by Atmosphere Research Group for the International Air Transport Association, an trade group. Of seven ticket distribution platforms, carriers rated their mobile app most important both today and going forward to 2021, according to the study, which examined the likely evolution of airline ticket distribution over the next five years.
“Airlines recognise that mobile will become passengers’ ‘first screen’ for connecting with airlines – and everyone and everything else in their lives,” Atmosphere analyst Henry Harteveldt wrote.
By 2021, more than 26 per cent of leisure travellers and 20 per cent of business passengers globally will be “mobile only”, operating with smartphones and tablets rather than laptop or desktop computers, according to the Atmosphere report. A Pew Research Center survey released on Monday found that 20 per cent of Americans have a smartphone but no broadband Internet at home. Among those 29 and younger, that figure jumps to 28 per cent.
Hopper said it plans to add secret fares from “six or seven” additional carriers later this month, also mostly international flights.
The app’s user can set a search for destination and price range, though the company said more than one-fifth of sales are from recommendations generated by its algorithm, not from the price alerts users set to track fares for a particular destination. In fact, Hopper said the app can be used to motivate travellers to change their destination entirely, another enticement for airlines.
“If the airline is interested in offering secret fares on routes they don’t serve via our recommendation algorithm, we encourage them to offer a deeper discount to incentivise travellers to shift their destination,” Hopper spokeswoman Brianna Schneider said.
– The Washington Post