New York Times April 12, 1998

So, How Much Did You Pay for Your Ticket?

By MATTHEW L. WALD

It was a typical flight in the era of deregulation: United Airlines Flight

815 from Chicago to Los Angeles, with 204 tickets sold at almost as

many prices. Deregulation has changed the way passengers are routed

and tickets are sold.

To illustrate the wide disparity in fares, United provided details of a

Boeing 757 flight last Oct. 31 from its hub at O'Hare International

Airport.

A total of 186 passengers showed up for the trip, 68 of them beginning

their journey in Chicago and the rest changing planes there. The flight

would end in Los Angeles, but that was the final stop for only 97 ticket

holders; most of the others were bound for Australia, on a different

plane with the same flight number.

But if any of the 33 passengers who held tickets only for the

Chicago-to-Los Angeles trip had compared notes, they would have

found that they had paid 27 different fares. One paid nothing, using

frequent flyer miles; another who bought a first-class ticket on the day of

departure paid $1,248.51. And one who bought a coach ticket on the

day of travel paid $108.26.

Illustrating the complexity of pricing, Gregory Taylor, vice president of

revenue management at United, said the last passenger was probably an

older person flying on a special deal called a Silver Travel Pack, which

requires advance purchase of coupons and advance reservations, and

then exchange of a coupon for a ticket on the day of the flight.

In general, people who bought their tickets earlier paid less, but not

always. The lowest cash fare paid was $87.21 one way (purchased 29

days in advance), but one compulsive planner bought his ticket before

Labor Day and paid $229.60.

Deregulation is a success, according to both the airlines and government

aviation experts, because average fares are down and travel is up. The

Air Transport Association, the big airlines' trade group, says fares,

adjusted for inflation, are down 35.5 percent from 1978. It has made life

complicated, though, with airline pricing completely divorced from cost

and, from the passenger's side of the ticket counter, arbitrary.

The Transportation Department said last week that it was formulating a

policy to determine when pricing crossed the line from arbitrary to

predatory, with big airlines squeezing out little ones. The big airlines say

they are simply more efficient.

Cyril Murphy, vice president for international affairs at United, said that

before deregulation, planes flew about 55 percent full, with only three or

four fares offered. Since then, he said, planes are fuller so the costs are

spread wider, and the average fare has dropped sharply, allowing a

boom in air travel and benefiting both consumers and the airlines.

In the weeks and even months before a flight, prices fluctuate. Rather

than let seats go empty, Murphy said, airlines will mark down prices if

demand is slack. But they also hold out seats until the last moment, for

last-minute travelers; the high price charged at that point, airline

executives say, is the airlines' reward for taking the risk that the seat

might go empty.

But customers, Murphy acknowledged, do not always see it that way.

"We always assumed we had a happy customer base," he said. "We

didn't understand that on a micro basis, that isn't what the customer was

seeing."

[From the graphic on price discrimination: Here are some examples of prices paid for similar seats on United Airlines Flight 815 (on a Boeing 757) from Chicago's O'Hare to Los Angeles on October 31, 1997.]

First Class

Coach

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