Business travelers get no free rides On-the-job fliers often miss discounts brought by competition

Airfares up sharply

Group lobbying against what it calls predatory pricing

March 08, 1998|By Suzanne Wooton | Suzanne Wooton,SUN STAFF

An article in Sunday's Business section incorrectly characterized an average airfare from Baltimore to six cities as an average leisure fare. The fare, the average paid by primarily business travelers booked through American Express, incorporates a range of rates.

The Sun regrets the error.

BWI may be discount fare heaven, but pardon the business traveler if he's not overwhelmed.

While competition has driven down fares to some popular business markets, like Chicago, others, like Dallas, Atlanta or Charlotte, N.C., are no bargain. The $600 round-trip business fare to Pittsburgh is so high that one Baltimore-based sales representative often saves $300 by driving to Philadelphia -- then taking a flight to Pittsburgh.

"In markets where there's no competition, you see price gouging," said Peter M. Buchheit, director of travel and meeting services for Towson-based Black & Decker Corp., which spends $16 million a year in air travel for U.S.-based employees.


Overall, business fares have risen 23 percent in Baltimore over the past two years, according to the most recent American Express Travel Services survey of six frequently traveled business markets. By comparison, the average leisure fare to those same cites rose just 2.4 percent, while the lowest discount fare -- typically a 21-day advance -- dropped 9.2 percent.

Nationwide, business fares have increased even more significantly -- 38 percent over the past two years, with particularly sharp jumps in markets like Atlanta, where hub carriers have a stronghold.

The increases have come despite the lowest inflation rate in years -- just 1.7 percent in 1997 and 3.3 percent the year before that.

"Baltimore is doing better than the national average," said Robert Harrell, a consultant to American Express Travel Services in New York. "But a lot of the discount flights there aren't necessarily in business markets."

For instance, the round-trip business fare to Dallas-Fort Worth, a market served nonstop only by American Airlines, is $1,436, while a round-trip business trip to Los Angeles can cost $1,198 or more.

Yet business fares at Baltimore-Washington International Airport

undoubtedly would be higher were it not for low-fare carriers. After Southwest Airlines began service to Providence R.I., for instance, the average one-way fare plunged from $194 to $46 and forced down ticket prices in the nearby Boston market as well.

In addition, fares dropped last year in the Baltimore-Detroit market when Pro-Air started service between the two cities. Most major carriers in that market now match Pro-Air's $158 round trip fare, although they restrict the number of low-fare seats so business travelers still often pay between $772 and $1,252 round trip.

Since 1978 when the airline industry was deregulated, carriers have been free to set their own fares, with the government regulating the industry only on safety issues. Even before deregulation, however, fares were structured so that those who could plan and purchase tickets in advance paid the lowest prices. Business passengers who needed to make last-minute trips at fully refundable fares were required to pay a premium for that convenience.

"We hold open seats for business travelers and because we take an economic risk holding them open, it's a premium product that costs more money," said David Fuscus, a spokesman for the Air Transport Association in Washington, which represents most of the nation's airlines.

But business travelers say it's not the disparity in fares that angers them, but the surprisingly sharp increases in recent years. In addition, large carriers have built fortress hubs that thwart competition, they say.

"Deregulation has worked extremely well for the leisure traveler but not very well for the business traveler," said Kevin Mitchell, president of the Business Travel Coalition in Philadelphia, which has marshaled some of the nation's largest companies to lobby for better business fares.

While many of the coalition's five dozen major corporations have cost-cutting contracts with airlines, the group has failed to secure any sweeping changes from the industry. As a result, it has mounted a lobbying effort in Washington, and Congress is now considering several bills, including one that calls for the U.S. Department of Transportation to act within 30 days on complaints of predatory pricing.

According to Patrick Murphy, DOT deputy secretary for aviation, the agency has conducted a preliminary investigation in response to a growing number of complaints about rising business fares and unfair competition.

"We have learned that there is unfair and exclusionary behavior out there," he said.

This month, the department is expected to issue its first-ever guidelines on airline competition. Among other things, it will outline criteria to help determine whether big airlines are intentionally losing money on routes in order to drive a low-cost competitor out of the market. Since May 1996, no new discount carrier has started up.

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