Are All Those Airline Fees -- Including the New 'Travel Protection' Gimmick -- Affecting Your Bottom Line?
Travel protection initially seems like a sound idea. But there's a problem. Here are five moves you should make.
To pad their bottom lines, airlines have historically leveraged your ever-changing travel plans as a business traveler dealing with last-minute emergencies.
In today’s environment, where almost every travel option equates to some sort of fee, and changes are prohibitively expensive, entrepreneurs need to be especially wary. Over time, a startup’s bottom line can easily be chipped away by a stream of accumulating fees, while the top-10 air carriers continue to ride this ancillary income to robust revenue booms.
Think: $29.7 billion in 2017. That was the customer ancillary-fee income figure included in a July report from IdeaWorksCompany, a research firm that specializes in commercial airline data. The report said that these fees had become a key and necessary contributor to airline profitability.
As if on cue, three major airlines -- JetBlue, Air Canada and Westjet -- have just announced yet more hikes to their checked baggage fees, paving the way for other carriers to follow suit. JetBlue announced it is also raising its ticket-change fee, a sum that already can surpass the cost of the initial fare. For the small business that relies on travel, not tracking this endless exercise in nickel-and-diming could be disastrous.
One of the latest gimmicks joining the laundry list of add-on travel-related services comes in the form of the travel protection program. For a “small fee,” usually another $25 to $35, a customer can safeguard his or her trip from change or cancellation fees by insuring it. Sounds great for your sales team or traveling CEO, since last-minute travel changes are part of daily business. But there’s a problem …
In August, Sen. Edward J. Markey (D-Mass.) released a report critical of the policy limitations and high costs associated with the travel protection plans airline carriers and online travel portals have begun pushing on their customers. The report correctly points out that the airlines created the market only after locking customers into non-refundable tickets that required exorbitant fees to alter.
The airlines then came to the rescue with a ready-made solution to that problem they created: low-cost travel protection plans, which on paper, at least, cover the flyer in the event that travel plans change.
According to the report, however, while these plans are often marketed as “total” and “comprehensive,” they may actually fail to cover the consumer trying to make a claim. Policy limitations, deductibles and exclusions, buried deep in the fine print, often leave the flyer woefully unprotected, the report claimed. It revealed that these plans had become a significant money-maker for the airline industry.
We have ourselves to blame, to some extent. In the digital age, we’ve become our own novice travel agents, Airlines for America, an advocacy group representing the big airlines, explains: Today, the group says, 82 percent of flyers make their own ticket purchases, either directly with the airline or through aggregator sites like Kayak or Travelocity.
This is an especially attractive alternative for small businesses that don’t want the overhead costs of fronting a travel agency. But because we lack formal training, especially when it comes to reading online terms and conditions, we’ve actually set ourselves up as easy marks.
So, what should consumers be on the lookout for when it comes to these digital come-ons from the airlines or other online service purveyors? Here are five things that should give you pause:
Be wary of offers you need to consciously opt-out of.
Most travel protection programs are baked into the offer, meaning you have to physically decline the service or physically remove it from your online shopping cart. Be wary of those types of offers. They generally signify a bad deal the marketer wants you to take because it will result in a pure profit.
It’s easy in this click/continue world to just accept that offer, but savvy travelers will go the extra step to opt out.
Track your ancillary-fee expenses.
It’s not easy tracking these change fees and upcharges while you're on the road. Oftentimes, the charges get lost in our credit card statements, so a business doesn’t get a clear picture of just how much these change fees are affecting its bottom line. There are many travel accounting apps out there, but BizXpense Tracker is one of the most versatile and inexpensive, providing an easy way to audit these unexpected charges.
Also make your flight changes the day of: The reason is that the fee difference between making a flight change the day before a flight and making it the day of the flight can be hundreds of dollars. Many carriers will allow you to make day-of changes, starting at midnight, at a much lower fee than you would have incurred any time prior.
Read the fine print.
I know, I know. You haven’t read a user-agreement page since you created your first MySpace account. And for some reason, we’re all so proud of that.
But when it comes to protection offers on the internet, for services you’re actually going to pay for, it’s worth taking a few minutes to read through the fine print. You don’t have to be a lawyer to figure out how the “total” in total protection often falls surprisingly short in terms of practical application of the coverage.
Learn how to identify tricky marketing practices.
While deception in the marketplace is illegal, few consumers have the time or resources to fight abusive policies. Being able to identify tricky digital marketing tactics will make you a better consumer who’s less likely to fall a victim. Some common marketing tactics include:
- Mark-down pricing -- when the price of the policy is placed next to a much more expensive, alternative price.
- Sense of urgency -- when a policy is presented as being limited in stock or offered for a limited time only.
- The Gruen Transfer -- this refers to the specific response consumers have when interacting with labyrinth-like interfaces. When a buyer gets confused and eventually frustrated, he or she is more likely to make an impulse purchase.
Protect yourself through a travel agent.
This may sound foreign to anyone born after 1995, but having the help of a travel professional can be an asset when you maneuver through online insurance policies. Just be wary of agents who, in partnership with the travel providers, try to steer you toward questionable protection programs.
Explain to the agent up-front that one of the reasons you’re coming to him or her is a need for an agent's expertise to help you avoid being ripped-off. It then becomes a case of trust-but-verify until you can find the agent who will work with you.
Entrepreneur Leadership Network Writer