19th Jan 2008
One airline is bucking the dubious trend of masking taxes and charges. Clive Dorman reports.
Singapore Airlines has become the first big foreign carrier flying to Australia to buck the marketing "virus" of deceptive airfare pricing.
The airline admits the move is in response to a customer backlash against so-called component pricing, where fares are advertised minus "taxes and charges" that, in some cases, are half the real fare.
The company's initiative is remarkable, considering its home base, Singapore, is a hotbed of component pricing, especially among low-cost carriers.
Even its subsidiary, Tiger Airways, will continue to use asterisked pricing for its Asian services because, it says, it is unwilling to give its competitors an advantage - even though, for its Australian services, it has fallen in line with the voluntary agreement by domestic airlines that has done away with the practice.
The airline's other Asian subsidiary, SilkAir, is also continuing to use component pricing.
"It would just murder us in the market," Tiger's Australian spokesman, Matt Hobbs, says of the reason the airline will continue to use asterisked pricing in Asia. "It would make our fares look not as competitive, even though we are actually undercutting our competitors."
But Singapore Airlines has decided to take a stand. "We will standardise our advertising practices to provide consumers with the full price in all advertisements, wherever we advertise," says its executive vice-president marketing and regions, Huang Cheng Eng.
"In some markets, this may mean we look more expensive than our competitors at first glance. But we think consumers understand that there are a variety of extras that form part of the ticket price now. And we think it's time the industry moved to do this across the board.
"In those markets where this practice is not adopted widely, we will take the lead, and give consumers the full picture."
In Australia, Qantas has been alone in advertising the full price of airfares on its overseas services. Even its subsidiary, Jetstar, dabbles in the practice. So does the Virgin Blue international subsidiary, Pacific Blue.
A Federal Government spokesman said last week the Government was committed to outlawing component pricing.
Jetstar spokeswoman Simone Pregellio points out that Jetstar uses the practice only at the first stage of an online booking. In the media, it advertises full fares including all taxes and charges.
Nevertheless, since most of Jetstar's international customers book online, their first inquiry gives the impression that the fare they'll book is hundreds of dollars cheaper than it really is.
(Warning: there's also a quirk in the Jetstar online booking process where, if you book a fare to Australia, departing from a point outside Australia, you are quoted the fare in US dollars.)
Virgin Blue spokeswoman Amanda Bolger admits Pacific Blue is continuing to advertise asterisked airfares against its will.
"We're in big favour of changing the law to make it illegal," Bolger says of the component pricing syndrome. "But we won't do it [abolish the practice] until everyone else does it, because it would put us at a competitive disadvantage."
http://www.smh.com.au/news/news/fare-play-for-hidden-costs/2008/01/16/1200419875261.html
