'Lower' Airfares May Not Tell Whole Story

Travelers checking airfares on American Airlines' Internet site in recent weeks may have noticed what seemed to be a substantial drop in prices.

No such luck. In fact, fares on most major airlines have been creeping up this year as the cost of jet fuel has risen. But Fort Worth-based American did make a change to its Internet pricing in April that makes fares appear cheaper at first glance.

Previously, the airline had included taxes and fees along with the base price of an airline ticket during an initial search on American's site. Now, the first price consumers see is the base ticket price plus a federal excise tax. Other taxes and fees are displayed later, when the traveler decides on a specific flight to purchase.

American executives say the change was necessary to compete with discount airlines such as Dallas-based Southwest Airlines, which have long displayed only the base fare on initial Internet searches.

"The way we did it before would be like if an auto dealer advertised a car and included the taxes and title in the price," said Rob Friedman, American's managing director of interactive marketing. "Other industries just don't do it that way."

The change comes as American's Web site has experienced rapid growth. In May the site set a record for the amount of revenue booked on aa.com, Friedman said.

Most of the other major carriers, including Delta Air Lines, United Airlines and Continental Airlines, still display fares in the traditional manner, reflecting the total purchase cost.

But in recent years, big carriers such as American have faced far more competition from smaller, discount airlines such as Southwest and AirTran Airways, which serves Dallas/Fort Worth Airport.

Travelers perusing Web sites could have gotten the impression that American's price was more expensive than AirTran's, for example, even though the base fare was identical.

"We wanted to show our customers that we offer the exact same competitive fares that Southwest and JetBlue and others do," said Billy Sanez, an American spokesman. "This really helps demonstrate that."

American changed the Internet price display with little fanfare. The new system was first reported in The Wall Street Journal on Tuesday.

Joel Frey, a spokesman for the online travel firm Travelocity, which is based in Southlake, predicted that other major hub carriers will eventually change their systems to display the base price only during initial searches.

"It's probably only a matter of time," he said. "The airlines are so competitive, no one wants to be left out of anything."

The new model does create some potential headaches -- as well as opportunities -- for sites such as Travelocity and Orbitz, which allow travelers to search multiple airlines for ticket prices.

Most of those sites continue to display the taxes and fees as well as the base price. That could give the impression that cheaper fares are available when booking directly on an airline Web site.

But Frey pointed out that Travelocity specifies upfront how much of the purchase price comes from fees and taxes. That could actually be an advantage for consumers who want to compare the final price of an airline ticket on several different airlines.

"Customers want as much information upfront as you can give them," Frey said. "Nobody likes to see the price suddenly go up when you're ready to make the purchase."

In addition to being competitive with discount airlines, American executives say another advantage of adding taxes and fees later is that travelers will realize how much of their total cost goes to the government.

"There isn't always a lot of awareness there when it comes to just how heavily air travel is taxed," Friedman said.

In addition to the 7.5 percent federal excise tax, tickets typically include a security tax that was levied after 9-11, airport fees and other charges.

Terry Trippler, an airline analyst for Cheapseats.com, an online travel site that tracks airfares, said consumers should be mindful that they may not see the final price until just before they buy the ticket.

"Practically every airline does this in a slightly different way," he said. "It can be very confusing."