Two weeks ago, George Hobica of Airfarewatchdog posted about a seemingly dramatic new change in the ways airfares are collected and disseminated, which he claimed would throw a wrench into the already-frustrating system of regularly fluctuating prices. “[A]irlines will be able to change their fares more often and more quickly than ever before, and consumers will need to keep on their toes like never before.” His suggestion caught my attention. The problem is, it’s a non-problem. The more I thought about it, his post just didn’t add up.

Under the title, “Airfares may change more often than ever in the near future,” George writes that “ATPCO, the folks who act as the airfare intermediary between the airlines and you, the consumer, via airfare distribution systems such as Travelocity, Expedia, and your local travel agent, will soon be implementing real time, instantaneous airfare updates, according to a person who is familiar with the matter.” The consequence of such a change, according to George:

What it means for you is that fares can fluctuate much more frequently than before, which may make shopping for airfares even more of a challenge.

What is means for airlines is that in order to respond to their competition’s airfare increases and decreases, they could conceivably have their pricing analysts work in a 24 hour environment. On the plus side for airlines and the online travel agencies such as Travelocity, they’ll be able to eliminate fare mistakes almost instantaneously instead of waiting for the next fare update, which could be hours away. On the minus side, airlines might have to add staff to their pricing and fare analysis departments, and really keep on their toes.

Right now, airlines file fares continuously throughout the day with the ATPCO clearinghouse, who then distributes those fares to reservation systems at set times (3 times daily for domestic fares on weekdays; once daily for domestic fares on weekends; up to 8 times daily for international fares on weekdays; and 3 times daily for international fares on weekends). Subscribers to those ATPCO feeds — airlines, and the global distribution systems such as Galileo, Amadeus, etc. — pass the information on to their clients, usually agencies. As long as inventory holds up (and if fares are low, that’s a big if), fares will be stable for a several-hour window.

On the surface, George’s account of the possible shift from periodic updates to real-time updates of airfares sounds like a plausible tale, and a big shift in the way the business works. (Except for the “pricing analysts” working 24-7… They have computers that do this sort of thing these days, you know…) But the more you think about it, the more it just doesn’t make sense for anyone to worry about this.

For starters, the concept of live-updated fares in ATPCO isn’t new, so George’s post is a few years too late. It’s been around for at least five years, and I can find evidence of it on the ATPCO website going back to at least February 2007. It’s currently pitched under the name “Instant Subscriptions.” It’s an option for subscribers, not a new standard. So the service is available, but it’s not being implemented. Which begs the question, why not?…

I called Rick Seaney, CEO of FareCompare, who works closely with ATPCO and knows more about their airfare products than any person really should. I asked Rick about the prospects of a shift to an instant-fare-update world. He confirmed my skepticism.

For starters, Rick pointed out, the technical challenges of implementing a system like this are huge. Huge hardware investments. Rewriting software. In today’s environment, this is highly unlikely.

Then there’s a collective action problem, and the issue of fare variation: Let’s assume that some agencies subscribing to ATPCO feeds would opt for the live updates, but others don’t. Then assume Airline A raises some of its fares. If Agency XYZ gets its fares through a live-updated feed, but Agency ABC doesn’t, then ABC will show the old (lower) fares. Now XYZ’s low-fare-guarantee would kick in, because its competitor ABC would be offering the same flight for less. So XYZ could lose money if it offers the live-updated fares. Unless everyone opts for live updates at once, it’s going to be a problem.

More to the point: Even if — if — airlines were signed on to constantly update new fares in real-time, would they want to? What’s the benefit in doing so, if you’re an airline? There are already multiple updates, only a few hours apart, so when one airline lowers or raises fares, their competitors don’t have long waits before they can respond.

And finally, even if the published fare changes, there’s still the matter of inventory. Airlines can publish all the fares they want, but if there’s no inventory of seats to back it up, any fare war is moot.

So is it possible that we’ll see live-updated fares someday, with prices bouncing around like a bank stock on options-expiration day? Sure, if every subscriber to airfare prices joins the fun, and if there’s plentiful inventory to back up each price point. None of this is happening anytime soon.

So let’s not fearmonger (or faremonger)…

Nearly three years ago, this site reviewed the then-burgeoning field of airfare aggregators, also known as metasearch sites. These sites let you compare the fares available across multiple airlines and across multiple booking sites, to help you find the lowest fare. Last time, Kayak came out on top. How much has changed in the last three years?

For starters, there are sites which have folded, some new competitors, and sites that changed their model significantly. At the same time, there has been pushback from airlines and suppliers, some of which have resisted the aggregator model. (The lawsuits between American Airlines and Kayak, which initially resulted in American Airlines no longer being listed in Kayak results, was perhaps the most prominent case of pushback. Since October 2008, aa.com results are back in the results. More on that below.)

The result: The golden ring of a truly complete search, covering all the options and all the providers, is still a ways away. No single site actually finds every flight option, every fare, or every seller.

But that doesn’t mean that there aren’t differences between the aggregators. It’s time to disaggregate the aggregators again.

This year, each site was put through multiple tests. Four kinds of itinerary were tested: A large-city to medium-city domestic US flight with multiple carriers offering direct service; a medium-city to small-city domestic US flight with at least one change of plane required; an international flight with a US origin; and international flights (from Paris to Dubai, and Manchester to Madrid) to test how sites do for non-US flights. For each of these flights, I tested a short-term booking (7 days advance purchase) and a longer-term booking (30 days advance purchase).

This time, I compared Kayak, Sidestep, Mobissimo, TripAdvisor Flights, Momondo, Skyscanner, WeGo (formerly Bezurk), Trax, Farecast, Fly.com, and Dohop. Sites which were on the list last time but either folded or stopped doing metasearch include FareChase (bought by Yahoo, then abandoned in March 2009), PriceGrabber, and Qixo.

So which aggregator came out on top in 2009? Here’s the summary, with site-by-site reviews thereafter… (more…)

Rick Seaney and the FareCompare team have once again beaten me to the punch: They’ve compiled a list of U.S. domestic airlines’ fees and put them all in one place.

Most every fee the airlines have imagined (so far) is there. The phone booking fee. The luggage fee. The cost of snacks, booze, and meals. The pet fee. The skycap fee. The re-ticketing fee. And on and on. (The fee fee, the Arial font fee, and the fee fi fo fum fee, as outlined here, somehow didn’t make the cut.)

It’s a great list, insofar as it helps consumers make better decisions. I’ve always argued that the lowest fare may not be the best value. (And that doesn’t even take frequency, upgrade possibilities, on-time arrivals, or anything like that into account.)

Be sure to check out the list.

File this under PR that works, because it makes me laugh… FareCompare has decided to send a semi-crotchety member of its staff to every state in the continental U.S., dressed in a Santa suit. It’s a simultaneous homage to Christmas, a testament to mileage-running, and a test of their site’s low-fare search capabilities.

The travels and travails of Grumpy Santa, who gets to spend all day in planes for close to two weeks, are being tracked at FareCompare’s Santa site. I hope he’s on the clock while he’s doing this. And that he gets to keep the miles.

I joked to FareCompare CEO (and blogger) Rick Seaney that Richard Nixon had tried this once before, when he campaigned for president in 1960. He just didn’t care about saving money on airfare at the time. (For the political junkies out there: Nixon promised to visit all fifty states when he accepted the Republican nomination. He lost to Kennedy, and pundits have argued ever since that Nixon spent time flying to out-of-the-way places, just to cross off a state from his 50-state strategy, rather than campaigning in tossup states where his presence might have made a difference.)

So in the spirit of the other season we’re in — presidential election season — I requested a photo of FareCompare’s Grumpy Santa giving the Nixon “victory” farewell from the top of the air stairs. Ask for photo, get video. How’s THAT for service!

(Reading this in a feed reader? Click here to view the original post with video.)

The other day, FareCompare.com CEO Rick Seaney sent over an analysis of AirTran’s recent fare sale. “When is a fare sale not really a fare sale?” The answer: When the airline hikes its fares, only to lower them with great fanfare a few days later. Hooray for the status quo?

Rick suggests that this is tantamount to those stores that once lined the streets of midtown Manhattan, declaring they were going out of business. That is, until you saw that the name of the store was “Going Out of Business, Inc.” or something like that.

So how did AirTran join such esteemed company as the all-things-must-go merchants of New York City? Within a one-month period, Air Tran raised their fares three times — twice for three days, once for five days — and then brought them back to the previous level. Each time, their return to normal pricing was heralded with breathless press releases and a marketing blitz, announcing a sale.

Rick is right: This is an at best questionable, at worst deceptive business practice. Think about it: If a department store jacked up its prices for a few days, then brought them back to normal, customers might be filing complaints with the Federal Trade Commission. Perhaps AirTran thinks that the fluctuating nature of air ticket prices makes them immune to such charges, but I think they’re walking on some very thin ice.

So now they’ve been called out on it. We’ll see if they’ll change their tune, of they’ll just keep right on doing it. If enough people catch on, the phrase “AirTran fare sale” might be like the boy crying wolf.

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This is the kind of experiment I wish I had thought of first: The guys at FareCompare decided to put various airline websites’ low-fare guarantees to the test. The results are mixed.

They did it by actually buying a ticket on every airline in their test. (They only included airlines that HAD a guarantee, naturally, so that meant American, Continental, Delta (sort of), Northwest, and United. US Airways, Southwest, AirTran, jetBlue, etc., weren’t included, since they don’t have a guarantee.)

Because FareCompare’s fare alerts — which I have strongly recommended in the past — give you several hours’ advance warning when a fare is about to drop, they knew exactly which tickets to buy. They bought the tickets before the fare drop went live. When the fare went down, they took a screenshot of a lower fare and filed for a refund and/or voucher with the airline.

What they found: Lots of variation. Each airline eventually came through, but the amount of effort required varied greatly. It wasn’t always easy: Some denied refund requests at first, or didn’t respond within 24 hours.

The airlines’ policies vary, too. Most required a $5 difference before considering a refund, but Continental required $10. Most give a cash refund, but United only gives vouchers. Most accept a lower fare published on any site, including their own, while American and Northwest bizarrely exclude lower fares that appear on their own sites. Delta doesn’t have a guarantee, per se, but they’ll refund your ticket within 24 hours.

It’s a great experiment. Go read the whole thing.

Note that FareCompare was testing the airlines’ sites only. Some online travel agencies have guarantees as well. For example, the folks at Peter Greenberg’s site recently had to step in to help a reader enforce Expedia’s guarantee.

In all these cases, it’s up to the customer to proactively search for a lower price within 24 hours. No one is going to volunteer the news that the price has dropped. But if you’re willing to spend the time and effort to check the prices again and wrestle with customer service, you could collect a few bucks.

The folks at FareCompare.com are an inventive bunch. I really like what they’re doing to lift the hood on the mechanics of airfares. I’ve previously posted about their fare alerts that tell you what the discounted fares will be hours before you can actually buy them, and how their fare search tools let you do flexible searches that the big booking sites have disabled.

So when FareCompare COO Neil Bainton started posting an index of airfares at his blog for airfare wonks, Airtravelchannel.com, I was interested.

What the index does is track the lowest fare (ignoring fare rules like minimum stay or advance purchase) between the 50 largest markets in the United States. That’s 1250 fares. (50 markets times 50 markets = 2500, but the fares are the same in each direction, so divide it by two to get 1250.)

Much like the Dow Jones Industrial Average doesn’t track all stocks, but only 30 blue chips, this index doesn’t cover all the bases. The index is a first cut at measuring the state of airfares as a whole. With tens of thousands of city pairs, and hundreds of fares between each airport, getting a glimpse of ALL the airfares in America isn’t going to happen anytime soon, and might not even be useful. (How many people really want to fly, say, from Grand Junction, Colorado to Pellston, Michigan? So I don’t think it’s not really necessary to include every fare.)

The index could have some interesting applications, especially for journalists or financial analysts who want to track the big-picture of fares in America. Just this past Tuesday, the index “crashed” 29 points, or 5.8%, with a Delta sale bringing the average down.

The index also comes with a one-to-four star label, to give the current reading historical context. Four stars obviously means that fares on the whole are generally good.

But the utility of this number isn’t immediate: No one buys “fares on the whole,” they buy specific tickets. This is all interesting stuff, and data hounds could eat this up. But individual travelers would probably benefit from a more localized index that targets their home airport. Neil tells me this is in the works.

An index just for your own city might be one extension. A rule-driven index might be another. Business travelers who can rarely take advantage of ultra-low advance purchase fares might instead benefit from an index of refundable fares, or 3-day advance purchase fares, possibly sorted by home airport as well.

Much like there is an industry-specific stock index for practically every sector of the economy, this could balloon into a huge number of indicators. Heck, this could be monetized by creating futures contracts based on an index like this. Go long the San Francisco fares and short the Dallas index! Don’t laugh, there are websites out there that already do this sort of thing, and Wall Street isn’t far behind.

In any case, it’ll be neat to see where this goes. Information like this increases the transparency of airfares and travel costs as a whole, which is good for consumers. Bring it on.

The good folks over at FareCompare want to know what you think will happen to Delta in the great merger game, so they’ve set up a poll. It’s not quite making book on the outcome, but they’re trying to see what the public thinks will happen.

(And no, the TradeSports/Intrade people haven’t set up a wager for airline mergers. Yet.)

Click here for the poll.

Reader Steven writes in:

I know that so called y-up fares can be a good way to sit in first class for cheap, but I can’t find them for flights to Europe or Asia. Can you help?

The reason you can’t find them, Steven, is because there are none by that name. International long-haul discount first (and business) class fares go by different names than their domestic equivalents.

Y-UP fares and their ilk are limited to North American flights, and generally refer to an upgrade from coach to first on two-class planes. See here for background on Y-UP fares, and see FareCompare’s Y-UP search tool to find these fares on routes you travel.

For Europe or Asia, you’re generally going to be looking for Z-fares. But there’s no handy-dandy search tool (yet) for Z-fares like there is for Y-UPs. (Neil and Rick, consider this a challenge!…)

Z-fares crop up from time to time, but aren’t available on every route. Traveling in summer or the December holiday season maximizes your chances of finding such a fare.

For international premium class travel, be sure to also consider the startup airlines like Maxjet, Silverjet, Eos Airlines, MiMa, and L’Avion (update: L’Avion is now renamed OpenSkies). These offer all-business class flights to London, Milan, or Paris.

Related:
- First class for less than coach?
- More tips on finding discounted first class fares (Y-UP, Q-UP, etc.)
- Update/Correction re: discounted first class fares (Y-UP, Q-UP, etc.)
- Y-UP and Q-UP first class fares apparently not enough: Welcome M-UP and B-UP fares
- More trans-Atlantic flights, but lower prices?

I’m a fan of FareCompare’s fare drop alerting service, which I’ve mentioned before here. The alerts go out as soon as a lower fare is loaded into the system, sometimes several hours before it’s actually even available for purchase. That beats the pants off of Travelocity and Expedia alerts.

Until now, the problem was the volume of alerts. If you signed up for their e-mails, you’d get three messages a day, essentially one for every instance of new fares being published. If any flights, to anywhere in North America, dropped, you got an e-mail. That’s great if you’re completely flexible about your destinations, but really, how many people want to travel to Ketchikan, Alaska in November?

Now, finally, you can limit alerts to just those cities you want. Once you’ve signed up for alerts (see the box on the left side of their homepage), you can click “manage” and tinker with the settings. Big thumbs up on this improvement.