NYTimes.com Article: Policy Shift on Nonrefundable Tickets Lauded

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Policy Shift on Nonrefundable Tickets Lauded

August 26, 2003
 By JOE SHARKEY






The decision last week by major domestic airlines to back
away from strict policies on nonrefundable tickets was
hailed yesterday by air fare experts as a significant
victory for business travelers.

"It's a huge retreat" by the carriers, said Kevin P.
Mitchell of the Business Travel Coalition. The policies,
which were imposed last year and greatly restricted the
ability of passengers to reuse cheap nonrefundable tickets
easily if they canceled their plans, were a "remarkable
failure" that did not generate revenue, he said. In fact,
Mr. Mitchell said, they drove business travelers to
low-fare competitors.

"Of all the new policies, restrictions and surcharges that
the airlines layered in the last 24 months, this was the
most onerous of all" for business travelers, he added. "It
was a huge gamble by the carriers that this policy would be
enough to force business travelers into buying
higher-priced refundable tickets."

Instead, he said, "the low-fare carriers just opened their
arms up for all these fleeing business travelers."

In the revisions made last year, passengers who changed
flight plans needed to rebook nonrefundable tickets for a
specific date within a year of the original departure date.
Airlines made the changes to discourage business travelers
- who tend to make more changes in flight plans than
leisure travelers - from using cheaper nonrefundable
tickets. Previously, a nonrefundable ticket could be used
any time within a year of the original departure date, with
the payment of a $100 rebooking fee.

Terry Trippler, the air fare expert at the travel site
Cheapseats.com, suggested that the retreat from the
stricter policies, which was led by American Airlines and
quickly matched by other major carriers, was "precipitated
by American peering into September and realizing there is
no travel rebound afoot, and that they have to stop
bleeding market share to Southwest, JetBlue" and other
low-fare carriers.

Mr. Trippler and other airline industry experts said they
expected all major carriers to make further revisions soon
fully restoring policies on nonrefundable tickets to what
they were before the revisions last year.

Under the changes announced last week by most carriers, a
passenger must still cancel a nonrefundable ticket before
departure time to be able to rebook later (paying a $100
fee).

But Northwest Airlines said last week that it would not
require a cancellation notice before departure time - which
in effect reinstated the policies on nonrefundables in
place before the revisions last year.

"Northwest is leading the way on this," Mr. Trippler said,
adding that he expected others to follow.

Airline finances brightened a bit in July, according to the
Air Transport Association, the domestic carriers' trade
group. Revenues were up more than 8 percent over July 2002,
the group said. Average fares were up 2.6 percent, the
first monthly rise this year.

That does not translate into a better ride for passengers -
and it does not mean air travel is up. Planes took off 82
percent full on average in July - the highest load factor
since the trade group started keeping such records in 1970.
But that is because there are fewer seats, as airlines put
fewer, and smaller, planes in the air.

Passenger traffic in July, traditionally the busiest travel
month, was off 8.6 percent from July 2002.

Trans-Pacific air fares, meanwhile, were off sharply - down
8.2 percent on average from a year ago.

Hotels need to catch up with airlines in selling on the
Internet, according to a new report from the Center for
Hospitality Research at Cornell University.

Last year, one in 12 hotel bookings were made online, but
by 2005 one in 5 will be, say Bill Carroll and Judy Siguaw,
who are professors at the School of Hotel Administration at
Cornell. But hotel chain Web sites will control only about
half of those bookings. The rest will be made by
third-party online bookers like Expedia and Travelocity.




http://www.nytimes.com/2003/08/26/business/26MEMO.html?ex=1062907173&ei=1&en=e74a7da29668e5c7


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