Las Vegas Airline Would Let Flyers Gamble on Prices
(LAS VEGAS) -- With all the angst that goes into buying an airline ticket -- Am I too early or too late? Do I wait until the last minute or purchase far in advance? What about the fees? -- purchasing airfare can feel like a bit of a gamble.
But one Las Vegas carrier wants to raise the stakes, so to speak. In a plan outlined in Bloomberg Business Week, Allegiant Air is considering a pricing structure where customers can either lock in a price or choose an adjustable ticket price based on fuel price fluctuations before travel.
In other words, fliers would have to pay more if fuel goes up or would get a partial refund if fuel goes down.
Allegiant Air relies more on leisure travelers than other carriers, with a presence in several Florida markets, Myrtle Beach, S.C., Hawaii and Las Vegas. The dependence on leisure fliers means it’s more exposed to fuel prices than airlines who have higher-paying business travelers to shoulder fuel cost increases.
The new pricing structure is at least six months away, according to Bloomberg Business Week. The airline’s CEO said that even if the plan passed muster with regulators, the technology isn’t in place. “We as a company are not ready for it mostly because our automation is not ready,” said airline CEO Maurice Gallagher Jr.
Getting the plan past regulators may be no small task. Earlier this year, the Department of Transportation issued several new rules to provide clarity in airfare pricing for consumers, including disclosing all taxes and fees up front. While a plan such as Allegiant Air’s wasn’t specifically addressed, it doesn’t conform to the overarching goal of making airfare easier for the average consumer to understand.
But, the DOT told Bloomberg, “Our rules do not prohibit airlines and ticket agents from selling tickets in which passengers pay part of the fare immediately and the rest later, with the final payment dependent on changes in fuel or other costs.” As Bloomberg points out, some tour operators operate similarly, with a sale structured in partial payments.
It’s clear Allegiant Air, like the rest of the airline industry, is looking for creative ways to increase the bottom line. Allegiant became the second domestic carrier to charge for carry-on bags. (Spirit Airlines, another airline largely dependent on leisure travelers, was the first.)
Copyright 2012 ABC News Radio