Friday, April 29, 2011

Price Transparency: Just Do It!

By Labor Day, airlines will have to disclose all fees, taxes, etc so customers can compare prices and make informed decisions. Lack of pricing transparency has long been a gripe among airline passengers, who see low advertised airfares and rush to buy tickets, only to discover at checkout that the "final" price is much higher, once all fees and taxes are factored in.

These days, "ancillary revenue" (from fees for checked luggage, flight changes, and so forth) adds up to nearly $8 billion in yearly ka-ching for for US airlines. That's a lot of extra money for services that once were bundled as part of the ticket price. Today's frequent fliers are savvy and dislike being nickel-and-dimed. Lack of transparency is a good way to annoy loyal customers and give them a reason to switch. No wonder Southwest Airlines has gotten traction from its no-fee luggage check policy (for 2 bags) and its no-fee ticket change policy.

Although airlines will be required to disclose fees and taxes to allow price comparisons, rental-car agencies don't and won't, most likely, without government action. Most of the 24+ consumers who commented on this New York Times article regarding rental-car pricing were not happy with the lack of price transparency. Price competition is a reality in the rental-car industry, yet the companies persist in adding layer upon layer of fees and extra charges that customers must accept or decline in the process of renting--which makes direct comparisons quite tricky.

Meanwhile, continued economic challenges are prompting many customers to research prices before they buy. Walmart's CEO points this out, saying: "Price transparency is becoming even more important." He's right. Travel marketers would win many fans and reinforce loyalty if they'd make their pricing more transparent. If a product or service is worth the money, tell customers why . . . and trust them to weigh the benefits vs cost on their own. Just do it!

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