Component Pricing Takes Flight

The Australian government has passed legislation banning the travel industry practice known as “component pricing”. Bless ’em. This dodgy practice is rife in Europe, where you can get “free” fares all over the place (not including taxes and fuel surcharges). It’s a rort pitched at anyone who thinkks there is such a thing as a free lunch.

How do the airlines make money, if they offer a free flight??? In two ways:

First, only a few seats on any given flight will be at the cheapy cheap rate.

Second, it’s simply a lie. Across the board the travel industry inflates this “taxes and charges” amount to produce an airfare. Example: ABC airlines has a sale, reducing their economy airfares from $1,200 to $800. Awesome. But magically the taxes and charges have risen by an equivalent amount. Your $800 airfare might not be as cheap as the XYZ fare for $999.

Travel agents get rorted because they get commissions based on the airfare. If the far gets halved, and the taxes double, their income take the hit. It’s dodgy, but clever too, in a mildly fraudulent kinda way 🙂

The ACCC is about to start policing the new legislation. It means travellers can more accurately compare “sale” fares. That means the market will be transparent. It means less false advertising. It may not however put a stop to airlines rorting the commissions of your local or online travel agent.

Check out prices at the better travel agents around town – Flight Centre, Best Flights, STA – suddenly the seemingly $400 – $800 discrepancy between fares when an airline releases a “sale” fare has dissipated. Same fares, just with the marketing strategy removed. It’s now a more genuine comparison between what airlines (and travel agents) are offering.

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