N&C

A decree turns the purchasing of transport tickets upside down

A decree requires transport services to display their prices at the start of the booking process.

The French competition authority (DGCCRF) has announced the publication of a decree strengthening consumer information in the passenger transport sector.

(published in Les Echos on 14 April 2017 by Clément Peltier with AFP)

 

No more hidden costs

From July 2017, a decree will require transport operators to display their prices at the start of the booking process.

Now that’s a good idea: no more booking fees that appear at the last stage with an extra 25€. Gone are the unlikely credit cards that nobody has, such as Entropay or Electron, which see their holders charged an extra 30€ at the end of the booking process.

Commissions here, fees there, taxes here, surcharges there. Phew! That’s the end of it. I don’t want to denounce anyone, but these dubious commercial practices were mainly the preserve of low-cost and online travel agencies. As the latter don’t carry out revenue management (they don’t own the prices or stocks they receive from the airlines), some agencies resorted to this type of practice in order to appear favourably on search engines (just like the low-cost companies, incidentally). A poor way of trying to make a semblance of Yield. Pathetic.

Reprehensible practices: much remains to be done

But there are other practices that should be avoided. 2 examples:

  • The process mainly used by online agencies known as « IP tracking », which consists of increasing the price after several connections even though the airline or hotel price remains unchanged.
  • False messages creating a sense of urgency on booking sites, particularly in the hotel industry, such as « hurry up, 6 people are booking the same hotel as you! » or « there are only 2 rooms left at this price! » written in bold red. But after several connections over the course of a week, it’s nothing of the sort. And the 2 rooms remain desperately available. In fact, they may never have had more than this quota of two rooms to sell…

Where is the limit?

Our intention is not to set ourselves up as the tourism police and try to ban everything. We could be told that Revenue Management is a scam and should be banned, or at least certain practices such as overbooking. We have had the opportunity to speak out on this subject on several occasions, in particular to show that overbooking is both an economic necessity for airlines and a necessary counterpart to the flexibility of certain tickets, and that it is to the customer’s advantage far more often than it is to his disadvantage (Pascal Niffoi’s speech on BFM Business).

Public authorities have been regulating air transport for a long time: Warsaw Convention (1929), Montreal Convention (1999), European Directive on overbooking (2004), DGCCRF (whose powers have recently been extended, giving it the power to issue injunctions and impose administrative penalties, law no. 2014-344 of 17 March 2014).

What should be regulated? What should be banned?

2 points to consider:

  • The first is the distinction between segmentation and discrimination: it is forbidden to offer different prices for men and women, or to differentiate prices according to your religion or nationality. These prohibitions set a limit to segmentation. For the rest, differentiating prices according to the length of stay, the time of booking or the type of customer (young person, senior citizen, family, etc.) should be permitted, with a degree of freedom left to the operators (there is no universal definition of what « young person » is, and transport operators or theme parks have their own age criteria).
  • The second is more subtle: it concerns commercial practices that are deemed to be abusive or that can be likened to deception. This second category includes hidden charges, lies to create a sense of urgency and exorbitant charges reserved for those who don’t have the right credit card.

We are counting on the common sense of public authorities to put some order into these practices and to distinguish between the genuine segmentation work carried out by Revenue Management and the sometimes eccentric practices that damage consumer confidence. So that Revenue Management is protected from the abuses that are falsely attributed to it. And for the good of everyone.

Keywords: Reservation, Revenue Management, transport service, IP Tracking, DGCCRF