Category: aviation

Aviation, including formal complaints, public comments, analysis of violations, and other efforts to improve consumer aviation

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Distribution at American Airlines (teaching materials)

Edelman, Benjamin. “Distribution at American Airlines (A).” Harvard Business School Case 909-035, January 2009. (Revised June 2009.) (educator access at HBP. request a courtesy copy.)

American Airlines sought to reduce the fees it pays to global distribution services (GDSs)–such as SABRE–to reach travel agents. But GDSs held significant tactical advantages. For example, GDSs had signed long-term exclusive contracts with the corporate customers who were American’s best customers. Furthermore, travel agents tended to favor whichever GDS offered the highest commissions–impeding price competition among GDSs. Against this backdrop, American considered how best to cut its GDS costs.

Supplements:

Distribution at American Airlines (B) – Supplement (HBP 909036)

Distribution at American Airlines (C) – Supplement (HBP 913034)

Distribution at American Airlines (D) – Supplement (HBP 913035)

Teaching Materials:

Distribution at American Airlines (A-D) – Teaching Note (HBP 909059)

Distribution at American Airlines – Slide Supplement (HBP 914039)

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Objections to Tentative Decision and Order to Show Cause (IATA 787)

Edelman, Benjamin. “Objections to Tentative Decision and Order to Show Cause (IATA 787).” June 2014. (Before the Department of Transportation.)

I critique Order 2014-5-7 (Docket No. DOT-OST-2013-0048-0415) to the extent that the DOT permits, or purports to permit, airlines to sell tickets other than in accordance with published tariffs. I argue that tariffs provide important benefits to passengers and should be continued notwithstanding the proposed IATA Resolution 787.

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Misrepresentation of Fuel Surcharges in Airline Price Advertising with Xiaoxiao Wu

Air travel tickets often include surprisingly large amounts described as “tax.” In one round trip New York-Paris ticket we quoted in January 2012, the fare was listed as $230 while “tax” was listed as $598.14 — fully 72% of the listed total. If government taxes were actually as large as Air France claims, many passengers might want to complain to responsible politicians and regulators. And passengers might have a different view of cramped seating, unpalatable food, or other service shortfalls on a $230 ticket versus a $828.14 ticket. But in fact, specifically contrary to Air France’s characterization of $598.14 as “tax,” the majority of the “tax” was not charged by any government, airport, or similar authority, and rather was retained by Air France to defray its ordinary operating expenses.

Our investigation uncovers a variety of examples in which airlines have mischaracterized various surcharges as “tax” and otherwise failed to satisfy applicable price advertising regulation. We present proof in both screenshots and recorded telephone calls, preserving clear records of carriers’ misrepresentations. Details:

Misrepresentation of Fuel Surcharges in Airline Price Advertising