Transparency beyond government

How many times have you been attracted by those blaring advertisements on fantastic promo airline fares, going as low as one peso or even “free”? How many times have you tried to book a ticket hoping to grab one of those great bargains—and then find out that they’re really no big bargain after all, if not already sold out?

The problem, of course, is that the advertised fares conveniently omit additional charges that usually well exceed—and often amount to several times—the so-called basic fare.  There is no better (and no more common) example of misleading if not outright deceptive advertising than this, which we see practiced all the time by most of the competing players in the market.  When I last wrote on this issue more than four years ago, I likened this to having your friendly neighborhood panaderia advertise all over town regular-sized pan de sal at 50 centavos (or even zero centavos) apiece.  But when hundreds of townspeople troop to the store to snap up the bargain bread, they are told that (1) there are only five dozen pieces available per day at that price, and (2) there is a two-peso “flour surcharge” on top of the price, bringing the actual cost to the buyer, taxes and other fees included, to about P3 per pan de sal.

Advertised airline fares are no different.  One airline recently advertised a “one-peso” fare that comes out to be a genuine bargain even with taxes and other fees included.  The ad also mentioned how many of the bargain seats will be available over the duration of the promo, which led me to pull out my calculator. Based on the same airline’s own passenger load projections (running well beyond 10 million a year now), it turns out those bargain fares represent a measly 1.5 percent.  That’s about three seats for every planeload of passengers, less than the number of vacant seats one would typically find in any given domestic flight anyway.  It seems to me those “free” seats really amount to no more than the “patikim” (free taste) that your neighborhood fruit dealer routinely allows her customers.  But they make great business sense for the airlines indeed.  While it’s good for the few lucky ones who manage to book those fares by hitting the Internet the moment the bargain is announced, one wishes that there were a lot more of them and a lot easier to come by.

All this is part of the healthy competition that now marks domestic air travel (and other key industries formerly ruled by monopolies), thanks to decisive moves made by the Ramos administration in the 1990s.  While this atmosphere of greater competition is a welcome boon for us consumers, what is not welcome is that we remain caught in a caveat emptor (“let the buyer beware”) situation that still makes us vulnerable to being misled or taken advantage of.  And there have been many instances by which this has led to consumer complaints in things such as pricing, rebooking and refund policies, and non-use of airport passenger tubes, among other things.

Don’t get me wrong; I do not fault anyone for those fuel surcharges, taxes and other fees that come with the basic fare, to the extent that they are legitimate costs incurred by the airline.  What riles me is the way these charges only show up as a little “plus-plus” in the quoted fare, when from all indications, they are part of the usual costs of providing the service in the first place. We consumers do not only feel misled; we are also left guessing whether part of the amounts being additionally charged of us are indeed legitimate costs, or simply additions to company profits. Significant differences among the airlines in both the amounts and the way these added charges are quoted do not help dispel this suspicion.

What exactly goes into the “plus-plus”?  I looked at how the airlines would charge me for a flight to Iloilo and back on Sept. 25-27, for example, in search of the best fares offered for a flight closest to midday. A proper comparison beyond the all-in prices turns out to be impossible, as each airline itemizes the components differently. Airphil Express would charge P2,806 for that trip, composed of P1,586 basic fare, P600 fuel surcharge, P280 tax, P200 terminal fee and P140 service fee.  Cebu Pacific would charge P2,833.12, with P1,176 as basic fare, P560 for baggage allowance and P1,097.12 for taxes and fees. Philippine Airlines does not give a breakdown of its best all-in P3,662 fare.  And Zest Airways charges P2,295.52, composed of P1,176 basic fare and P1,119.52 tax and surcharge. Apples and oranges? You bet.

I’ve asked it before, and I ask again: Shouldn’t our regulators require all advertised fares to be all-inclusive and transparent, like what the US Department of Transportation, the Canadian Transportation Agency and other countries now require of their airlines? In rules that took effect last January, US airlines are now required to include all mandatory taxes and fees in advertised fares. Airlines are also required to permit passengers to hold a reservation without payment or cancel a booking without penalty for 24 hours after the reservation is made, if done one week or more prior to the flight. Will our own government take the cue?

Much has been said lately (but hardly anything done still) about the long-pending Freedom of Information bill that would operationalize transparency in government, something the late great Secretary Jesse Robredo championed by example. Yet transparency is not something demanded of government alone; transparency in business is just as crucial for an economy that promotes the greatest good for the greatest number.

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