Only increased competition can bring down air fares

Jul 24, 2008 Letters

DEAR EDITOR,
I read in your July 18 edition that Minister of Tourism Manniram Prashad is concerned about travel agents selling tickets at “inflated prices” for travel for CARIFESTA which is being hosted by Guyana this year.

In particular, the Minister is concerned with the concept of “blocked tickets” by certain agencies. I support the Minister’s call for lower fares and I am in solidarity with travelers and I believe they should get the lowest price possible to make their journey to Guyana from overseas.

I am familiar with airline pricing, travel agency consolidators who sell at lower prices than airlines, and the concept of block ticketing, having been involved briefly in the airline business and writing reviews of airline service for major international carriers.

Although it is possible, it would seem almost impractical for travel agencies to manipulate prices of tickets which are largely set by the airlines.

I do not see any evidence of price gouging by any agency. As it stands right now, only two airlines operate the Guyana-US route – CAL and Delta.

We lost North America and Universal and from last February Travel Span suspended services because of rising fuel costs. Constellation also suspended services from last April.

So there has been a shortage of seats for flights to Guyana. Airlines set prices based on demand. Because of higher demand than available seats, prices rise – simple basic economics at play.

If the demand were low, the airlines would be forced to re-price the fares to encourage people to make a trip. Summer is peak time for travel.

So naturally, the airlines raise fare. The agencies do not set fares contrary to what many people may believe.
However, a few agencies have contract with airlines allowing them to buy bulk seats at a fixed low fare and resell them at any price.

CAL does not release bulk seats to travel agencies. Delta engages in that practice. Two agencies from NY are authorised to sell tickets at a commissionable rate and both, I believe, or at least one NY agency also has the right to purchase bulk seats and resell them.

That is a business venture that involves risk and one should not be upset with the agency for engaging in a business risk to make a profit.

If an agency bought bulk seats, it would want to sell it and not suffer a loss.
So if the agency calls a price and nobody is willing to purchase then the agency would have to lower the fare.

But the truth is there simply is no seat coming down to and from Guyana and if one finds a seat the price is hefty.

I know because I had to pay very high fares from NY, higher than the cost of tickets I purchased for travel to India and Fiji.

My investigation reveals that the price charged by the agency with “block tickets” is lower than that being sold by Delta directly whenever a seat opens up.

So there is no evidence that any agency is “making a killing” in fares. If a block ticket agency does not sell its tickets, it loses money.

So it would have an incentive to sell what it “blocked”. What is needed to lower fares for travel to Guyana is another airline for the route. Only increased competition can bring down fares.

I remember when Guyana Airways (GA) was in existence, BWIA dare not raise fares beyond the reach of passengers. GA was a moderating influence on price hike.

I humbly suggest to Minister Prashad to offer incentives and subsidies to Guyanese carriers like Travel Span to resume operations and to encourage others to start operations. American carriers got soft loans, tax breaks and grants after 9/11.

There is talk now among politicians of giving them further breaks in landing fees so they can continue flying to certain airports.

Similar breaks should be granted to TS and other Guyanese carriers, especially in lowering landing fees and removing the tax on aviation fuel as well as helping the carrier to combat drug trafficking.
Vishnu Bisram

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