Airlines rethink fare rules

Call it the first chink in a system that for the past two decades has driven the American flying public crazy - the major airlines' complex pricing structure, which often makes it cheaper to fly from Chicago to Paris for a two-week vacation than from Chicago to Detroit for a two-day business trip.

Several major airlines have announced that, on selected routes, they are doing away with the requirement to stay over a Saturday night. The goal is to jump-start business customers who've been grounded by the lagging economy.

While few experts believe the change will last once the economy rebounds, some consumer advocates see it as a hopeful sign of much larger changes on the horizon.

A big drop in profits is what forced United, American, and others to cancel the Saturday-night stay, mostly in and out of Chicago. Consumer advocates note that it's the first time the airlines have eased the intricate and restrictive pricing structure that grew up after the industry was deregulated in 1978.

Indeed, some members of Congress would like to see many of the restrictions - from the rules of advance-ticket purchasing to the prohibition against using only part of a ticket - done away with completely.

This fall, Congress is expected to hold hearings on the airlines' pricing system to find a way to make it fairer to consumers.

"The whole idea in a deregulated environment is that ticket prices are set by the airlines to maximize profits, not by the government to be fair to consumers," says Edward Hasbrouck, author of "The Practical Nomad" travel books. "That's one reason deregulation has not created a level playing field, and why there's a crying need for a degree of reregulation, at least where there is no real competition."

But other consumer advocates, as well as the airlines themselves, are opposed to any changes in the pricing system. While they acknowledge that it might be confusing for consumers, they say the complexity of the system allows larger, high-cost carriers like United and American to compete against the low-cost, no-frills airlines nipping at their heels. Tampering with the system, they fear, could bring about unintended consequences like higher fares and less service to smaller cities.

"While we understand and empathize with passengers who are paying relatively high fares in some markets, we believe the way to solve that problem is to create more competition in those markets," says Steve Martin of the Congress's General Accounting Office (GAO), which just completed a comprehensive analysis of the airline's pricing structure.

To understand how and why the complex pricing system tends to work to the airlines' advantage, one must take a step back. Before 1978, airlines generally flew directly from one point to another, and the Civil Aeronautics Board set fares. Generally, the farther the distance and longer the flight, the more one paid.

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