Hoping to fill seats left empty by the combined fear of terrorism and the recession, U.S. airlines have been advertising a bargain fare to Europe - $318 round trip to London, Paris and Amsterdam for trips that start between April 3 and May 20.
The most recent ads for the $318 deal appeared two weeks ago in newspapers, including The New York Times, and the fares were for sale through April 9. They sounded too good to be true, and for many consumers, they were.Within two days of the ads' appearance, not one seat on any airline offering the deal - Continental, Pan Am or United - was available at the advertised price for travel in May, based on calls to each airline as an individual consumer and computer searches by travel agents.
And only four dates in April were available from all three airlines combined.
But seats were available on those flights - for double or triple the advertised price.
The airlines reported record numbers of callers beginning when the ads appeared on March 19. They quickly sold the allotted number of seats and offered callers seats at higher fares.
"This is the old story with the airlines," said a New York travel agent who has been in the luxury travel business for 20 years.
"But this offer is the worst I've seen."
Like the three airlines, two others, American and Trans World Airlines, had been offering the same price since mid-February (originally for tickets bought before March 1), but they had stopped advertising it.
The day the other ads appeared, TWA had a seat available on two separate days in May to London; American was sold out on its flights to Paris.
All the airlines stipulated in their ads that the number of seats was limited.
While all offered fares that were lower than those I was quoted (the fares on the London route range upward in increments of $10 or $15 on all the carriers providing service), these too were sold out.
The motive for advertising the low fares is clear - to counter the reluctance of Americans to make an overseas trip on U.S. carriers, which suffered a drop in overseas business of as much as 50 percent after the gulf war began.
The airlines, according to an industry analyst, Kevin C. Murphy of Morgan Stanley & Co. in New York, had already borne record losses in 1990 - $1.5 billion.
And the year before, their most profitable ever, airlines reported net profit margins averaging only 1.8 percent, well below the average for American industries of 5.6 percent.
With this offer, Murphy said, "The airlines are hoping to jump-start consumer demand. They designate a portion of their fares at a very low price, and they stimulate call volume. This may divert attention to other seats at other prices."
Ed Perkins of Consumer Reports Travel Letter, a consumer newsletter, put it this way: "In other words, bait and switch."
The airline strategy worked well.
A United spokeswoman, Sara Dornacker, said United began offering the new fares at midnight March 18 and the newspaper ads appeared March 19. On the 18th, United handled a new record of calls worldwide, 250,000, and sold a new record number of international tickets, 32,000, surpassing the previous record of single-day sales of 27,000.
It is impossible to say how many seats were sold for $318 in any of the offers.
Adam Aron, United's senior vice president for marketing, said, "Our intent was to make about 100 seats available on a Boeing-747, which seats 350 in coach."
Spokesmen for other airlines refused to disclose how many seats were sold for $318, saying it is proprietary information. But Joseph Vengersammy of Galo Travel in New York, who specializes in discount air fares, said that based on his experience he guessed it was no more than 20 on a 747.
"The question is, are the airlines offering a reasonable number of seats at those advertised prices?" Perkins said. "The consumer doesn't know because they are not required to disclose the number. Is 20 out of 300 coach seats a reasonable number? It's about 7 percent. I'd have a tough time arguing that that is reasonable. Is 100 seats? Probably. "
Mark Green, the New York City Commissioner of Consumer Affairs, sets another standard for a reasonable number of seats.
"If you are going to offer 20 seats a day in a local pennysaver, read by perhaps 2,000 people, then fine. That may be enough to reasonably meet demand. But if you are going to offer $79 to Orlando to 2 million readers of two national newspapers, then that's not okay."
New York City consumer law prohibits businesses from "offering goods or services with intent not to supply reasonable expectable public demand, unless the offer discloses to limitation of quantity."
Offering without intending to deliver "is exactly what airlines are doing when advertised fares are `sold out' even on the morning the ad is published," said a report, "Flights of Fancy: Deception in Airfare Ads," issued last summer by Green's office. The airlines stipulated in their ads that the number of seats was limited.
But this city law, which applies to everything from shoes to Chevys, does not apply to airlines. Instead, jurisdiction lies with the Federal Department of Transportation under the Airline Deregulation Act of 1978.
Although this jurisdiction was challenged by the National Association of Attorneys General and 34 states last year, the Supreme Court in October refused to hear a case asserting that ads from Continental, TWA and British Airways were deceptive on fares. This Supreme Court action left intact a Texas court's injunction barring states from taking legal action against carriers.
Officials at the Transportation Department concede that enforcement is difficult because they have only two inspectors reading the nation's newspapers for deceptive ads.
Facing what seems to be bait-and-switch advertising, consumers have two recourses: don't switch to a higher fare and register a complaint with Federal authorities.