Home Economy Are Airlines Manipulating the Markets for their Own Gain?

Are Airlines Manipulating the Markets for their Own Gain?

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Air France

Cost-Cutting Measures Rile Air France Workers

Air France recently announced that it would be shedding up to 3,000 jobs as part of its restructuring program. Mass protests erupted, but that is just the beginning of European airlines’ woes. This latest round of layoffs brings to 15,000 the number of jobs lost since the company’s restructuring plan began. In total, this amounts to some 25% of the entire workforce of Air France. Such was the dismay at the additional job cuts that the CEO of Air France had to flee to avoid being lynched by protesters. Angry mobs demanded his immediate resignation, but Air France stuck to its guns and released a statement that the company would continue its restructuring initiatives, and that it would take all necessary legal action against violent protesters. It is clear from the aforementioned activities at Paris’s Charles de Gaulle airport that ongoing job losses, cost-cutting initiatives and declining profits are hurting the airline industry tremendously.

ETTSA takes Lufthansa to the European Commission

Airline fare prices

Air France is not the only European airline facing a set of challenges – Lufthansa is under the gun too. Last month, online travel agents decided to file charges against the Lufthansa Group with the EC. The reason there is such discontent among online travel agencies is that Lufthansa is taking on an additional €16/$18 for every ticket that is booked through an external travel website or online booking agency. This means that Lufthansa passengers booking with anyone other than Lufthansa itself have to pay more for their tickets simply because they choose not to shop directly at the airline’s official website. The Brussels-based European Technology and Travel Services Association (ETTSA) received the formal complaint from the travel agents, and it filed charges against Lufthansa and its affiliates with the European Commission. The subsidiaries include Austrian Airlines, Brussels Airlines and Swiss International Airlines.

At the heart of the complaints is the issue of punitive measures being taken against passengers seeking to compare prices at online websites. Lufthansa is acting in its own best interest by making it more expensive for passengers to book on external third-party websites. They are doing this because they don’t want to pay the commissions to third-party sites, and they want to maximize profitability when passengers book through their website. The fact of the matter is that comparative shopping becomes more difficult when major airlines are excluded from the selection. In much the same fashion as Air France, Lufthansa alluded to being fully compliant with regulatory practices in the European Union as it pertains to pricing and transparency. The Travel Technology Association conducted research which points to an interesting fact: airlines that restrict what information is available to passengers in terms of pricing cost passengers as much as $6 billion annually. By restricting what information passengers can find online, airlines are effectively doing a disservice to their clientele.

 
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William R. Feins , freelance journalist from London, UK; he received his B.A. degree in Economics and his Masters in Sociology. William has always been interested in the mechanics of business and the inspiration of original thinkers, and firmly believes that the former can’t succeed without the latter. In his spare time, he enjoys the ridiculous spectacle of watching table tennis on a big screen (preferably at a pub) and reading weighty tomes about World War II.

28 COMMENTS

  1. I think airlines are struggling due to the recent events that happened in the past and the unexpected rise of airlines tickets. I also think that what Lufthansa did is really unfair, it’s unacceptable to buy more charges for just not booking through their website directly and I think that will make them lose more customers.

     
  2. I think airline losing customer due to higher ticket price, and also cutting jobs pointing out bad practice. They need to provide better deal for the customer.

     
  3. I would say rather than a disservice, restricting the information that customers can find online should be classified as illegal.

     
  4. I think airlines are battling because of the late occasions that happened in the past and the unforeseen ascent of carriers tickets. I likewise surmise that what Lufthansa did is truly unjustifiable, it’s inadmissible to purchase more charges for just not occupying through their site straightforwardly and I imagine that will make them lose more clients.

     
  5. Another way to cut fuel costs would be to look at the routing and ATC handling of many aircraft. Complicated, I know, but common sense should come into play.

     
  6. I feel great sadness for the French and the people who work at Lufthansa as it seems that corporal greed is at the heart of it again.These companies never seem to cut at the very top.

     
  7. This is not new, airlines and travel agents manipulate prices every second. If you are looking for tickets it’s best practice to do it incognito so you don’t keep any cookies. They use the cookies to find out what you are searching for and jack up the prices on every subsequent website you visit.

     
  8. It is not the first time French workers have taken matters into their own hands with violent results. Since 2009, as the global economic crisis has escalated, several bosses have been held hostage by angry staff.

     
  9. Great to see this information being shared, airlines have for too long hidden away extra charges and made them difficult to find. Hopefully more pressure on them from customers can have long overdue changes in their practices.

     
  10. Useful information, The decision was taken against Lufthansa Group with the EC its fair. I think each individual should have their own choice to buy tickets. They should be able to buy tickets from any website with the same price as they are paying through airline’s official website.

     
  11. Helpful data, The choice was brought against Lufthansa Group with the EC its reasonable. I think every individual ought to have their own decision to purchase tickets. They ought to have the capacity to purchase tickets from any site with the same cost as they are paying through aircraft’s official site.

     
  12. Airline industry is a cut throat business and many airlines have become bankrupt. To avoid this they are resorting to desperate measures which might not please the masses.

     
  13. It’s sad to think so many jobs will be lost this is just so unfair. I am not surprised that there are angry protesters Air France should not be allowed to do this.

     
  14. wow..it’s so awakening to know these information..didnt have any idea…i thought i have been paying cheaper price !!!

     
  15. Jobs being lost would be sad, feel bad for air France employees and employers.
    Also I feel customers are losing out, as prices are high and agents are manipulating prices every day.

     
  16. I often think that there is unfairness as the consumers really have no way for alternatives. You want to travel to Australia from the UK, youahve to fly.

     
  17. No great surprise, profits before jobs. It should be a customer focused industry but as ever shareholders come first. At least they are too cautious to put passenger safety at risk, so far!

     
  18. I think this is a case of make as much as you can for as long as you can until customers kick up a fuss. It’s silly that airlines would restrict us from finding them through compare sights and agencies. Why restrict your customer base? I guess for the same reason you’d cut so many job;. more money for the few. These all seem like senseless acts in the face of humanity. I do hope that this level of greed will one day be no longer acceptable.

     
  19. Greed from the airlines again, so typical. All about profits before people Lufthansa should hang their heads in shame.

     

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