Is Fare-Stickler Northwest Helping or Hurting the Sector?

Whereas carriers once competed on service, the downturn has caused them all to add in new fees, skimp on small stuff and even charge for food. Airline tickets have become a commodity, and consumers know they're going to get the same experience no matter how much they pay. As a result, most shop on price, which has been made incredibly easy through search engines offered by Orbitz, Expedia and Travelocity.

Raising ticket prices won't solve the problem, especially because the carriers that demand ticket increases simultaneously dump cheap seats onto Internet vendors such as Hotwire.com, which sell fares well below the published prices without revealing who the carrier is until the ticket is bought. Nearly every carrier does this, but they take great strides to protect their own identities so as not to tip off consumers and rivals.

The real issue has nothing to do with ticket prices and everything to do with proper management. If the companies were meeting lowered demand levels, they wouldn't need to undercut their own higher prices by selling seats over the Internet on the cheap. In many ways, the act of dumping seats, not a failed ticket hike, is hindering carriers.

"It's all about yield management," said Boult. "You don't have to come out and say, 'Woe is me. Not having this fare hike is killing me.' All you have to do is make it harder to find those cheap fares."

As long as airlines feel they need to make industrywide pricing decisions in lockstep, then they're all bound and gagged in the same sinking boat. As Boult says, "In no other industry do you have it so prices are always the same. Take Krispy Kreme and Dunkin' Donuts. Do they sit there and match each other all the time?"

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