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All’s fare in Japan’s cheap travel industry

Discount travel agents get you there for less, but there are some drawbacks

by Geoff Botting

An airline ad recently caught the eye of this seasoned traveler: “Daily, no-nonsense, non-stop 747 flights to your favorite destinations worldwide.”

The magazine advertisement describes the airline’s two flights a day to the U.S. West Coast and the same number headed for Hong Kong, one of which leaves at 10 a.m. and arrives at 2 p.m. Not bad: breakfast in Japan, lunch in China.

What’s more, all the flights from Tokyo leave from Haneda airport, whose location in the heart of capital makes it 100 times more convenient than its country bumpkin cousin in far off Narita.

But before you start flooding the editor with e-mails asking for more info on this great service, I must point out: The ad is nearly 30 years old and it’s for the defunct Pan American World Airways. I spotted it in a 1975 edition of Time.

Still, it reminded me that the quality and convenience of air travel have in many ways worsened, rather than improved, over the past three decades.

The airlines, it seems, play by their own rules of economics, which conveniently ignore such tawdry concepts as “the free market,” “competition” or “fairness.”

The prices we pay for tickets is a prime example. Ask 200 or so passengers in economy class how much they paid for their tickets and you’ll likely get 150 different answers. In how many other service industries is it standard practice to charge your customers widely varying prices to give them exactly the same service?

Many of my gripes were crystallized last month when I tried to book a flight back home to Canada. I expected to get bargain, since the newspapers had been telling me that the number of travelers heading to my homeland had dropped off drastically due to SARS and even mad cow fears. The travel agencies would surely be giving seats away.

Well, I was wrong. I had made that foolish and naive blunder of assuming that the forces of supply and demand exist.

Northwest Airlines, my preferred carrier due to its great mileage plan, was booked solid on flights that connect to Canada. Anyway, its fares were about 20,000 yen higher than in previous years, for some strange reason.

In the end, I was assured a seat at the cheapest fare going — 67,000 yen, which actually ended up costing 77,000 yen after taxes and a weekend surcharge. Even so, I was forced to restrict my travel period to 10 days. Staying longer would have pushed up the ticket price well beyond my personal psychological threshold of 100,000 yen.

Another mystery I encountered during my journey was the voucher my travel agent handed me. I always get these when I travel overseas, rather than receiving tickets. Not only that, but these flimsy pieces of paper always have me listed as being on group tours, although I don’t recall making any such arrangements.

Furthermore, instead of going to the airline’s counter to check in, I am instructed to go to the group tour counter at the airport to receive my ticket.

This arrangement, which I’ve only ever experienced in Japan, has always baffled me. So I called Zhou Qing of No. 1 Travel in Tokyo for an explanation.

Agencies like his, he said, like to issue tickets about three days in advance of departure dates, rather than earlier. So to ensure that the customer gets the tickets during such a short window, they are sent in batches to the airport, where they are exchanged for vouchers.

And that’s why the group counters are necessary: So that the tickets have a place were they can be held and distributed after being delivered to the airport.

“Just think of the tour name as a sign,” Zhou said. “We also do package tours and we have tour names, so we also send the individual customers’ tickets to the package tour counter. We don’t want a separate counter for individuals.”

A more complicated issue is the fluctuating retail prices of tickets. This is basically due to the way the airlines distribute their tickets to the discount travel agencies.

First, they try to sell as many tickets as possible at regular fares. These prices are beyond levels us regular peons can afford and are set by the International Air Transportation Association (IATA). The main market here are business travelers, people, who tend not be so fussy about prices.

Since the airlines are fully aware that such high prices are sure to result in plenty of empty seats, they turn to the discount travel agencies to unload the surplus.

Each of these agencies negotiate separately with the airlines over their allotment of tickets, and that accounts for the differing prices from one agency to another.

As for the prices the agencies get, numerous factors are involved. For instance, says Zhou, if one agency does a certain airline a favor by promoting its seats during a slow travel period, then the airline will reciprocate in the form of lower prices offered to the agency.

Complicating all this is the high degree of discrimination behind the pricing of discount tickets, a practice based on the consumer’s willingness and ability to pay.

The assumption behind tickets like mine, which stipulate early return dates, is that the short-term traveler is on a smaller budget than someone planning to spend a month or two abroad. Since the latter has the bucks to fritter away long periods of time in foreign lands, he can also afford to fork out more money for his ticket, according to the airlines’ thinking.

Even nationality is a factor in this price discrimination.

No. 1 Travel is a branch of H.I.S. Co., Ltd., Japan’s largest discount agency, and was set up to cater to Japan’s foreign community.

According to Zhou, No. 1 offers tickets that are nearly always cheaper than those offered by the H.I.S. offices, whose customers are mainly Japanese.

Price sensitivity is the main factor. Foreigners are generally bottom feeders when it comes to shopping for air tickets. If they can save a couple of thousand yen by going to another agent, they usually will. Japanese travelers, on the other hand, will stick with an agency or agent they like, even if it means paying higher prices.

But let’s not forget that discount air tickets in Japan can be extremely cheap when to compared to other countries.

So once you surmount the ticket restrictions and the offensive nature of price discrimination and illogical fare structures, you may end up actually enjoying your trip.