The Extra Mile

Airlines' Fuzzy Math Leaves Travelers Up in the Air

Prescription for airlines' credibility problem: truth serum

August 27, 2007 - Numbers can tell the whole story, or they can be used to obscure it.

While it's hardly the only business to do so, the airline industry has shown a particular tendency to torture data until it reveals a story of its own liking. And it's done so at the expense of the traveling public.

56 million members, and counting

As an example of the airlines' creative accounting, consider a recent news release from American, the world's largest airline, which boasted that its mileage program, AAdvantage, was the world's first and remains the largest with 56 million members.

There's no question that AAdvantage legitimately holds the title as the first of the modern travel-rewards programs, beating out archrival United by a mere two weeks in the race to launch a loyalty scheme in the early days of airline deregulation.

But there's more to American's claim to 56 million members than meets the eye. Or less.

Most industry outsiders would be scandalized to discover that in reporting the membership of its program, American includes every account ever established since the program's inception. So included among those 56 million members are duplicate accounts; accounts of people who signed up but never earned or redeemed a mile; and accounts of those who enrolled at some point during the program's 26-year history but have since died.

American, it should be pointed out, is not alone in its member accounting practices. For reasons now lost to history, it has become standard industry practice.

If such metrics were purely academic, the airlines might be forgiven for indulging in arcane counting practices.

But airlines tout these figures in their marketing efforts, to establish the legitimacy of their programs, playing to the natural assumption that more members means not only a bigger program but a better one.

Which raises the question: How impressed would prospective program members be if they knew the robust numbers were inflated by duplicate and triplicate accounts, and included non-travelers and the deceased?

What matters to consumers is a measure of other travelers' engagement with various programs. So meaningful disclosure by the airlines would consist of reporting the number of active members. What constitutes activity, and whether it occurred within six months, one year, or two can be debated. But including as members account holders who are inactive, some terminally, is useless at best and cynically misleading at worst.

On-time flights, stuck on the runway

Another area where the airlines have played fast and loose with their reporting has been in the area of on-time performance.

According to the Department of Transportation, a flight has departed on time so long as the plane has pushed back from the departure gate within 15 minutes of the published departure time. That seems reasonable until you realize that the aircraft's leaving the terminal and its taking to the air are two very different and separate events.

In fact, in order to maintain high on-time departure percentages, airlines routinely back their loaded planes onto the tarmac knowing full well that the flight won't be taking off any time soon.

The disconnect between what the airlines report and what passengers actually experience was made glaringly apparent in a recent series of incidents in which a fully loaded plane left the gate only to sit for several hours and more on the tarmac a mere stone's throw from the terminal.

Whereas passengers on these flights surely considered themselves delayed, if not kidnapped, the offending airlines could report on-time departures if the aircraft had pushed back within the 15-minute window.

Delays are clearly underreported, but the airlines continue using the data to promote their supposed reliability.

In this case, what travelers want is a measure of an airline's ability to reliably transport passengers between two points, departing and arriving as promised by the airline's schedule and confirmed on the flyer's ticket. To many consumers, that amounts simply to an airline's on-time arrival performance. That's exactly what the airlines can and should provide.

How cheap is that cheap ticket?

Perhaps the most flagrant example of the airline's numbering problems is in the area of pricing.

Take as an example the following from United: "Travel from where you are to where you want to go this fall for as low as $44."

While the ad trumpets a $44 fare, the fine print acknowledges that that's based on a roundtrip. In fact, a roundtrip is required. So the real price is $88. Assuming, that is, there are seats available at that teaser price.

But that's just the beginning. Also lurking in the fare's terms and conditions is the disclosure that the quoted price does not include taxes and fees. Among them: a $3.40 per flight segment tax, the September 11th Security Fee of $2.50 per flight, and Passenger Facility Charges of up to $18, "which may be collected depending on the itinerary."

And if you call the airline's reservations center to make the booking -- which you might want to do in order to make sense of the convoluted pricing -- there's a $10 service fee.

So when everything is factored in, the traveler would be paying close to three times the advertised $44 price.

It is well within the airlines' capabilities to do the math and disclose the true ticket price up front. And it's clearly the right thing to do from the standpoint of their customers. They should be required to do so.

According to the latest University of Michigan American Customer Satisfaction Index, the airlines' credibility with consumers is at a seven-year low, behind even such perennial underperformers as cellular service providers. At the same time, the airlines' fuzzy math has become the butt of cocktail party jokes.

Perhaps part of the solution to the airlines' credibility crisis lies in telling the truth, the whole truth, and nothing but the truth.