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Edward Hasbrouck
interviewed by Anthony Qaiyum on 2 October, 1995
"The passenger gets a perfectly legitimate ticket for the same seat, on the same plane, of the same airline that they would have had to pay, in some cases, twice as much for if they had gone directly to the airline."
Edward Hasbrouck is a travel columnist for Moon Publications.
Tripod: What, exactly, is a bucket shop?
EH: Bucket shops are travel agencies that specialize in selling, almost exclusively, international discounted airline tickets at prices below what the airlines would charge for the same ticket, for the same flights, on the same airlines.
Tripod: How do they afford to offer you prices below the airline fares?
EH: The prices offered by the airlines are set by a fairly elaborate international, price-fixing cartel which involves both the airlines and national governments, and a set of international agreements. In order to participate in the price-fixing cartel and get the advantages of membership, airlines have to agree that they won't sell tickets directly, at anything less than the officially set price. Since, if they only sold the tickets at the official price, they'd have a lot of empty seats left, they sell their empty seats without breaking the cartel rules and getting kicked out of the club by offering discounts below the official prices, not directly, but only through [bucket shop] travel agents ... The passenger gets a perfectly legitimate ticket for the same seat, on the same plane, of the same airline that they would have had to pay, in some cases, twice as much for if they had gone directly to the airline.
Tripod: How much can you expect to save through a bucket shop?
EH: That varies enormously. In some cases, you may pay only half the official price. On the other hand, people shouldn't expect to get anything like that kind of savings if they're traveling on a prestigious airline, on a popular route, at a busy season. The greatest savings, of course, are for those who are willing to travel on the less popular airlines in the less popular seasons -- i.e. those who are willing to fill seats that the airlines are having the greatest trouble filling.
The other factor that will greatly influence the savings that people can achieve in addition is flexibility, both in terms of dates of travel and airlines -- actually, more airlines than dates ... A lot of people are trying to have their cake and eat it too, in wanting to get cheap prices while still wanting to be very picky about which airlines they fly on, and wanting to go on the ones on which they have the most frequent flyer mileage. You don't get something for nothing. There is a real trade-off there.
The other thing that will affect how great of savings you can have is how far ahead you can plan. One of the most widespread myths -- and I think it is important for people to understand it is entirely a myth -- is that the airlines will reduce their prices in some kind of last minute fire sale, or that the bucket shops themselves will have already bought the tickets, and they will sell them for a song at the last minute if the seats are empty. The reality is that no money changes hand until the reservations are made and the tickets get purchased for a specific person in a specific name. And the airlines, in fact, find that for the most part the people who need to travel at the last minute are the business travelers who are very price insensitive. The airlines are quite prepared to have several seats go empty that they might have sold cheaply at the last minute if that means that they can extort out of the last minute business traveler a very high price.
Tripod: How reliable are bucket shops?
EH: It varies greatly. It's an extremely competitive business. The margins are very thin, and the cash flow is very high relative to the profits. So I'd be the first to acknowledge that there are recurrent problems of discount travel agencies having cash flow problems and going out of business. At the same time, there are very few fraudulent agencies. Unlike some other things, like package tours, where there are a lot of out-and-out frauds, the discounted airline tickets are mostly legitimate. And there are many that have been around for many years, and have strong reputations and a lot of backing. You really have to be careful with anything you buy.
The surest consumer protection, particularly under U.S. law, is if you buy tickets with a credit card, because you should receive your tickets before you get the credit card bill, while you still have the opportunity to dispute the charges if you didn't get what you paid for. Typically that involves a slight additional cost, because most discounters can't afford to absorb what they're charged by banks and credit card companies and do offer, therefore, a discount for cash payment. But it's fully inexpensive, and a fairly reliable form of consumer protection.
Tripod: I've read that you should also call the airline to confirm that the bucket shop you're dealing with is authorized to sell their tickets. Is that true?
EH: Well, the biggest thing that you can verify if you call the airline directly is you'll be able to find out if you have reservations on the specific flight. The other thing to watch out for, in that regard, is people who try to push you into buying open tickets. This sounds very attractive, meaning to many people that you can fly whenever you want, but actually an open ticket is a ticket without any reservations for any specific date, and thus with no guarantee of actually flying.
Tripod: So you're just waiting for standby space ...
EH: Well, an open ticket is valid for any seat on that airline between those cities for which space is available. But it's not uncommon for people to wait several weeks or longer for space to be available. If they simply present themselves at the counter and say, "I'd like the next available seat from point A to point B," they might say, "That's fine. The next seat is three weeks hence." And, again, it's particularly bad if you're relying on that ... I would always insist on having confirmed reservations for specific dates, even if I wasn't sure I would use them, because any ticket that can be issued as an open ticket can be issued with confirmed reservations for specific dates, and the option to change them at no charge. But, it's a bottomless pit of technical details, unfortunately. The rules are made by the airlines. They hold all the cards in this game.
Tripod: Is it a losing game, then?
EH: No. I think that for most people that are planning ahead for international travel, they will get more out of one call to a bucket shop than they will out of hours of researching all of the fares ... by calling every airline that flies the route.
Tripod: Then it seems the next step is locating the bucket shops. Where do I start looking for them?
EH: In the U.S., the main places are the back pages of the Sunday travel sections of the newspapers in the major international gateway cities. The San Francisco Chronicle Examiner, The Los Angeles Times, The New York Times, The Miami Herald. Those are the places I would go, if I were not in this business myself, and I was going somewhere ... It doesn't particularly matter where you are ... Look through those newspapers and see what kinds of things are being advertised.
Tripod: Are there any resources on the Net that you would recommend?
EH: I don't know of any good way of finding prices on the Net. There are an increasing, but still very small number of travel agents who do business on the Net. It isn't, yet, the best place to look. My main caution would be in terms of putting too much stock in the airline prices, or assuming that the airline that has the lowest fare to the public is also going to be the one who is the biggest discounter.
You can reach Edward Hasbrouck at [email protected]
His column for the Moon Publications Newsletter can be found at http://www.moon.com
For more info on bucket shops visit The World Wide Wanderer Cyberian Bucket Shop Guide.
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