The Truth About Cheap Flights: Channel 4 Dispatches

25 April 2016

Monday 25th April, 8pm, Channel 4

It's that time of year, when dreams of a summer escape will soon be just an air ticket away, if only you can find the best price. With travel companies claiming that they can offer the lowest prices on the market, Dispatches investigates one of the major players in the travel trade, Flight Centre, to see if it lives up to its promise.

Harry Wallop uses an undercover reporter's secret camera footage to look behind Flight Centre's fun-fuelled company ethos to see how the company makes its millions.

Dispatches discovers that Flight Centre staff use a wide range of tactics to enhance the profit they make from their customers, including:

· Undisclosed flight mark-ups

· Assessing less internet-savvy customers to charge them more of a mark-up

· Telling customers all flights are non-refundable, even when they are

· Using flight changes as a money-making opportunity.

· Seat blocking – temporarily reserving cheap seats on flights making the price of available seats to customers appear higher.

Flight Centre says it has a "lowest airfare guarantee". It is run like an old-fashioned travel agency with shops on the high street and staff you can talk to. Flight Centre is one of the world’s biggest travel agents, and it hosts an annual global gathering with celebrities and top DJs. Searches online reveal staff videos of office waterslide competitions and workplace dance routines. Trainers say the company attitude is ‘work hard, play hard’ and the company has quickly grown from nothing to a £250-million a year business in the UK alone.

 

Undercover Flight Centre Sales

Dispatches sent Hannah, an undercover reporter, to work at Flight Centre. Hannah has a background in finance and sales. She gets through the selection process and is sent to study at Flight Centre’s training facility in New Malden.

In training, she is repeatedly told that staff could earn large amounts of money as their commission isn’t capped.

 

Flight Centre Structure:

The company’s structure is based on Stone Age society, with sales teams grouped into families, villages and tribes.

· Families – small teams within a store

· Villages – the combined teams of an individual store

· Tribes – the stores in a regional area eg: London, Scotland, The South East

The families, villages and tribes are encouraged to compete against each other to have the highest monthly profit.

 

Different prices for different customers:

Harry Wallop and his 81-year-old mother-in-law went in to two separate Flight Centres on the same day and requested pricing for the same flight, on the same date, to New York.

Harry makes it clear that he has already checked out cheap prices online while Anne tells her sales consultant she hasn’t researched flights. Harry is quoted £494 and Anne is quoted £610 – a 23.5% difference.

Flight Centre UK said the different prices we were quoted for the same New York flight appeared to be “extraordinary” and “one isolated example”.

 

Hidden charges:

Flight Centre trainees are told that one way to help their ‘family’ make money is to add hidden mark-up charges to their cost of tickets.

Trainees are encouraged to assess their customers, whether they’ve been looking at other flight prices or how much budget they have available. They are told to use this information to work out how much to mark up their flights.

One of the trainers says, “The worst scenario to have is that you know you literally give a price to the customer and they turn around and go ‘Oh my God. It was about £600 online. You’ve got it for £480. That’s awesome.’ You know, and you’re sat there going dammit I could have marked up another £50, £60 or whatever on that.

It is not illegal to mark up flights.

One member of staff says to our undercover reporter, “That walk-in I had earlier - She's looking to have her parents and her sister fly over and then she looked at the price and then she’s: 'Oh, that's really good per person.' The search was actually for two people. So, potentially if I can get her to book that on Monday then I have made like eight hundred pounds.”

Flight Centre UK told Dispatches that the margin or mark-up is “built into the price paid… in the normal way for all retail businesses.” They said it was “not unusual, unethical or immoral… to apply a margin” and that their prices honoured their Lowest Airfare Guarantee.

 

Ticket Cancellations and Changes:

Mark-ups aren’t the only method used to drive up profits. Flight Centre staff tell our reporter that they inform customers that all flights are non-refundable, even when a fare allows a flight to be cancelled with a refund.

Our undercover reported filmed one saleswoman explaining how she had handled a cancelation, “My guy cancelled the other day as a ‘non-refundable flight’. It’s not. So I can make a hundred on it and still give him back money even though technically it’s ‘a non-refundable flight’. So it looks even better for me because I’ve actually managed to get him money back on something that is ‘non-refundable’.”

Staff were also filmed talking about charging various amounts of money for changes to flights.

Flight Centre UK told us that “The suggestion that ‘all fares are sold as non-refundable’ is completely incorrect and should not have been made by any Flight Centre employee.” The company said it generally charges a reasonable fee for cancelling bookings.

Brian Lewin, an expert on trading standards, said: “There will always some companies, who will exploit the law by looking at where there are gaps, where there are loopholes and go as close to the law, without breaking it, as possible. I don't think this company, as a practice, go over the line but I think they are as near to it as you can get. I think some of the company's practices are undesirable. I think that some of them are unfair.”

 

Seat blocking:

Our reporter filmed staff discussing using this practice.

When you book with an airline you book in what is called a booking class. There is a limited number of seats available at different prices, e.g. ten seats at £500, ten seats at £600. As a plane fills up, the seats get more expensive.

At Flight Centre, staff can access the airline booking systems and place cheap seats on hold so they are no longer available. If a customer then looks online for a ticket, they will see that the price of the seats has risen. This misrepresents which seats are available and which aren’t. It forces the price up and pressurises the customer to purchase.

MANAGER: Is the seat availability any good?

SALES CONSULTANT: It was alright when I looked.

MANAGER: We’ll have a gander at that - see if we can lift 9 seats out...

SALES CONSULTANT: Yeah

MANAGER: ...and it raises it. We can say that the seats have gone up.

SALES CONSULTANT: Yeah.

Flight Centre UK told us that seat blocking was “entirely unacceptable and expressly against our company policy” and said that the company had emailed staff to remind them of this last November.

 

Expert comment:

Seventeen million flights were booked through travel agents last year. The business is worth 29 billion pounds. One of Britain's leading ethical travel writers is concerned to hear about the behaviour of one of the industry’s biggest players.

Simon Calder tells Dispatches: “It is very distressing to learn that a big, well-regarded travel company seems to be employing some techniques that are most definitely not customer friendly. The idea has generally been that as a consumer in a transaction the price is here and it might come down, depending on how good we are at negotiating, depending if we found a better deal elsewhere. What we are not used to is the idea that a salesperson is going to size us up and think ‘OK how much is this person actually going to be prepared to pay?’ and that's a whole different customer experience and one that is going to concern a lot of people.”

 

Flight Centre response:

“The views and recordings in this programme are not a fair reflection of our company culture or customer experience. Dispatches’ allegation that Flight Centre has a policy or culture of applying opportunistic or excessive margins to particular customers or demographics is completely unfounded. Our Lowest Airfare Guarantee enables our customers to secure a better price than that available from our competitors. We acknowledge that this programme … may highlight some isolated behaviour that is against our company policies and ethics. We are taking this very seriously and will deal with it immediately.”

 

THE TRUTH ABOUT CHEAP FLIGHTS: CHANNEL 4 DISPATCHES Monday 25th April, 8pm, Channel4

Reporter: Harry Wallop

Exec Prods: Steve Boulton, George Waldrum

Prod/Dir: Duncan Staff

Prod Co: ITN Productions