Are Big Discounts on Business Class Seats Legit?

Websites offering big fare discounts are often brokers -- can you trust them?

By
<a href="http://www.smartertravel.com/all/?content_type=column&author=ed" target="_external">Ed Perkins</a> <a href="http://www.smartertravel.com/" target="_external">SmarterTravel</a> Contributing Editor
March 23, 2011, 1:12 PM ET
5 min read

March 25, 2011 — -- "Business Class -- up to 75 percent off!"

Certainly, that offer is tempting to anyone looking to escape from the cramped seating and non-service you get on most long-haul overseas flights. But are those claims just a come-on or are they for real?

A reader who recently came across a claim like that asked:

"I saw a website offering big discounts on business class, but it looks like some kind of coupon travel broker that buys unused frequent flyer miles then somehow sells business class award tickets to customers. I never heard of this agency, and it sounds fishy to me. Is it OK or not?"

The short answer to this reader is, "It's fishy."

The site in question displays the tell-tale sign for a coupon broker: a "we buy miles" notice. But not all agencies that claim big business class discounts are fishy. Instead, probably most of them are outlets for consolidator tickets. If you're interested in cheap business and first class travel -- or even in economy -- you need to know the difference.

Brokers -- Still Around

What, exactly, is a "coupon broker?" Basically, it's an agency that buys and sells frequent flyer travel awards. And, because of market prices and mileage award schedules, almost all of the coupon action is in first or business class on intercontinental trips.

Contrary to some reports I've seen, coupon brokers do not buy and sell frequent flyer credit as miles. Nobody can do that without paying transfer fees that often cost more than the credit is worth. Instead, a coupon broker buys and sells frequent flyer awards in a three-step process:

  • A person interested in selling excess miles contacts a broker, specifies the amount of available credit for sale, and negotiates a price. Typically, sellers receive 1 to 1½ cents a mile, depending on the number of miles involved and the airline. The seller then waits for the broker to make a deal for some or all of the miles available.
  • A person looking for a cheap trip contacts a broker in search of a specific award, the broker gives a price, and they strike a deal. Typically, buyers pay 2 to 3 cents a mile for the credit required for the award.
  • Once a deal is agreed upon, the broker pays the seller and asks the seller to have the requested award issued in the buyer's name. Sometimes, the buyer makes reservations. Sometimes the seller or the broker does. In any event, the buyer travels under his or her own name.

    • Just about every legitimate travel writer I know warns that traveling on brokered awards is "risky." All major airlines expressly prohibit "sale, barter, or trade" of their frequent flyer awards.

    Over the years, airlines have been able to shut down a lot of coupon brokers, apparently using fraud laws. Others have hindered the process by limiting award transfer to family members and possibly requiring that both the mileage holder and the person flying show up at an airport ticket counter together. Despite concerted airline opposition, a few hardy brokers seem to remain in business.

    Usually Not a Good Idea

    Overall, I recommend against buying a brokered award, for three compelling reasons:

  • Airlines do enforce anti-broker rules, at least some of the time, and if you're caught using a purchased award, the airline can cancel your reservation, void your award, require you to buy a replacement ticket at full fare, confiscate your own frequent flyer miles, or some combination of those.
  • Even if you buy an award without a problem, you may not be able to use it. Most airlines allocate very few seats to award travel in business class, especially at the lower mileage levels, and actually getting a seat typically ranges from tough to impossible. Some brokers suggest that you arrange a reservation before you buy, but many airlines do not permit you to reserve award trips unless you already have sufficient miles in your account.
  • Foreign airlines may add a fuel surcharge of several hundred dollars to your supposedly "free" award trip using their own awards.

    • Given the consequences, I can't see why anyone would want to risk a lot of money on a coupon – especially because alternative discount sources are available.

    Consolidator Tickets for Legitimate Discounts

    Probably most of the ads you see these days for heavily discounted business and first class travel are from agencies that sell discounted consolidator tickets. Consolidators are wholesale agencies that arrange contracts with individual airlines to sell tickets at less than published prices.

    The benefit to the airlines is that "back door" ticket sales through consolidators allows them to discount discreetly without adversely affecting sales at regular published fares and to fill seats that might otherwise depart empty. Typically, consolidators arrange ticket discounts in all classes, not just business and first, although they can typically offer much bigger discounts on business and first class tickets than in economy.

    Most big consolidators I know are strictly wholesalers that do not sell directly to the public. Instead, they sell through retail travel agencies that specialize in discounted tickets, and those are the agencies that promote the big discounts.

    Consolidator tickets are perfectly legitimate. The airlines deliberately sell them at discount prices. Even so, however, consolidator tickets pose several drawbacks:

  • Typically, they're 100 percent nonrefundable If you cancel, you get no residual value. Some, however, allow changes, but usually for a fat fee.
  • Many highly discounted consolidator tickets entail indirect routings. The international airlines that discount tickets often follow a "don't mess up your own back yard" practice. They don't discount nonstops to or from their home countries, but instead discount connecting flights through their home countries to or from third countries. Thus, for example, a few years back some of the best deals form the U.S. to Europe were via connections in Canada. The best discounts from the U.S. to London may be on connecting flights through some continental "hub" city rather than nonstop.
  • Some discount tickets do not earn frequent flyer credit.
  • Although government rules prevent airlines and major online travel agencies from quoting artificially low fares, to which they subsequently add fuel or other surcharges, many consolidators and retail agencies ignore these rules. As a result, some of the "too good to be true" fare promotions really are too good to be true. They're deceptive and you actually pay a lot more.
  • Except in unusual circumstances, consolidator tickets in economy class don't usually provide much of a price advantage over cheap published fares. When you can't get a good published fare, however, a consolidator ticket might be useful.

    • Unlike regular tickets at regular published fares, consolidator tickets typically do not show a price. Consolidators usually sell to retail agencies at a "net" price, so the agency can add as much markup as the market might bear. That's one of the main reasons you shouldn't buy a discounted ticket without getting several competitive bids.

    Most online discount agencies post a few sample fares, but they want you to submit a specific trip request, to which they respond in a few hours. Although I have more than a dozen such agencies on my "favorites" list, I prefer not to list any because I don't want to imply any personal recommendation. They're easy enough to find online.

    All in all, if you can accept the various limitations, consolidator tickets are generally your best bet for a cheap trip in business or first class, and sometimes good for economy, as well. But be sure you're dealing with a consolidator ticket, not a brokered award.

    Ask if you have any doubt about that. And keep in mind that even at 50-75 percent off, a business class ticket is likely to cost at least twice the cheapest economy trip, and usually quite a bit more than that. Still, if you do want to escape the cattle car, discounted tickets are almost always the best deal you can get.

    Ed Perkins is a SmarterTravel contributing editor and a respected commentator on all aspects of the travel industry, including passenger comfort and rights, travel insurance, the best credit cards for travelers, and car rental. This article originally appeared on SmarterTravel.