Aid: Steel And Deals (3/22/2002)
Diana: Brace yourself for the sound of rising European airfares. Ready? [sound effect: blast furnace] Okay, that's actually a blast furnace churning out steel. What does steel have to do with airfares? That's what Travel Expert in Residence Rudy Maxa is about to explain. Hi, Rudy.
Rudy: Hi, Diana.
Diana: All right, Rudy. Let's talk steel and airfares. I've read about the Bush administration's new steel tariff, which just took affect this past week. Is that somehow connected?
Rudy: You bet, Diana. The European Union says the tariff is protectionist and makes it impossible for EU countries to sell steel in the U.S.
Diana: What does that have to do with travel?
Rudy: Well, the EU is considering retaliatory tariffs.
Diana: Uh-oh. Let me guess -- those retaliatory tariffs might show up attached to airfares.
Rudy: Right. The EU may slap a tax on all non-EU airlines that receive government subsidies. But there's more to this spat than just the steel issue -- although that's certainly stoked the fires. EU officials say the bailout of U.S. airlines has led to unfair competition, pointing out that EU nations have not given similar support to their own struggling airlines.
Diana: Yeah, Sabena, the Belgian National airline, recently went bankrupt. But back to the tariff -- how much more would a transatlantic ticket cost?
Rudy: It's too early to tell. The airfare tariff is still just a proposal, but it's being seriously considered. It could be applied within the next 3 months. I'll keep you posted.
Diana: While we're on the subject of Europe and airlines, I want to ask you about some incredible deals I've been noticing on smaller European carriers, like Ryanair, Go and Easyjet.
Rudy: These no-frills airlines are the European version of Southwest. They keep costs low through online booking, using secondary airports, and flying only Boeing 737s, which have lower maintenance costs. Fares can be 30 percent to 50 percent lower than traditional airlines. For example, let's say you want to fly from London to Geneva next weekend, leaving on Thursday, coming back on Sunday. The cost on Easyjet: $165. On British Airways: $595.
Diana: Any drawbacks?
Rudy: Secondary airports may be harder to get to, and flight times may not coincide with overseas timetables.
Diana: One more question for you, Rudy -- about U.S. airlines this time. Delta, American and Continental have just announced that they're going to drop travel agent commissions. What's up with that?
Rudy: Most airlines had been paying a maximum base commission of $20, although they've been slowly cutting back for years. This latest move is another attempt to cut costs and return to profitability. Other airlines will likely follow suit.
Diana: Sounds like this might force some smaller agencies out of business.
Rudy: Yes. Some might merge with other agencies to stay afloat, or focus on niche services.
Diana: What will this mean for travelers?
Rudy: Agents will charge higher fees, and that means more travelers will probably book online.
Diana: Thanks, Rudy. Got a Deal of the Week for us?
Rudy: Do I get a commission?
Diana: No, but if it's a really good deal, I'll drop the tariff I was considering.
Rudy: Okay, okay. One deal, commission-free, coming up later in the show.
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