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They’re elusive. The airlines don’t like to talk about them (we asked). And determining their legitimacy from among the myriad websites that claim to specialize in them is a Herculean task. We’re talking about consolidator fares, those secret airfares the airlines release in limited “buckets” to companies that re-sell them for big discounts.

Yes, they do still exist and you can get them, but as with any purchase (such as “grey market” electronics), you’ll always trade something for the price break . There are reliable ways to get them, just as there are ways to get burned. And just because they’re specially negotiated deals doesn’t mean you might not be able to find a better published fare on your own.

The Backstory

To understand what consolidator fares mean today, you’ll need a little history. Decades ago, it became clear to airlines that only selling highly visible, published airfares to travel agents and consumers made it easy for competing airlines to beat their fares and make off with their customers. To ensure they could fill up less popular flights, airlines began quietly selling discounted seats through consolidators. They reasoned that a little revenue per seat was better than none, and because the discounted prices weren’t published, other airlines wouldn’t be able to swoop in and drive down overall prices.

You’d often find these fire sale fares in ethnic storefront travel agencies or even bodegas, which offered them only sporadically. According to Bob Harrell of New York airline consultancy Harrell Associates, the airlines employed plenty of tactics to get around pre-deregulation rules about tariffs, which required large numbers of seats sold this way to be part of a tourism promotion. “They’d print up five brochures, pass them around, and call it a tour,” he says.

Consolidators Today

Consolidators have come a long way since those early, often risky times. Airlines now see consolidators as a reliable distribution channel, negotiating annual contracts with them, establishing revenue targets, and tightly controlling ticket sales through a specific kind of booking class, or “bucket.” If you were wondering, consolidators and bucket shops are essentially the same thing, though the name, like the practice, has been refined over time. The fares are also known as “private” and “bulk” fares. But for the record, not every unpublished fare is a consolidator fare; military discounts, corporate discounts, and other specially negotiated fares – such as cruise and package fares – are also considered “unpublished” and are almost never consolidator fares.

Airfarewatchdog.com talked to Greg Rholl, Vice President of Pricing and Distribution for Minnesota consolidator Centrav, one of the largest consolidators, with contracts with more than 30 airlines, who ran us through the process:

A consolidator will have a contract to sell private fares at a lower price than the published fare. If there’s a printed ticket, only “bulk” generally appears on the receipt. They generally can’t – or won’t - sell the ticket straight to you, but will offer it through a travel agent (including an online travel agent such as Travelocity or Expedia), or agencies such as the ones that advertise in Sunday newspaper travel sections.

The agent adds their markup – keeping the margin slim so they’re not out-priced by published fares – and passes the remaining savings on to you. True consolidators don’t buy in quantity or ahead of time. Rather, they pull availability from their assigned class until the airline decides to close the window. It can be a great way to find a fluke fare, and consolidators now keep each other honest.

Centrav, for instance, is a charter member of the United States Air Consolidators Association, which requires that its members sell at least $20 million in consolidator fares and have uninterrupted sales of at least two years. This may not mean much to you, since you can’t buy tickets from the USACA, but it should: If your trusted travel agent chooses a dicey consolidator that reneges on the deal or goes under, you’ll be relying on your credit card or your agent’s integrity to buffer you from the loss.

In the second half of this article, the best ways to shop for consolidator tickets.

Source — Aviation

Like Unicorns (or in these trying times, a bank you can trust) consolidator fares are elusive, precious items that can offer a traveler great savings. Airfarewatchdog.com has taken the time to track down the facts about these airline special offers. In the first installment, we learned they were created to ensure flights sold out, but in an era of airline consolidations and bankruptcies, these deals are getting fewer and far-between.

What’s Your Best Chance of Finding the Fares?

According to both Bob Harrell of New York airline consultancy Harrell Associates and Greg Rholl, Vice President of Pricing and Distribution for Minnesota consolidator Centrav, the best times to find consolidator fares are when 1) you’re traveling coach internationally, 2) you’re traveling last-minute, or 3) both.

Because consolidators don’t actually buy the seats, they’re usually granted their window of opportunity early in the booking process (to fill up a limited number of seats to hedge the airline’s bet on passengers) or late (to make up for the passengers the airline estimated would book, but didn’t). Your travel agent can even find consolidator business class seats last minute, for up to a 50% discount.

What Do Consolidator Fares “Act” Like?

You may think that because you’re getting a bargain basement price, your consolidator ticket will be nonrefundable, non-changeable, won’t allow you to make advance seat assignments, won’t let you earn miles - a heavily restricted “use it or lose it” ticket. That’s usually not the case (and yes, you’ll almost always earn your miles), but you DO need to ask your travel agent for up-front restriction information. Consolidator fares generally act like those discounted economy class tickets of the lower echelons, and carry similar restrictions. That’s why some travelers are convinced they’ve bought consolidator fares on airline websites - but they haven’t. American Airlines spokesman Ned Raynolds confirmed that the airlines aren’t allowed to sell unpublished fares themselves.

The problem with bulk fares often doesn’t lie with the restrictions themselves, but the capacity that the consolidator has been granted by the airline. For example, say you bought a consolidator ticket as a “T” class (generally one of the lowest of the low airfare classes). If you bought it and the airline then closes out the consolidator’s “bucket,” you won’t be able to change it, even if the airline still has “T” class tickets of its own to sell. IF the consolidator has similarly restricted tickets like “L” or “K” class, you might be able to swap them, through your agent, but only if the consolidator’s window is still open.

Similarly, say you bought a discounted “Q” class ticket directly from the airline. If you wanted to change it and that particular class was sold out, you could ask the airline to let you pay the difference and a penalty to upgrade to a full-fare, unrestricted “Y” class ticket. You won’t be able to do that with a consolidator fare. The other restriction you’ll find across the board: You’ll never be able to upgrade your ticket using miles. The lesson: You’d better be sure that your consolidator ticket is the one you want, because you’re most likely stuck with it.

What About Consolidators That Sell on the Web?

Not a good idea. Consolidators simply aren’t built for customer service. As we mentioned before, through years of relationship-building, your travel agent has a much better grasp of which consolidators are good, and which ones are shady, than you do. Consolidators themselves can’t really offer you any guarantees on your fare. Big consolidators have a lot of sway with the airlines because of the volume they do, so they can often help (but the reputable ones will only deal with your travel agent). If something goes wrong with a consolidator ticket you’ve bought through a trusted agency, the agency should absorb your loss.

According to Simon Bramley, head of pricing for Travelocity, the Travelocity Guarantee to “make things right” would function this way, buffering you from a loss if something should happen to one of the consolidator fares it offers through its site (you’ll usually spot these marked as “exclusives,” and all restrictions are listed before you purchase). And as always, you’ll want to ensure every purchase by using a credit, not a debit card, so you can take it up with the credit card company if the deal goes south.

Comparison Shopping

The inevitable truth is that you’ll want to shop around. Airlines, in an effort to drive customers to their own sites, now offer low fare guarantees. That means that even if you find an “exclusive” consolidator fare online, the airline will more than likely match or beat it. Domestic consolidator fares have been all but completely squeezed out by the Internet, and because airlines are decreasing capacity (mostly domestically), you’ll find even fewer for US-only flights. Rholl notes that airlines now release prices to consolidators that are exactly the same as published fares. Of course, you always have the option of searching the consolidators that sell online, and then mitigating your risk by asking your travel agent to find the fare for you. Like all fares worth finding, locating them will take a search.

Source — Yahoo!

WASHINGTON — Congress has voted to block a cut in Medicare payments to doctors but has done nothing to solve the fundamental problem that caused the cut, and the issue will come back to haunt the next president and the next Congress, lawmakers and health policy experts say.

Democrats and Republicans agree that the formula for paying doctors is broken, but fixing it would be phenomenally expensive, they say. So Congress provides temporary relief from year to year, the same way it takes care of the Alternative Minimum Tax, which snares more middle-income families every year.

Older Americans are directly affected because they pay higher premiums when Medicare spends more on doctors.

Senator Edward M. Kennedy of Massachusetts made a surprise return to the Senate last week and helped Democrats pass a bill to rescind a 10.6 percent cut in Medicare payments to doctors. The White House says President Bush will veto the bill because it would also reduce subsidies paid to insurance companies that care for some Medicare beneficiaries.

Democratic leaders believe they have the two-thirds majority needed to override a veto. The bill was passed 355 to 59 in the House, and the crucial vote in the Senate was 69 to 30.

The bill would give doctors an 18-month reprieve. But it leaves in place the current system of paying doctors, based on a fee schedule that sets payment rates for 7,000 different services.

“The physician payment mechanism is hands down the most broken part of Medicare,” said Gail R. Wilensky, who was administrator of the Medicare agency under the first President Bush. “We desperately need a new way to reimburse doctors. I fear that the need for fundamental change will be kicked down the road once the latest crisis has passed.”

Senator John D. Rockefeller IV, Democrat of West Virginia, agreed. “We must find a long-term solution,” he said.

Mr. Rockefeller and other lawmakers are pleading with physicians’ groups to come forward with a comprehensive proposal. But that could be difficult because any new formula would almost surely produce winners and losers among doctors.

Dr. Thomas R. Russell, executive director of the American College of Surgeons, said, “We absolutely want to work with Congress to get this fixed in the next 18 months.”

“Doctors who are responsible for the rapid growth in certain areas, like testing and imaging procedures, need to bring those expenses under control,” Dr. Russell said.

But radiologists say it is unfair to hold them accountable for all the growth in imaging services because the services are usually ordered by other doctors, like orthopedic surgeons and internists.

Senator Debbie Stabenow, Democrat of Michigan, called the current formula severely flawed. She said it cut payments to doctors about 5 percent in 2002 and would have caused cuts every year since then if Congress had not intervened.

Senator John Cornyn, Republican of Texas, said, “Congress needs to step up with a permanent solution, not the kind of shameful temporary patches and fixes that require physicians to come hat in hand to Congress every 6 or 12 or 18 months.”

The fee schedule places a limit on payment for each service, from a routine office visit to brain surgery, but does not limit the volume or quantity of services. Medicare officials set payment rates each year, using a complex formula that sets overall goals for spending on doctors’ services.

When actual spending exceeds the goals, payments to doctors are supposed to be reduced. If Congress steps in to block a cut in one year, Medicare recoups the money by making deeper cuts in future years. Under the bill passed by Congress last week, doctors would face a cut of more than 20 percent in 2010.

The purpose of the formula is to control the growth of Medicare spending for doctors’ services. But individual doctors are not rewarded or penalized for their own performance.

Medicare provides the same annual update to doctors, regardless of whether they control costs and keep their patients healthy or provide poor care and perform unnecessary tests.

The Medicare formula, established by Congress in 1997, links spending on doctors to growth of the economy, measured by the gross domestic product. This formula works when the economy is booming, doctors say, but people need their services just as much in a recession.

The formula does not distinguish between appropriate and inappropriate increases in services billed to Medicare. Nor does it reflect the fact that many services can be done with new technology in doctors’ offices, rather than at hospitals.

Dr. Wilensky said that instead of paying for “little bitty units of service,” Medicare should provide a bundled payment to a doctor or group of doctors who care for patients with chronic illnesses like diabetes and congestive heart failure.

Many doctors want to eliminate the payment formula. They say their costs — for malpractice insurance, staff salaries and other expenses — are rising faster than Medicare payment rates.

But the Congressional Budget Office says if Congress repealed the formula and allowed payments to doctors to grow by the rate of medical inflation, the costs could be substantial: $65 billion in the first five years and nearly $200 billion in the next five years.

Source — The New York Times