|by Jason Steele|
Brett Snyder, AKA The Cranky Flier and I share our geeky obsession for all things airlines. We agree on all sorts of areas of the airline business, but not everywhere. Back in December, Cranky tried to explain Why You Should Love Airline Fees. His arguments were based on the marginal cost of the luggage and other items being separated out. In my article, Are Airline Fees Good?, I granted him that the fees helped the airlines, but I thought his piece represented the views of the industry.
Cranky Takes His Good Fees Message To CNN
It is great to hear that someone as knowledgeable about the airline industry as Brett will be writing for CNN, which can use all the help it can get.
His first article for them is entitled Why airline fees are good for travelers. In the spirit of friendly debate, I will attempt to rebut his arguments as I believe that most airline fees are bad for travelers.
Pay Only What You Use?
Let’s start with his premise that you will be paying only for what you use. The logical extension of this idea is that you shouldn’t pay for anything you don’t use. By implication, there should be a charge for speaking with a gate or ticketing agent, receiving frequent flier miles, or even drinking a glass of water. In fact, some airlines have tried these things. Ryan Air charges to print a boarding pass at the airport, Air Canada sells discount tickets that do not earn miles, and US Airways tried to charge for water. Ryan Air faces EU action and US Airways backed down from it’s pay for water policy. Customers simply don’t like this. We do not want to be nickeled and dimed for everything. Restaurants continue to offer silverware free of charge, even though we don’t use it when we eat a hamburger. I studied economics and I understand pricing externalizes and such, but I also understand customers hate this and the customer is always right.
Airlines Lack The Credibility To Convince Their Customers Fees Are Good
Imagine for a moment that the airline charged a fee for luggage that actually represented their costs. We could debate the marginal fuel burn per pound for various aircraft and even include the labor rates and benefits bestowed on hard working rampers , but let’s stipulate that the baggage fees charged by most airlines bore some resemblance to their costs. If that were true, first bag fees might be the only airline fee that correlated with their costs. The public sees airlines as masters of price gouging. Everyone has had the experience of attempting to make last minute travel plans and being quoted at rates that are many multiples the price of an advanced purchase. Then there are all sorts of ridiculous fees that go far beyond the first bag. Why does the third bag cost three times as much as the first? Why does a change fee cost $150 for a few strokes of keyboard? Why does Delta charge $150 for a nearly weightless styrofoam surfboard? Fees for small animals carried on? Fees for ticketing a lap child on an international flight? I could go on all day about outrageous fees, but it is clear that there is no correlation between most fees and the cost of the airline for providing the service. The public knows this and views the airlines like the gas station that doubles their prices when there is a shocking headline about the middle east.
Profits, But No Price Difference For Airlines That Charge Fees
Ever notice that a high end hotel might charge $25 a night for Internet Service while the budget inn across the the street gives you free wi-fi? This is currently the state at the airlines where Southwest and JetBlue give you free checked bags (1 and 2 respectively), but the legacy carriers charge you for bag one. At the same time, it is not like there are many markets where the legacies are beating Southwest and JetBlue on price. The point is that the claim that check bag fees reduce ticket prices rings hollow to people who actually shop around pay for their own tickets. Once you learn that airlines have increased their profits due to fees, you realize that the fees are not really coming out of ticket prices.
Exceptions Erode Perception Of Value
I might believe it actually costs something to transport my bag, if there weren’t so many exceptions. People with elite status, branded credit cards, child strollers, or military ID all get free passes. If you don’t fall into one of those groups, just bring your bag to the gate where they might offer to check it for free if the flight is full. Then there is the biggest exception of all; Check your bag on a Delta flight from Jacksonville to Atlanta, and you pay a bag fee. If you mention that you are continuing on to Johannesburg, the fee disappears. So much for “pay for what you use”. The fact that longer, international flights are exempt from bag fees kills the whole argument.
Fees Create An Adversarial Environment
It used to be that you paid your fare and then felt like you were getting a service in return. Customer service representatives and flight attendants did their best to promote customer satisfaction. Now, the passenger is a source of revenue and the airline personnel are like cops erecting speed traps. At each interaction, passengers are potentially penalized and asked for more money. I have literally had to hide from gate agents who I have seen trying to force people to check bags. I knew my bag met the published size and weight limits, but I also knew that the airline would win the argument when it came down to surrendering my bad or not boarding. The whole arrangement sours whatever customer service had been left at the airlines.
Fees Gum Up Operations
How many times have we seen passengers re-packing their bags at the check in desk in order to distribute their weight and avoid an overweight bag fee. Or perhaps they are consolidating to avoid another check bag fee. Other times, ticketing and gate agents spend valuable time explaining and reiterating the nuances of various fee structures while dozens of passengers wait steaming. They even process payment at the gate sometimes.
It only gets worse when it comes time to board. People carry more roll ons and personal items to avoid the fees, and it can add significant time to the boarding process. Passengers juggle overhead items like squares on a Rubix cube before they take their seats. The same holds true when priority boarding fees allow customers to board in less than optimal order. By comparison, travel on Southwest happens at lightning speed and they get more utilization from their aircraft. Some times I wonder if the slowdown of opperations costs more than the fees collected.
Cranky argues that in the future, the fees will not bother us as technology will make them more transparent. We will pay different fares for different service levels and we will be content to keep our hands off of our wallet on the day of travel. I see no reason to doubt this eventuality, and indeed there are airlines that currently offer these tiered service levels. I will also grant that this will alleviate some, but not all of the adversarial interactions between passengers and airport staff. I still find that a fee is a fee, regardless of whether I pay it when I book a ticket or at the airport. Sometimes, I just can’t foresee the need make a change or check a bag, and so long as I pay for my own tickets, I will always direct my business to airlines that have lower fees.
Not All Fees Are Bad
When an airline offers a service that had not been previously offered, I have no problem with a reasonable fee. $5 for inflight wi-fi or a movie is not egregious. The problem is that the airlines are not acting in isolation from the rest of the economy. These days, it seems that nearly every transaction involves fees that are ridiculous and/or inadequately disclosed. Rental cars, telecommunications providers, and event ticketing agencies have been doing this for some time. The airline industry is becoming the next TicketMaster, and I don’t see how customers are ever going to like that.