Saturday, June 20, 2009

Airline Fees: What Next? Smarter Reporting, I Hope

There is absolutely nothing new in this widely distributed news story today about airlines piling on fees. Old news, rehashed.

There are several things wrong with the story, including the assertion that airlines' see fees as an alternative to raising fares.

To the contrary, airlines jump at any opportunity to boost fares, assuming they can get away with it. Just last week, the domestic industry, acting pretty much in tandem, managed to slip in an across-the-board $20 increase in base fares.

And while fare sales have proliferated (airlines are desperate for cash), fares on many routes between mid-sized cities where competition is not great are up 40 to 60 percent in the last year.

Yes, airlines charging extra for a checked bag (for non-elite-status coach passengers paying discount fares) is an annoyance and, for a family traveling on vacation, a burden. Yes, the fee-fling has gone so far that Ryanair, the cheapo carrier in Europe, is actually considering pay toilets. (This story, rehashing old news, dismisses that as a publicity stunt, but in fact Ryanair's chief executive Michael O'Leary says he is serious about the pay toilets; is able to circumvent EU regulations about providing public toilets, citing the precedent of pay toilets in European train stations; and is in the market for a credit-card reader that will enable the scheme to work.)

But why am I supposed to be wailing about the fact that some airlines are charging an extra $20 extra for priority seating? That is not in the same price-gouging league as charging extra to check in at the airport. In fact, it's a very good idea, from a consumer point of view.

The AP story mentions AirTran as charging $20 for an exit-row seat with extra legroom. But US Airways and other carriers also offer customers that option -- which is in fact generally welcomed by people who fly. When I fly US Airways, for example, I jump at the opportunity to grab an aisle exit-row seat with the extra legroom, for $20. I consider it a bargain, given a low fare and given that I don't have elite-status on US Air and so wouldn't otherwise be able to grab that better seat.

And by the way, why do none of these rehashes ever mention that Continental Airlines, for one, still serves free meals in coach? Or that that $7 sandwich you can buy on some other airline is often a very good sandwich, way better than its free predecessor?

Extra fee-revenue, which ranges up to $1 billion a year for some carriers, has not been sufficient to dig domestic airlines out of the deep hole they're in. Across the board, passenger revenues are down sharply as demand for flying declines in a very poor economy. Business travel -- which airlines depend on for most of their revenue -- is down, but companies are still sending businss travelers on the road. It's just that those travelers are now acting like leisure travelers, waiting for fare sales, adjusting schedules to fly cheap, avoiding the front of the plane except as an upgrade option. It's now common for a budget-conscious business traveler to shop around for a better deal at a nearby airport, calculating in the cost of a rental car or even, gasp, public transportation.

SO it's time for some people writing about air travel to smarten up, to stop rehashing old news, and to begin looking in a grown-up way at basic economics. Oil is going up, industry revenues are down, demand stubbornly resists prodding even by deep fare sales. Unemployment or other economic problems have taken away air travel as an option for hundreds of thousands of people.

There is no way the domestic air travel system can continue to operate without significant change, and some of that change, alas, is going to have to come in customer expectations. Demand is down? Costs are up? Well, the reasonable economic response is that supply must be reduced.

Reality says a smaller air-travel system, with higher fares and far fewer choices, is in our future, and perhaps for a long time to come. This will not be a popular reality.

Rather than winging about someone paying $20 extra to grab an aisle-row seat, air-travel reporters need to start evaluating the economic and political options -- and the national transportation-policy realities -- as our air travel system, and our beloved national travel culture, shrinks.



psa188 said...

While I realize that airlines must make a profit to stay in business, I fail to understand the logic of nickel and diming the passenger with extra nuisance fees on top of the airfare. I've discussed this with my co-workers, friends, family and business associates, and there is a general consensus among us that airlines should charge one honest fare and eliminate the extra fees. Therefore, whenever possible, I’ll be flying Southwest and JetBlue in the future.

See also said...

I agree, in principle. However, once an airline tries this, a competitor comes along and undercuts them and before you know it we're back in the fee-slapping routine. (Southwest is an exception, though even Southwest has gingerly entered the game, with higher "business" fares (that are really fees) for seat priority and a beer, etc. Still, as I said, I like having the option of spending $20 for a better seat that I otherwise wouldn't have had access to. Meanwhile, airline booking sites and 3rd party sites are developing new layouts that clearly spell out fees with the total fare, no fine print. Thanks for the note.