Wednesday, December 21, 2005

Are These Really New Fees?

It used to be that when you purchased an airline ticket, the price you paid covered the cost of the transportation for you and your baggage, a meal and beverages during the flight, and other amenities that the airlines used to woo customer loyalty.
These days, extra fees are tacked onto your ticket price.  Service charges, cancellation or change fees, airport improvement fees, security fees, and the list goes on (and on).
Now, some airlines have announced some additional charges:
From USA Today's Today in the Sky is news that starting in January American Eagle (American Airlines' regional carrier) will begin charging for beverages.  Test marketing is on flights into and out of Los Angeles, and is based on a charge of $1 for a 12 ounce soda.
Also from Today in the Sky is the news that the British low cost carrier, FlyBE, will be charging for check baggage starting in February 2006.  Not only will they be charging fees for checked baggage (ranging from approximately $3.50 to $7.00/bag), but they will also be giving a discount to those passengers who only bring carry on bags.
Finally, from Inflight HQ comes the news that Alaska Airlines will begin charging a $10 service fee on tickets purchased at a ticket counter or via their 800 number.  Alaska is apparently the last carrier to jump on the bandwagon of charging more to talk to a human being.
These fees are being touted as "new," although I maintain that passengers have always paid for them. 
Originally they were paid for as part of the all-inclusive ticket price.  Now that travelers are demanding the very lowest price ticket, airlines have decided that the can't afford to include all these "niceties" for free. 
It's a Hobson's choice:  Pay more for all-inclusive, or portion it out to pay for what you use. 
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Astroprof said...

These things may have been included in the one price before, but it is still rather annoying to pay for a ticket that costs $XXX and then find that when you pay for it you are paying $XXX+$250, not to mention parking at the airport, transportation at the other end (which often has more local fees and taxes tacked on). This is a way to raise prices, but still legally advertise a lower price than customers actually have to pay when they purchase tickets.

Airlines are not the only ones doing this, though. It is common everywhere. Buy a car, and you pay thousands extra beyond the price that you agree to pay. College tuition does not cover the cost of going to college, anymore, either. Now, you pay tuition, computer use fee, building use fee, parking fee, athletic fee, wellness fee, etc. At my institution, the fees amount to more than the tuition itself!

Fly Girl said...

Personally, I'd like to see the airlines charge a fair fee for tickets. A price that reflects the costs of doing business, keeps them out of bankruptcy, and is a one-price covers everything fee for the traveler.

Uh huh, like that's going to happen.

Now as for college, we haven't begun to talk about books, special supply fees, lab fees, etc. I went to a small private college, and doubt that I could afford it with the prices these days.

Traytable said...

Airport fees were part of my studies, for example:

For a large, well-known Asian carrier with cute uniforms to bring a 777-200 to my city, it costs nearly AUD$10,000 just to land the thing on the runway....!

As you say, then there's security & 'improvement' fees and so forth. Australia also had the $10 Ansett levy on every ticket purchased, due to the unique situation of having really only two main carriers and one suddenly going under... it was supposed to pay the employees but of course that's still being fought for...

Astroprof said...

Oh, and lets not forget that it is possible for every passenger on the airplane to pay a different fare.

jiffy said...

Astroprof: " At my institution, the fees amount to more than the tuition itself!"

That's the problem with user pay. In Australia, hundreds of thousands of uni students will wake up to this reality once the VSU (voluntary student unionism) bill kicks into gear next year. Previously everyone paid a mandatory union fee, and in return the student union made sure everyone got a fair deal (it could only do so on the basis that everyone paid). As of next year however the private facility operators can play on the free market, so get ready for price hikes.

But on the topic of airline fees, i wonder whether these "price hikes" are simply a marketing gimmick to attract the more economical flyers. As you rightly point out:

"These fees are being touted as "new," although I maintain that passengers have always paid for them."

My question then is, are we getting the same value for money as we used to under the "all inclusive" pricing regime? I doubt we are (though in saying that, im not taking into consideration the recent fuel hikes). Is it the old "six apples for $3, 3 for $2 strategy"? If it is, the pricing structure is sloping, and customers end up sliding towards full price (because it makes more sense), or receive proportionately less service (eg. no food/beverages, inconvenient flight times, non-refundable tickets etc). Naturually this makes good marketing sense for the airlines doing it tough with security scares and fuel hikes.

That's my take on it. But im not a regular flyer or in any way part of the airline industry, so this is simply the opinion of a curious outsider. is there any truth to this observation? What are your thoughts on this?

jiffy said...

a minor disclaimer on comments made about student unionism: to the best of my knowledge the unions subsidise text books, internet access, all campus retail outlets (eg, stationary, food, clothes etc), legal aid, accommodation, public transport, clubs and societies, sporting equipment/facillities and competitions, as well as a host of other items generally bundled under the heading "student community activities". And so while membership only covers a portion of the fees you guys pay, they do a damn good job of reigning in market forces to make university affordable to common students. I wonder if there is something similar in the US? Unfortunately our present govt. is adamant in making this country more like yours (pardon the expression) and is earnestly out to destroy all unions nationwide.

Robert Konigsberg said...

If an airline starts charging for stowing baggage, and provide discounts for carry-on only, this is merely going to create even less space in overhead compartments as people stuff them full with bags that are too big. On the bright side, you'll have more opportunities to walk away from passengers that demand you stow their heavy bag for them.

Remind me to stay away from airlines with this policy, and not because I want to boycott them, but because I want space for my damn bag.

Fly Girl said...

Traytable: I don't think anyone disputes the costs involved in having an airplane land at an airport. But these costs aren't new. The way we are charged for them are. Legitimate fees that were once part of the aggregate ticket cost are now being tacked on so that airlines can advertise their "low cost" prices.

Fly Girl said...

Jiffy: I really think there are very few completely "new" fees. Things like charging for meals, charging to talk to a real person, etc., were all services that were previously included in the price of a ticket. What's new is that now it is an additional charge to the "low cost" ticket.

Are we getting the same value? Definitely not! If you compare the price of a ticket 20 years ago and the price today (make the appropriate adjustments to convert the ticket price to current value), and I think you'll find that you are paying much less to travel now than you were then.

(And every day I ask myself, "How can that make sense?")

I think the more realistic question to ask ourselves is if we are receiving commensurate value for what we are paying.

Travel surveys repeatedly show that passengers don't want to pay for the amenities of food and beverage. I think that's why we are seeing airlines charge for them as a user fee.

I'll keep saying it: This failing industry needs to stop relying on government bail outs (which costs us money through our tax dollars), and start charging a true user fee: the cost that it takes to provide the service that it is selling.

Fly Girl said...

Robert: I'm with you!

As a working crew member, the last thing that I want to see is more carry on bags. There's usually too much already. And what will the airine do if the cabin is too full to accommodate someone's bags? Check it, and then charge them additionally. Seems to me this is just asking for trouble.

When I travel, I check my roller bag. Yes, I know it will fit onboard, but I lug it every day for work and I want someone else to lug it when I'm not working.

My carry on bags consists of a shoulder tote/laptop bag and my purse (mid-size). I can put all my reading material, travel documents, CD's etc. in those items and both will fit beneath the seat in front of me.

If I have a winter coat, I wait till larger bags are in the overhead, and I then neatly fold and place my coat on top of those bags, leaving valuable bin space for others.

It works for me!

JoeyC said...

Alaska: Lowering the standards for airline travel and customer service... again!

Fly Girl said...

Unfortunately, Alaska is only the most recent airline to add this "talk to a person" fee onto the price of a ticket. When one plunges to a new low, the rest are sure to follow.