Can the Airlines Teach Us to Love the Fees We Love to Hate?

The Extra Mile
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Dollar bills on a line (Photo: Index Open)
Editor's Note: This story was originally published on June 15, 2010. To see the most recent SmarterTravel articles on related topics, please click on any of the following links: airfare, frequent flyer, government regulation, Spirit, taxes and fees, The Extra Mile, US Airways.

The airline industry calls them ancillary revenues.

The traveling public calls them nuisance fees.

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The industry depends on them.

Travelers loathe them.

Airlines argue it's a legitimate way to price their services.

Consumers grumble about pricing "surprises" when the total ticket cost is finally displayed.

By whatever name, and to whatever end, airline fees have become a fact of travel life.

Big Business, Nasty Business

In 2009 alone, airlines generated $7.8 billion from ancillary fees, largely from checked bags. That's a 42 percent increase over the previous year. And while that growth rate is unsustainable over the long term, no one expects the industry to throttle back on its newfound reliance on fee revenues.

As big and entrenched as the business of fees has become, the pushback from consumers, the media, legislators, and consumer groups may be bigger still.

In a report released last month, Consumer Reports found that the top two traveler gripes were both fee-related, luggage charges and added airline ticket fees.

So incensed was he by Spirit's "outrageous" $45 fee for carry-on bags that New York Senator Chuck Schumer personally secured commitments from five of the largest U.S. airlines to foreswear such a fee, and vowed to petition 21 other carriers to do the same.

And the newly proposed DOT passenger protection rules take direct aim at the airlines' fees as well, mandating that advertised ticket prices reflect any and all surcharges, and that all charged fees be itemized.

What's So Unfair About Fairness?

Consumer Reports. Chuck Schumer. The current incarnation of the DOT. These are people and organizations that have my sympathy and respect. Indeed, I've taken more than a few swings myself at the airlines for their fee frenzy.

But there's an element of hypocrisy in the naysaying, mine included.

Underlying a-la-carte pricing is a principle that most right-thinking consumers would endorse: You get what you pay for. Flip that and it becomes: You pay for what you get.

With American's deep Puritan roots, that's practically written into our collective DNA.

And yet, when airlines began piling on the fees for anything that could be disentangled from the core service and tagged with a separate price, we bristled. "Nickel and diming," we snarled.

Is the outrage justified, or are we just a bunch of hypocritical whiners who can't come to grips with the inevitable manifestation of an inconvenient truth?

Why, in other words, are we so outraged by something that seems so sensible?

Change Is Hard

The recent explosion of airline fees has been a double whammy, psychologically, exposing flyers to two powerful emotional triggers, change and loss.

Not only are we being charged more, but we're getting less. No meals. No pillows. No blankets.

And we're being asked to endure these insults during a period when airlines are flying their jets fuller than ever, adding physical discomfort to the list of travelers' woes.

Amenities, service, comfort—all downgraded. Grouchy? You bet.

Hiding in Plain Sight

To the extent that fees allow the airlines to advertise artificially low ticket prices, the a-la-carte pricing scheme is fundamentally rooted in dishonesty and deception.

It may fall short of bait-and-switch for legal purposes, but that's what it feels like.

Fees and the Real Story

The airline industry has an uneasy relationship with truth-telling. Ads routinely tout low fares that simply don't exist—the advertised price is for a one-way ticket, but the fare rules require a round-trip purchase.

The chiefs of merger-hungry airlines regularly oversell the consumer benefits of industry consolidation.

And related to fees specifically, in an attempt to justify the imposition of surcharges for carry-on bags, Spirit chief Ben Baldanza went so far as to claim the new fees were actually intended to save travelers time and money.

The truth about fees won't be found in the airlines' ads or press releases, or in Ben Baldanza's pronouncements, but in their financial reports, where the economic impact of the fees is proudly, gleefully, trotted out for Wall Street analysts and investors.

The Slippery Surcharge Slope

Also contributing to consumers' unease with the current fee-for-all is the niggling sense that there's nothing the airlines won't do to separate travelers from their money.

How about a fee for not pouring hot coffee in my lap? An enterprising airline could call it a "temperature guarantee surcharge." Or a fee for preventing the pilot from coming to my home in the middle of the night and robbing me? A "home invasion exemption fee."

Crazy? Sure, but how much crazier than Spirit's fee for carry-on bags, or US Airways' for simply issuing a frequent flyer award ticket?

A Dummies Guide to Selling Airline Fees

While consumers are never likely to embrace fees any more than they do root canals, the airlines could do more to ease the transition to the new pricing reality.

The airlines, it should be remembered, did a masterful job of convincing travelers to book online rather than pick up the phone, deploying a combination of carrots (bonus miles) and sticks (fees for telephone bookings).

So, what can the airlines do in this case?

Be Transparent

The word "sneaky" appears prominently and often in consumers' grumbling about fee-for-all pricing. And more substantively, adding injury to insult, consumers can't make meaningful price comparisons if they don't have ready access to all-inclusive prices from all airlines, whether it's on the carriers' own websites or on the site of an online travel agent.

Full fee disclosure is something the airlines should have done proactively, from the beginning. Soon, they may have no choice—as mentioned above, the DOT has included language in its proposed passenger-protection legislation that would mandate up-front disclosure of all fees associated with a particular ticket price.

Be Sensible

"Rush" fees for tickets issued within 21 days of departure?

Close-in booking fees are sometimes still called rush fees, a reference to times long past when airlines had to use courier services to get tickets into customers' hands when a booking was made too close to the departure date to allow for delivery by regular mail. The rush fee offset the airline's additional costs. But today, with the great majority of tickets being issued digitally, there are no paper tickets or FedEx fees to deliver them.

And airlines' Internet booking applications are no more "rushed" in generating a confirmation number for a flight that departs in 24 hours than for a flight departure 30 days out.

If the fee doesn't cover a cost to the airline, or deliver extra value to the consumer, it's just a gouge and should be cut.

Be Humane

An extra charge to use the plane's lavatory?

'Nuf said.

Be Honest

Spirit's Baldanza and his fellow fee-frenzied airline chiefs would do well to heed Judge Judy's injunction: "Don't pee on me and tell me it's raining."

If their airlines' profitability depends on a-la-carte pricing, say so. Explain why. (But be prepared to explain how Southwest, the industry's most reliably profitable airline, manages to succeed with minimal fee-dinging.)

If there's a compelling case to be made for the fairness of a-la-carte pricing, make it.

While not all travelers are Nobel economists or distinguished professors of moral philosophy, they're generally well educated and business savvy. They're more than capable of assessing the facts, if they have them, and judging accordingly.

The Right Thing to Do

Of course it could be that nothing the airlines can say or do would be enough to convince their customers that fees are a benign addition to the travel landscape, or at least a necessary evil. The public's distrust of the airlines runs deep and such ameliorants may be too little too late.

Still, questionable prospects for success notwithstanding, the airlines really don't have much choice in the matter—there's only one transparent, sensible, humane, honest thing to do.

 
 
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