Representative Steven Cohen (D-TN) wanted to regulate seat width and legroom. That went nowhere in the House Transportation Committee, but Senator Chuck Schumer (D-NY) decided it would make a good issue. His office even pitched me on the story after I had already explained why this would be bad for consumers. The Points Guy gave him more sympathetic coverage.
On Tuesday, two U.S. senators introduced a bill that would limit fees tacked onto the price of your airfare that “are not reasonable or proportional to the cost of the service.”
Dubbed the Forbidding Airlines from Imposing Ridiculous Fees Act, or FAIR Fees Act
Fees aren’t just about making money. Spirit Airlines charges fees to incentivize behavior as well, to make passengers act in ways that reduce the airline’s costs. They want customers to do all of their transactions online. They want aircraft to board quickly. They charge fees that discourage the sort of carry on stampede that goes on with other airlines and slows down the boarding process. They charge a penalty rate for customers who aren’t taking care of transactions in advance where it’s cheaper and more efficient for the airline to process.
Consumers certainly have choice. Southwest attempts to differentiate themselves through lack of fees, their marketing slogan is “transfarency” (though perhaps another reason for the lack of fees is the IT investment that would be necessary to implement them).
We often derisively refer to ‘fees’ but another term for the same thing is a price for a service. As long as such prices are clearly spelled out up front, why shouldn’t a business be able to charge them?
It may not ‘cost’ an airline much to assign a seat, but that’s not the point. Some seats are actually better than others. The certainty of where you’re sitting on a plane is important to some people, less important to others. Advance seat assignments, and specific seat assignments, have value. It’s a product the airline is providing, why shouldn’t they get paid for it? And in fact the best seats on a plane are limited, such as emergency exit rows. Is the only acceptable mechanism to choose who sits there ‘first come first served’? Should the fee for the seat not reflect its value rather than its cost?
Why should prices be legally restricted to the cost of providing the service? Should Beyonce’ be limited in what she can charge to the cost of renting a venue and paying for electricity? Because, freedom.
If you limit the fees airlines can charge for ticket changes, why not just make airline tickets completely non-refundable with no residual value? Why should an airline have to spend millions of dollars on planes, commit to the employees that will staff the aircraft, and fill the plane’s gas tank — and not be allowed to build in assurances that customers will show up, or at least be entitled to keep the money for the purchase if they choose not to?
Some airlines have more nuanced change fees, of course, based on how far off in to the future a flight is. But that’s also a competitive differentiator.
Of course, this legislation is going absolutely nowhere.
- It’s an election year
- It’s proposed by two Senators whose political party is in the minority in the Senate
- The Senate could well change hands in the 2016 elections, but the House won’t
- The House Transportation Committee is
chaired by the airline industry lobbyist girlfriend of the member with the committee assignmentchaired by a staunch advocate for the airlines.
Look, I have my beefs with airlines. There’s plenty of things to hate about the process of getting from A to B.
But cracking down on fees isn’t going to make things better. If anything, it aims the power of the federal government squarely at the ultra low cost carriers who are precisely the ones driving down the cost of airfare and making travel affordable. Found a cheap ticket on a legacy airline? You probably have an ultra low cost carrier to thank for that too as the majors match their price while providing a couple of extra inches of legroom and not charging for water.
There are policies you could advocate that would make air travel better.
- If you want to do something about the spread of fees, push to end the disparate tax treatment of domestic airfare versus ancillary revenue. The former is subject to a 7.5% excise tax, the latter is not. So every dollar airlines can push into fees and out of the base fare isn’t just incremental revenue, it’s tax savings.
- If you want to do something about lack of competition, or quality of product, then push to end restrictions on foreign ownership of US airlines. Let Singapore Airlines and Ryanair bring either a quality product or a super low price to US markets.
Serious proposals would bring in competition, and would eliminate the incentives the government creates to add fees. Unserious proposals promise to wave a magic wand and make us feel better.
In this case the two Senators are just demagoguing the issue and thank goodness these aren’t serious proposals because they’d drive up Spirit’s costs and Allegiant’s costs, make them uncompetitive, and then we’d start to see higher airfares from the majors.
Blumenthal also wants the DOT to take action against airlines over fuel surcharges. Should I be somewhat more sympathetic there?