Airline Fees Run Amok--Paging Congress

Posted by: David Kiley on September 19, 2009

Congress is so tied up with health care reform that it has no time to take a new and overdue hard look at the airline industry and its total abuse of the American consumer. Airline fees have run amok. It is part of a runaway scourge—Fee Nation—sapping the U.S. economy.

Today, Businessweek.com has a story on fees becoming a lifeline to the airlines. Lifeline? It’s more like a choke-hold. And it has part of the false economy built around fees charged for no good reason and no additional service or benefit.

Let’s hope that changes in the New Year when Congress reconvenes. Hearings are needed; Big, nasty, hoary hearings where the CEOs of airlines are walked into the Capitol.

The latest: A friend of mine used his frequent-flier points to book a trip from New York to Detroit, which cost him a fat fee to start…just to use the points he had earned. After having to change the time, and checking a bag, what should have been a free ticket in the first place because of the tens of thousands of miles he has logged with this airline, the ticket was $280.00, or more than the price of the ticket I booked last month, without using points, to fly between Detroit and New York.

Not every airline is completely abusing fliers with fees. Southwest and JetBlue, for example, do not charge for the first checked bag, while Delta and United charge $15/$20. Spirit and Delta charge $90 if your checked bag is more than 50 pounds. Delta charges $175 for an over-sized bag or box that is 63-80 linear inches. Delta and United charge an outrageous $150-$250 change fee for tickets.

While the fees vary somewhat airline to airline, there remains a aura of collusion among airlines around fees that soak the consumer/business traveler. And that is the practice that needs to be looked into by Congress.

Airlines have a unique place in the U.S. economy. Keeping America flying is viewed as critical. No question that the airlines have been under great pressure since 9-11. But some entity needs to bring sense and a dram of justice to the absolute abuse of the American consumer.

As I have said before, some extra fees seemed merited when oil went to $140+. That is long over, but the fees remain.

Congress? Well, as we see with health care, it isn’t likely that Congress would have the sense or courage to do what needs to be done.
But the hearings would be a start in the right direction.

As a past blog of mine suggested, the way to bring the airlines into line is to treat them like tobacco companies, but at the sharp end of a czar’s regulatory sword. I suggested auto industry czar Ron Bloom, who did a superb job of forcing automakers to make necessary and logical changes to their basic business model. Among other things, he was responsible for firing GM CEO Rick Wagoner.

United Airlines has been in the blogosphere the last couple of months because of a superb video produced by a musician whose guitar was abused and broken by baggage handlers.

United subsequently offered to compensate the singer for his guitar only after he had cut this video and promised to make more. Having been avoided, ignored and shuffled for months on end, he rejected the offer, having earned back the loss from new opportunities that came his way after posting the video. Good for him.

I would suggest that offering to engage an angry consumer, or blogger, only after their YouTube video becomes a runaway sensation on the Web is not such a great strategy for building brand trust, brand equity or a good business model.

Reader Comments

Ed

September 19, 2009 12:14 PM

Are you kidding me? Is Congress the answer to everything that's wrong in a free capitalist society? Give me a break. The airlines are selling seats at a loss. When they do raise fares by $10.00, its on the AOL homepage or the lead in for CNN. What other business gets that kind of pressure on their product pricing? How much do you pay for a gallon of milk? How much did you pay 20 yrs ago? How much did you pay to fly to Detroit 20 yrs ago? I bet the difference is less percentage wise than the difference between the milk. The flying public is entitled to seat and a safe flight, not a five course meal and a paid move of half of their earthly possessions across the country.

From Kiley: As I have said before...I want Congressional hearings to shine a light on the pricing thuggery and stupidity that goes on by airlines against the consumer. In the end, the only thing that is going to reform the airlines into a system we can better live with is a czar who is politically immune from lobbying, given the power to force the companies to adopt a model, a structure and set of sane pricing practices that can bring the industry back to profitability and a state of operation that won't incite its customers to hate them.

Rich

September 19, 2009 1:28 PM

David, the BW story you reference mentions one particular airline as "one of the few profitable U.S. airlines." If most U.S. airlines are unprofitable, you can't really blame them for charging extra. Also, it's not in their interest to annoy their customers, so why would they do that unless they felt they had no choice?

From Kiley: I can blame them for abusive practices. If they can't make profit without usery practices and consumer abuse...all the more reason for an industry czar, immune from political pressure, to go in and knock heads until a business model emerges that it is sane and respectful of consumers.

contrail7

September 19, 2009 2:37 PM

Mr. Kiley, I don't guess you have noticed the airlines are in poor shape. Profits are nill, ever at "the darling of the airlines" Southwest. Unless you want to nationalize the airlines, like say AmTrak, let the consumer fly the line with no fees and decide. If its Jetblue or Southwest fine. If the consumer flies Us Airways or United, so be it. I would hate to think I could only shop at Wal- Mart because the goverment thinks Macy's charges too much for undershorts.

From Kiley: what i'm looking for is not treating the consumer like Tony Soprano treated someone who owed him money.

RNB

September 21, 2009 7:50 AM

Really love your comparison of a major industry to organized crime just because you're having a tantrum about some fees you don't like. Also love your assumption that an unfettered government-appointed czar can make it all better by fiat.

Lindsy

September 28, 2009 3:17 PM

There's no combination worse than deteriorated service and increased price. Southwest started as the value airline because it didn't offer all the frills. People who wanted more service and luxury paid more to get it. Fair enough. But in my recent experiences, United and Delta have been more expensive, with less service and an inferior product in general. The only reason to fly them anymore is if Southwest doesn't have an available flight. www.southwest.com

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News, opinions, inflammatory meanderings and occasional ravings about the world of advertising, marketing and media. By marketing editor Burt Helm, Innovation Editor Helen Walters, and senior correspondent Michael Arndt.

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