SENATORIAL RIDICULOSITY

Posted on 03/17/2016

We live in a world of acronyms. Some work well, like MADD, ‘Mothers Against Drunk Driving’ which makes total sense. Few people realize that QANTAS is an acronym for ‘Queensland and Northern Territory Aerial Services’, which is why so many insist on spelling it QUANTAS. Some, like BARF or ‘Biologically Appropriate Real Foods’, leave a lot to be desired, while using the acronym for this publication might misrepresent the kind of content readers can expect.

When it comes to the US government getting into the acronym game however last week’s newly tabled ‘FAIR Fees’ Act is a toss up as to which is the more nonsensical, the content of the bill or its tortured contrivance of an acronym-forming title. The ‘Forbidding Airlines from Imposing Ridiculous Fees’ Act is surely the most amazing demonstration yet of how little understanding politicians have as to the basic workings and economics of the airline business. 

The ill-conceived bill, introduced by two US Senators, seeks to limit fees that are “not reasonable to the cost of the service” from being offered as add-ons to airfares. If they had their way, they would force airlines back to the prix fixe pricing days when things like checked bags were “free”. Sorry gentlemen but they were never free and if you want to talk about what’s “fair” here’s a little test question for you. 

Only a few years ago most domestic airlines had a “free” checked baggage allowance of not one but two 70-pound bags. Under this system, passenger A with zero checked bags would pay the identical airfare as passenger B with two bags weighing a total of 140 pounds… or roughly the same weight as another passenger. Is that really fair on passenger A – why should he/she subsidize passenger B’s baggage excesses. 

Nowadays in that same scenario, passenger A would pay nothing whereas passenger B would pay $25 or more per bag. More likely however, the ‘all you can eat’ buffet effect would set in and, when it’s no longer “free”, passenger B would miraculously manage to travel with just one bag of 50 pounds or less. As Michael O’Leary has always averred, charging for bags is not a revenue grab but is a deliberate disincentive to bringing them. He’d prefer to see his airplanes fly with no bags: Weight after all is the enemy - it requires more fuel, which in turn requires more fuel. In other words, baggage fees make total sense and are very much tied to the cost of the providing the service - but only for those passengers that bring them. Including them would put everyone’s fares up. 

Another family of fees being attacked is cancellations and changes. The misguided lawmakers would see airlines limited to charging fees for only the cost of processing new tickets and any potential loss of revenue. They noted however that airlines are unlikely to lose money since they “can always resell the seat”! 

Paying for advance seat assignments is another fee that FAIR would be limited or vanquished. Assigning a seat may not have a direct cost for an airline, but advance assignments do have a value for the customer. Every seat gets you from A to B in the same time just as every theater seat allows you to enjoy the same performance but why shouldn’t the sellers be permitted to attach a premium to those seats that buyers value. Like orchestra seats, exit row seats are limited – why shouldn’t supply and demand be permitted to influence airline pricing as in every other business? 

Okay gentlemen, so why don’t you go all-out and solve this one by also making all but the highest priced airline tickets work like theater and pro sports tickets – make them all 100 percent nonrefundable. Buy an expensive Broadway ticket for next Tuesday and show on Wednesday asking if they can maybe squeeze you in and they’d laugh in your face. This bold move would greatly reduce no-shows, the need to overbook flights and so instantly eliminate over-sales aka ‘bumpings’. It would be a win-win-win Trifecta would it not? Dream on. 

The ultimate irony is that this bill, if successful, would impede the ability of ultra low cost carriers like Spirit and Allegiant to offer truly low fares with a la carte add-ons. The legacy carriers would probably happily give up the baggage fees if an act like FAIR forcibly dragged the ULCCs back in the prix fixe fold. But don’t hold your breath, it ain’t going to happen. It will however garner a lot of vote-getting sound bites for the senators concerned – not that they could possibly have such an ulterior motive. 

Maybe this ridiculous act would be better described as BSBSBSBS i.e. ‘Badly Structured Bill Supported By Stupid Bloody Senators’.