This is what I hear every time I’m in an airport now: “What’s next? Lavatory use tax? Late-to-the-gate levy?”
I hear your pain—and your outrage and confusion. But in this column I’m going to try to convince you that airline fees are not as obnoxious as they’ve been portrayed in the press.
How This All Came Down
Given competitive and cultural pressures, right or wrong, airlines believe they must “advertise” low fares. Long ago they decided to move from targeting just the elite customer and had to finance mass-market expansion. They gave the market what it wanted to see—low fares, in neon lights. Plus, the media’s obsessive focus on airfares—headlines that read “Fares Up,” even when they changed by $25. Then along came such things as baggage fees, merely as a way to attempt to make an airline profitable.
So, What is a Fee Really?
Rather than a nuisance tax, which is how they’re portrayed, think of airline fees as actually a way of segmenting the cost of providing a service. The county fair charges an admission fee and then a fee to ride the Ferris wheel. It could charge an admission price that would cover everything, but why should you pay for riding the Ferris wheel if you’re scared of heights?
Likewise, the airlines charge you a price (the fare) for transporting you from point A to point B, and in recent years have started charging for various associated services. That airfare often is shockingly low. I just checked and found a fare of $218 round-trip LAX to NewYork—20 years ago the price was the same, and given the rate of inflation, that $218 is really only $69.30.
What does that $218 (or $69.30) cover for the airlines? Not much. The airlines do have a price that covers everything: It’s called full fare and very few travelers avail themselves of it. (Full fare on that same LA-NY flight costs $3,322.00.) Look at it this way: Fees simply offset airline costs by helping to generate revenue. For years, I’ve contended, that for the comfortconscious, strategic air-traveler, fees are to be embraced. Now I’m going public.
How I Learned to Love Fees
Fees Keep Fares Low
You see, full-fare passengers pave the way for the rest of us to fly across the country, if not between continents.They don’t get hit with the extra fees usually. In fact, fees on lesser tickets (for $69.30) are what keep those fares no higher than they are. We always want people to be paying full fares so the airlines can charge the rest of us less, even if it comes with something called a fee.Fees Make It Easier to Get Upgrades
What are the odds of getting a “free elite status upgrade” from Delta, Northwest or USAirways? Huge—that it won’t happen. What are your chances on American and United, which impose upgrade fees? Much better because the line for those upgrades is not as long. Upgrade fees help by depressing demand.Fees are Actually Cheaper than Paying the Piper Directly
American charges $50 to upgrade a domestic ticket with miles—a fine price to pay for something that could cost ten times the price. And it buys you good things like admission to a Business Class Lounge, sometimes for as little as $25.All this is to say, simply: Fees keep some people out, so others can go in.
As always, see you up front. –MJB