We need these consumer laws now


If you’ve ever said, “There ought to be a law,” then you’re one of a million frustrated consumers. And you are not alone.

Vast tracts of the commercial landscape are poorly regulated — or completely unregulated. Sometimes, it’s because technology develops so quickly that the rules can’t keep up with it. American privacy regulations are a good example of that. Other times, consumer protection laws have been weakened or eliminated by influential lobbyists or campaign contributions. That’s what has happened with airlines.

Question is, which rules are needed now?

Make airline fees fair again.
The Forbid Airlines from Imposing Ridiculous (FAIR) Fees Act, introduced last year by Sen. Ed Markey, D-Mass., is still alive and kicking around Congress. It would prohibit airlines from imposing fees that are unreasonable or disproportionate to the costs incurred by the air carrier.

Why it’s needed: Airline fees are out of control. Some ticket change fees are over $700, which can easily eat up the entire cost of your fare

Who’s against it: Airlines and their surrogates say the law would effectively “re-regulate” the airline industry.

Stop frivolous lawsuits against consumers.
The Speak Free Act, which is expected to be considered by Congress soon, allows any person to make a special motion to dismiss a SLAPP (Strategic Lawsuit Against Public Participation) suit that has been frivolously filed against them. The Speak Free Act would allow consumers to quickly end these suits before they run up legal bills. Supporters say the law also would encourage consumers to offer honest feedback in online forums and social media without fear of retribution.

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Why it’s needed: Businesses with access to big law firms can suppress free speech without this law. (It’s happened to me.)

Who’s against it: Trial lawyers.


Don’t let your boss take your Facebook password.
“It’s not against the law for a possible employer to ask you to look through your social media accounts during a job interview,” says Andrew Selepak, a professor in the department of telecommunication at the University of Florida, and director of the graduate program in social media. The proposed federal Password Protection Act would forbit employers from requiring or requesting employees or job applicants to provide password information for their social media and email accounts as a condition of employment.

Why it’s needed: More employers are asking for passwords.

Who’s against it: Employers who ask for passwords.

Stop bad presettlement loans
Accident victims find themselves in dire financial situations after an accident and injury. As a result, a cottage industry has developed that lends presettlement money to these consumers. “The rates and fees are astronomical,” says Michael Manoussos, a civil lawyer from Kew Gardens, N.Y. “Hedge funds are envious of the returns.” Both Vermont and Indiana recently passed legislation to regulate these legal funding mechanisms. But a federal law is needed.

Why it’s needed: Presettlement loans are exempt from usury laws and lending regulation.

Who’s against it: Lenders.

Better overdraft and lending rules
“Lenders should have to assess the borrower’s ability to repay — without any exceptions,” says Liana Molina, director of community engagement at the California Reinvestment Coalition. To that end, new federal rules are needed to regulate high cost car title, payday, and installment loans. Also needed: new overdraft rules. (Overdrafts, if calculated as a loan, would come with a 17,000 annual percentage rate, according to the Consumer Financial Protection Bureau, or CFPB.) Both these issues are being taken up by a CFPB rulemaking, the first step toward a regulation.

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Why it’s needed: These financial instruments prey on the weak and desperate.

Who’s against it: Predatory lenders.

What are the chances of these proposals becoming law? In this political environment, they’re not that great, say experts. And that’s too bad. These proposed rules could do a world of good for consumers.


Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or check out his adventures on his family adventure travel site. Contact him at chris@elliott.org.

  • Harvey-6-3.5

    A privacy law, that entitled consumers to power over their own information, would be a great addition, which imposed financial penalties on companies that misuse or lose private consumer information and paid the consumers actual cash when the company was careless and hacked.

  • Alan Gore

    A needed start on the reforms we need, though it is only a start.

    And this is the first time I have ever agreed with Sen. Markey on any issue.

  • John Baker

    Watch what you wish for…
    For example #1 “Make airline fees fair again” … Airline response to the new legislation… Fine you bought a non-refundable ticket and want to legislate change fees… No changes to any ticket. Period. Full stop.

    Does that help anybody?

    Last two … These folks are forced into bad deals.. Right. Guys with baseball bats make them sign the paperwork. Some times you just can’t protect people from themselves. If they really have gotten themselves in a situation where the absolutely need a high interest loan (combination of lack of savings, poor credit risk & true need), why shouldn’t they be allowed to take one out. There is some personal responsibility left in this world… right?

  • Kairho

    I’d like to see an example of a $700 change fee. And no, the difference in then and now prices cannot be included in that.

  • Lindabator

    you are correct — those change fees are specifically prohibitive as this society becomes more flaky by th day, and want to change their flights every time they get a brilliant new idea. This means the airlines cannot properly plan out their annual needs, and if you legislate low fees, thy will go back to the short lived instant purchase no change tickets they played around with in the late 80’s. Thy already have this with the basic fares, which are nonchangable, and which most people absolutely hate

  • Lindabator

    correct – $200 is the domestic and $300 – $400 on international is the norm

  • ArizonaRoadWarrior

    “It would prohibit airlines from imposing fees that are unreasonable or disproportionate to the costs incurred by the air carrier.”

    How about having a law prohibiting restaurants from charging $ 2.00 to $ 3.00 for a soft drink when the cost is only $ 0.25 or less? I think that we can find many examples where the retail price is several times the cost to the merchant on products and services.

    Do I like the fees from the airlines? No…but they and other companies need to make a profit…they are not like the government where they can print money. If you don’t like the change ticket fee from an airline then buy a refundable ticket.

  • ArizonaRoadWarrior

    A person can buy a refundable ticket but they don’t because they can buy a non-refundable ticket at a lower price. It is fully disclosed that a non-refundable ticket is non-refundable and there are change fees if you want to make changes.

    Due to certain group of people that have been telling the public that 1) you shouldn’t be responsible for your actions and 2) other people should pay for your actionslack of actionslack of responsibility, we have a bunch of narcissists in our society believing that the world evolves around them and the rules doesn’t apply to them.

    If legislation is passed on airline fees then 1) airfares will go up and/or 2) no changes will be allowed.

  • Joe Blasi

    in f***ing cook county do that F***ing tax places that used to have free refills and are changing for it.

  • Bill___A

    And yet I see no mention of stopping fake fees such as resort fees.

    There is something wrong with the morals of an employer who asks for Facebook passwords and I believe that is against most providers’ AUP rules. You’re right, it should be illegal, and there also should be some public shaming about it.

  • Nathan Witt

    All businesses need profit; therefore, any profit, from any source, at any expense to anyone, by any method that works, is a fair profit, and furthermore, anyone who cries foul is probably a pampered millennial snowflake who has no concept of personal responsibility. That’s the thrust of this argument, which gets passed around any time anyone suggests that a particular method of increasing profits isn’t ethical. So I’m curious to know whether you think that there are any rules, in any industry, that *are* unethical or usury.

  • Michael__K

    those change fees are specifically prohibitive as this society becomes more flaky by th day, and want to change their flights every time they get a brilliant new idea

    You keep peddling this fact-free assertion over and over again for years, even after it’s been repeatedly pointed out to you that the airline lobby’s own data shows that flight changes were flat or down in between change-fee increases.
    http://www.elliott.org/blog/airline-fees-senate/#comment-2563992528

  • ArizonaRoadWarrior

    If flight changes were flat or down, it shows the change fees are working. One purpose of a fee is to change behavior.

  • Michael__K

    This bill is not necessarily the best way to tackle the fees issue, but airlines probably won’t be able to respond the way you claim.
    The bill itself (like most bills) doesn’t cover every fine detail — the Secretary of Transportation would be responsible for prescribing the detailed regulations — but it’s pretty good bet that the regulations would construe a no-changes ticket as a 100% change fee, unless the Secretary was intent on sabotaging the intent of the law…

  • Michael__K

    Changes were flat or down while fees were CONSTANT. Which means fees were raised to generate more revenue, not to clamp down on a spike in changes by flaky customers….

  • Maxwell Smart

    in Australia on weekend of 30SEP/1OCT we had 2 major sporting events. In OZ we have 4 major football codes, rugby league(NRL), Australian rules(AFL), rugby(rugby union) & soccer.
    Some admin rocket scientists decided to have to the AFL grand final on the Sat 30SEP (always in Melbourne) & the NRL (always in Sydney) on Sun 1OCT.
    It was also a long weekend(Mon public holiday) + spring school holidays in many states of OZ.
    The AFL grand final featured one Melbourne team & one Adelaide team. Adelaide, OZ 5th biggest city is about an hour flying time from Melbourne, OZ’s 2nd biggest city.
    Both NRL grand finalists were from outside Sydney, one from Melbourne(hour flight south of SYD) & other from Townsville(TSV) a small town, around 2.5 hours flying time from SYD(but stuff all nonstop flights)
    When grand finalists were decided weekend before grand finals, there were loud cries in the media by big mouth politicians & locals, complaining about the cost of airfares esp from TSV, but it was a long weekend, it was school holidays & flights had been very close to full, months ahead of any football game. Airlines put on a few extra flights, but as they basically had to fly one way empty, fares weren’t cheap. A few charter flights were also put on, but again, aircraft weren’t sitting at TSV, so they have to fly at least 2 hours empty from somewhere else, BUT still pollies etc. tried to big note themselves by saying what bastards the money hungry airlines were, this at same time, when many airlines closing down (Monarch in UK, Air Berlin & Alitalia not far away, plus in this worldwide recession, many more will close down. In USA, possibly due to mergers, you might not have many airline failures, but fares/charges will be higher.
    BE VERY, VERY, CAREFUL WHAT YOU WISH FOR. YOU CAN’T HAVE YOUR CAKE & EAT IT TOO !!!!!!!!!

  • ArizonaRoadWarrior

    The best way to tackle the fees issue is the free market.

    1) buy a refundable ticket
    2) fly on Southwest Airlines
    3) follow the rules on a non-refundable ticket
    4) buy travel insurance since stuff can happen in life

    The objective of these non-refundable tickets is to offer a much lower fare than a refundable fare with restrictions. By agreeing to the restrictions, airlines can offer you a lower fare. I can remember those weekend fares (i.e. you need to stay a Friday or Saturday night) in order to get a low fare back in the 80s.

    The restrictions for these non-refundable, non-changeable airfares and hotel room rates are fully disclosed. Therefore, I don’t understand why people want a refund and etc. when they agree to these non-refundable, non-changeable fares and rates especially when they have a choice between refundable and non-refundable rates and fares.

  • ArizonaRoadWarrior

    Before enacting consumer laws, how about the passing the following laws:

    1. Terms limits for Senators and Representative…a total of 10 years (i.e. six years in the Senate and four years as a Representative). They are there to serve us not themselves…not to enrich themselves at the expense of the American taxpayers.

    2. Senators and Representative will have the same health insurance as the American public…no more private insurance for them…when they have their own health insurance instead of Obamacare, they don’t feel the pain that the public is going through.

    3. In addition to health insurance, Senators and Representatives can’t be exempt from the laws that they are passing.

    4. No pensions…they are there to serve us not themselves…not to get rich at the expense of the American taxpayers.

    5. After serving in the Senate and/or the House, they will have a lifetime ban from being a lobbyist, competing for federal contracts, etc.

    6. Balance the budget…don’t balance the budget, they don’t get paid and/or new elections are scheduled…in the real world, if you don’t do your job, make your quotas, etc., you are fired, lose your job, etc.

  • Michael__K

    We don’t have a free market.
    A free market means open competition and it means transparency and ease of comparing features and pricing.
    We have oligopolies controlling their gates at major airports and avoiding competition.
    And we have airlines unbundling and making the rules and fees more and more complex so that passengers — and especially inexperienced passengers — cannot readily compare what they are getting and what their all-in costs are on an apples-to-apples basis.

  • Michael__K

    AA.com

    Voluntary change to ticket before day of travel
    $200 – domestic travel
    Up to $750 – international travel

    https://www.aa.com/i18n/customer-service/support/optional-service-fees.jsp

  • Michael__K

    We have laws prohibiting restaurants from charging for tap water, which makes the soft drink costs completely avoidable (unlike baggage fees for many airline passengers).
    And unlike airline fees, restaurant soft drink charges are not exempt from taxation.
    Do you oppose the laws which prohibit restaurants from charging for tap water, and which require restaurants to collect taxes on soft drink sales, on the grounds that restaurants are companies which need to make a profit?

  • ArizonaRoadWarrior

    It was written in the article: “It would prohibit airlines from imposing fees that are unreasonable or disproportionate to the costs incurred by the air carrier.”

    In other words, the government is going to tell businesses how to price their products and services especially if a fee or charge are unreasonable or disproportionate to the costs incurred by the air carrier.

    IF it cost an airline $ 20 to change a ticket and the fee was $ 150…that is unreasonable or disproportionate to costs incurred by the airline.

    Using this ‘logic’, I applied it to soft drinks (fountain) served in restaurants. I know a person that owns a convenience and his cost for a fountain drink including the plastic cup is $ 0.25 for 52 ounces. I know another person that owns a restaurant and his cost for a fountain drink is between $ 0.15 to $ 0.20. I usually spend between $ 2.00 to $ 3.00 with $ 2.49 being the average for a fountain drink at a restaurant….spent $ 2.49 for an 8 oz fountain drink at Sunday lunch.

    In regards to change fee, the airline marks up their fee by 7.5 times. A restaurant marks up their fountain drink by 15 times ($ 3.00 divided by 20 cents)…even with free refills…the mark up is 7.5 times or higher.

    Again, using the logic for the proposed airfare fee bill, the mark-up of 7.5 times is ‘outrageous’ for a change fee and should be lower. The mark-up for a fountain drink is the same or higher; therefore, the government should force restaurants to lower their prices of their fountain drinks IF you want to apply it to ALL businesses. Hey…McDonalds only charges $ 1.00 for their soft drinks…shouldn’t other restaurants charge only $ 1 for their soft drinks?

    My issue is the government ‘telling’ business how to price their services and products. First, socialism and communism have failed miserably. Second, coming from the government that can’t balance their budget as well as most government programs have not worked; ‘bankrupted’; have not solved problems; inefficient; etc. The recent program of Obamacare have failed miserably…can’t keep your plan; can’t keep your doctor and premiums went up 116% in the state of Arizona…please remember that the federal government started to collect taxes for Obamacare for three years before Obamacare was mandatory.

    A traveler has choices…

    ….they can elect to fly Southwest to avoid change fees…of course, Southwest doesn’t fly into all markets (why…not profitable) especially ‘small’ markets…how about forcing Southwest to fly into airports such as Santa Barbara; Dothan Regional Airport, Flagstaff, Walla Walla Regional Airport, etc?)

    …how about buying a refundable ticket?

  • Michael__K

    You answered none of the questions I posed. Instead you chose to answer different ones and post irrelevant fallacies about Obamacare.
    Airlines, per the Airline Deregulation Act are not subject to the state or local laws that virtually every other business is subject to.
    Southwest (like every airline) is blocked by airport capacity and gate restrictions from offering all the flights to/from major airports that it would like to offer if it could.
    Airlines already receive subsidies to maintain otherwise unprofitable flights to small rural airports under the Essential Air Service Program.

  • ArizonaRoadWarrior

    “We don’t have a truly free market. A free market means open competition and it means transparency and ease of comparing features and pricing.”

    A free market does mean competition but it doesn’t means transparency and ease of comparing features and pricing.

    Here are four (4) definitions of Free Market:

    Free Market: A market economy based on supply and demand with little or no government control.

    Free Market: An economic system in which prices are determined by unrestricted competition between privately owned businesses.

    Free markets are characterized by a spontaneous and decentralized order of arrangements through which individuals make economic decisions.

    A free market is a system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.

    Before the deregulation of the airline market, the Civil Aeronautics Board (CAB) regulated US airlines like a public utility, setting where they could fly and what fares they could charge. All of the fares were the same and extremely high…making airline travel for the rich and business travelers.

    After deregulation, it became a free market…new airlines like America West (who purchased US Airways after they came out of bankruptcy for the second time…then they purchased AA after they came out of bankruptcy) and Jet Blue were founded and a small regional carrier, Southwest, was allowed to grown into other markets.

    Airlines like Pan Am, Eastern Air Lines, Braniff International found that they couldn’t compete in the new world of open markets.

    Do we want to go back to the “golden age of aviation” where flight attendants carved chateaubriand on rolling silver carts and airlines put piano lounges in the upper decks of their Boeing 747s? Passengers dressed up to board flights, and flying was glamorous and exciting and mainly for the rich..the 1% and business travelers?

    Don’t want to sound like a broken record but you can 1) buy a refundable ticket; 2) fly on Southwest; 3) take a bus; 4) take a train; 5) drive your vehicle; 6) don’t go.

    Free market isn’t perfect but it sure beats socialism and communism…ask the people in Venezuela.

  • Michael__K

    It’s not a free market per your own definition. The price of goods and services are determined by monopoly/oligopoly pricing power on the route in question and by taxation policies and by legalized monopoly GDS systems which treat fees more favorably than fares.

  • ArizonaRoadWarrior

    Your questions had nothing to do with my point of my original post…the government determining if the profit margin of a product or service is outrageous. If you are going to use that logic then apply it to all businesses and I used the example of a soft drink at a restaurant.

    The reasons that Southwest doesn’t fly into airports such as Santa Barbara; Dothan Regional Airport, Flagstaff, Walla Walla Regional Airport and etc. are 1) you can’t fly a 737 into these airports (their business model is to have one plane so that their maintenance costs are minimized) and 2) these markets are NOT profitable.

    Southwest is smart with their strategies…flying the profitable routes…the routes with the most passengers…they are not flying into non-profitable markets. I have been to several small airports over my business travels including the ones that I have mentioned…there have been several times where there were less than 10 passengers on a 50 seater CRJ.

    “Southwest (like every airline) is blocked by airport capacity and gate restrictions from offering all the flights to/from major airports that it would like to offer if it could.”

    What cities that Southwest would like to fly to that they are not flying today? Looking at the map of their routes, they are flying into the major marketscities of the US.

    “Airlines, per the Airline Deregulation Act are not subject to the state or local laws that virtually every other business is subject to.”

    What state or local laws that the airlines exempt from? More importantly, I found nothing in the Airline Deregulation Act of 1978 stating specific state and local laws that the airlines are no longer subject to. Please provide the specific portion of the Act listing the removal of state or local laws. Here is what I found about the Act:

    The Airline Deregulation Act is a 1978 United States federal law that deregulated the airline industry in the United States, removing U.S. Federal Government control over such areas as fares, routes and market entry of new airlines, introducing a free market in the commercial airline industry and leading to a great increase in the number of flights, a decrease in fares, and an increase in the number of passengers and miles flown. The Civil Aeronautics Board’s powers of regulation were phased out, but the Act did not diminish the regulatory powers of the Federal Aviation Administration (FAA) over all aspects of aviation safety.

  • Michael__K

    So you must be really outraged by laws that prohibit restaurants from charging anything at all for providing a glass of tap water… And by the Essential Air Service Program….
    Of course, under the law in question, government wouldn’t be “determining profit margins” any more than dictating free tap water determines the overall profit margins of restaurants.

  • ArizonaRoadWarrior

    I must disagree about the free market definitions.

    The taxation of fees is a federal and state issue…if the government want more of our money then they can pass laws to tax airline fees…personally, I think we send too much money to Washington where it is NOT spent wisely, prudently and efficiently.

    It is a federal for price-fixing which you are claiming. Where is your proof that the airlines have a weekly phone call, e-mail, WebEx, etc. where they collude to set the prices on the routes. You can report them to the government and make big money as a whistle blower.

    I have been purchasing tickets for my business trips for years…I have seen a wide discretionary in fares as well as super low fares on the routes that I have traveled.

  • Michael__K

    What state or local laws that the airlines exempt from?

    Anything whatsoever that has to do with prices, services or routes, which the courts have defined very broadly, or FTC regulations. 49 U.S. Code § 41713

  • Michael__K

    You disagree with the definitions you cited yourself?
    States are prohibited from taxing airlines so that’s purely a federal issue.
    The taxation model predates the existence of virtually all the ancillary fees. The airlines have abused the model, and of course their lobbyists successfully block any efforts to fix that.
    To prove price-fixing you need to prove active collusion. It’s not price fixing if you maintain high prices because you have monopoly or oligopoly pricing power and new entrants are blocked from competing. Compare fares for CVG-MSP for example with routes of similar length where there’s competition.

  • ArizonaRoadWarrior

    (b) (1) Except as provided in this subsection, a State, political subdivision of a State, or political authority of at least 2 States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation under this subpart.

    (b) (3) This subsection does not limit a State, political subdivision of a State, or political authority of at least 2 States that owns or operates an airport served by an air carrier holding a certificate issued by the Secretary of Transportation from carrying out its proprietary powers and rights.

    You wrote: “Airlines, per the Airline Deregulation Act are not subject to the state or local laws that virtually every other business is subject to.”

    Airlines are subject to the minimum wage laws, discrimination laws and any other laws that my business is subject to. A state like California couldn’t pass a law stating that all airlines must have a $ 1 fare to all cities in California. Or a state like Wyoming can’t pass a law forcing an airline such as Southwest to fly to a certain city in Wyoming.

    I can’t see where airlines are exempt from all state and local laws that virtually every other business is subject to.

    If you mentioned the NFL then I will agree with you that they are a monopoly since the Supreme Court granted them exclusions when the AFC and NFC merged in the 60s. For example, the NFL can’t have football games on Saturdays during the regular college football season.

  • ArizonaRoadWarrior

    The reason for a restaurant to charge $ 3.00 for a soft drink is to make a profit and I don’t have a problem with that. The reasons for an airline to charge $ 150 for a ticket change on a non-refundable ticket are 1) to reduce a certain behavior and 2) to make a profit…again, I don’t have a problem with an airline trying to reduce a certain behavior and making a profit at it.

    I have sat in airports for four or five hours because I didn’t want pay the change fee. I have spend an extra night on the road because it was cheaper (hard dollars not soft dollars but sometimes the bean counters don’t understand the soft dollar costs) than flying back one day earlier.

    Stick to the original itinerary of a non-refundable ticket or purchase a refundable ticket or use other methods of transportation!

  • ArizonaRoadWarrior

    “States are prohibited from taxing airlines so that’s purely a federal issue.”

    From the study of “Consumer Regulation and Taxation of the U.S. Airline Industry Estimating the Burden for Airlines and the Local Impact” published in 2011: For a typical $300 domestic round-trip fare in the US, about $60 is paid in taxes, of which $33 is paid to the federal government, $10 for security services and $18 to local airports. Total tax collection from the airline industry now totals almost $17 billion (including both
    federal and state fuel taxes) and will grow to more than $19.5 billion by 2014.

    Per this study, the local airport is charging a $ 18 per ticket tax thus a local tax (could be a city or county).

  • Michael__K

    For example, airlines are generally immune from the consumer protections which are enshrined in state contract laws.
    Nearly every state has a presumption of good faith and fair dealing, among other provisions which are automatically an implicit part of every contract. The courts have ruled that airlines are immune to these consumer protections.
    Some states stipulate that punitive contract provisions are reciprocal. For example, if the party which drafts the contract collects punitive change fees for changes by the customer, then the same penalty would generally apply to the counter-party, if the drafter makes changes. Of course airlines are immune to such contract law rules, again under the Airline Deregulation Act.

  • Michael__K

    You ignore two of the biggest reasons why airlines charge higher fees (and lower base fares):
    1) Monopoly GDS systems which sort flight options by base fares but do not support sorting flights by actual out-of-pocket costs including fees
    2) Tax policy which makes fees (and only fees) exempt from taxes.

  • Michael__K

    Local airport facility charges are capped and subject to federal approval.

    The ULCC airlines which collect 40% of their revenue from fees pay far less in taxes to support our air traffic infrastructure even though their aircraft rely on that infrastructure just as much as their competitors do. This is a market distortion.

  • The Original Joe S

    Simply don’t give them the password to the socialist media. Me, I don’t use those anyway, because they are monitored by the Thought Police for crimes against Big Brother…..

  • The Original Joe S

    make it illegal to refuse to change the tickets.

  • The Original Joe S

    I concur w/u about people being CHEEP CHEEP CHEEP. If you buy an non-refundable, then don’t bleat! If you deal with an on line travel agency, don’t fret when they abandon you. You get what you pay for………..

  • The Original Joe S

    Tell me where is the bus or train to Asia?

  • The Original Joe S

    Meals tax – a money-maker for the local govt!

  • The Original Joe S

    The way things are going, they might not have very many games after all…….

  • The Original Joe S

    Send me some of that wonderful booze you are drinking! Ha ha ha!

  • Bill

    This is more toward Michael K than you, ARW, but I think it tandems with your point.

    I think the crux here is, do we want a price based on
    supply and demand, or cost based?

    S&D says, “What price gets me the best financial benefit?” A movie theatre charges $8 for a soda. If a restaurant tried that, they’d sell no
    soda. So, they sell for $3. If a 7-11 tried that, they’d sell no soda. So they sell it for $1.50. That same soda costs each of them (about) $0.25. If the theatre sold sodas for $1, they might
    sell 2x as many, but they’d bring in 1/4th the revenue, and 1/5th
    the profit. So, why should they? Each sells their product for what the market will bear. Independently, they try to lower their costs so that same income yields more profit. That’s capitalism.

    Cost based says, “How much does it cost to provide this? You can charge X% over that amount.” Ignoring the complexity of figuring out that
    actual number, the effect is a reduction of products and services and increase in price. Why? Because if I can make a widget for $10, and I’m only allowed to sell for 20%, I get $12, and keep $2. If I work hard to bring my cost down $8, I can sell it for $9.60, keeping only $1.60. But if I let costs go up to $12, I can charge $14.40, and I keep $2.40.
    Am I motivated to cut costs or let them drift up? That’s the airline industry before de-regulation. Union wants a raise? Sure…not our money. Airport wants a fee increase? Sure…not our money. There was NO motivation to cut costs, because they could go to the CAB and get the fare raised every year.

    If my competition sells widgets for $9.60, I HAVE to find a way to get my costs down, but until then, no one is going to buy my $12 widgets. So I either sell my $10-to-make widget for $9.60, or I go out of business. If I get the cost down to $9, maybe I can eek along at $0.60 profit while trying to cut more. Until my competitors sue me for undercutting the market. Then I go out of business. Who cares, you say? I SHOULD go out of business if
    I can’t compete, you say? OK. Fine. But what happens when everyone goes out of business but the last manufacturer? Does he care about quality? No. Does he care about service? No. Why should he? Where else are you going to go?! He’s the only game in town. Sound like Cable?? If you want Cable, put up with their ****. If you don’t want to put up with it, go without cable. And they’re not even cost based!

    Do we REALLY want to see airlines go that path?

  • Bill

    Michael, I sort of agree with you, but for different reasons. GDS is NOT the problem, although it contributes to it. You are right that fares are the only thing presented. You are right that the data is skewed due to this. However, that is the single driving factor in most decisions. Fare. A corporate travel department sees the fares, not the incidentals and fees. A typical family sees the fares, not the fees. When the market responds to fares, not fees, all participants see that as the new rule. Spirit, Ryanair, and other ULCCs got the attention of customers by offering a ridiculously low fare. No airline, even a ULCC, can stay in business with 18 (dollar, euro, pound) fare. So they use that to get your attention, and then make it up with fees. If customers said “No way!” in the beginning, they would have gone the way of Skybus (ULCC start up in 2007) as would their business model.
    But Spirit and Ryanair, for all of their bad press, turn profits, fill airplanes, and add routes. It IS working. The consumer spoke and said, “Give me a low fare, and I’ll complain about the fees, but I’ll pay them. Then I’ll come back for more.” The rest of the industry heard that vote, and here we all are.
    I personally would rather the bundled product, but I don’t buy my own tickets very often (company pays for the fare, I have to absorb the choices”). My wife goes out of her way to stay away from the ULCCs, and has to argue it with her Travel Dept from time to time. But there is no way to compare once it is unbundled, unless the search feature asks you everything up front. Where do you want to go? Will you be checking a bag or two, or carry on? Will you print your boarding pass and not talk to a person? Do you want to select a seat or play check-in roulette? Do you
    want refundable or not? Do you have status with any airlines? After a litany
    of Q&A, FINALLY Kayak, Expedia, etc will give you a list of options, attempting to tack on all of the “selected” fees and options. Even then, you can’t know, because baggage fees vary with Frequent Flier status, and ticket classification, weight, etc. So, it is still a guess.

    My whole point is, this is a mess of our own making. If you want it to stop, tell everyone you know to stop flying Spirit, don’t buy AA’s Basic Economy or United’s similar product. Hopefully they’ll pull it back and Delta won’t introduce it. Spirit will atrophy and the industry will rebundle because THAT is what customers want, based on what they say with their wallets.

  • Michael__K

    The market mostly responds to BASE fares, not real out-of-pocket prices, because that’s how the only real time pricing systems available are organized to present the options.
    If GDS did not exist and people either shopped around one airline at a time or used a travel agent — like they did in the pre-internet days — then Spirit et. al. would lose tons of business. They rely on people who never heard of them and who would never otherwise find them to see their base fares on top of the search results and believe they found a great bargain.

    The Spirit Airlines of the world want to have their cake and eat it to. They want to sell their product through these distribution channels that are all plugged in to a monopolistic entity that has been protected from anti-trust action. But they don’t want this monopoly entity to adapt to the 21st century reality and accurately capture the true cost of a flight purchase in the 21st century. And their (recently ousted) CEO boldly told shareholders that he targets for 50+% of his airline’s revenue to come from fees — of course the average customer is not expecting to pay more in fees than the quoted price of their airfare. And of course Spirit is counting on the fact that this 50+% of their revenue will be tax exempt, even though they use no less aviation infrastructure than they did when their fees were a much smaller share of their revenue.

  • Hanope

    If airlines had problems “planning their annual needs” they wouldn’t allow any changes at all. But they do, and people still make many changes even with the fees, and airlines manage to plan ahead year by year just fine.

  • Bill

    The point I am making is that “real out-of-pocket prices” are NOT a representable line item. If a given airline has 3 choices, each with a price, and another airline has 4 choices, but only two are the same as the first one, you have to ask all 6 choices before you can compare just those two airlines. So, when it is dozens of airlines, with dozens of choices, and each airline having a dozen pricing structures to include or reduce the cost of each choice, it is simply not possible to reflect that unless you are asked and answer a question for each choice. And every time a new fee is created, the software has to be changed.

    GDS, while it IS a monopoly, has little to gain or lose by how the fares presented. Although a regulation would require them to write new software for presenting fees (adding additional fields), and that is a significant expense, that is miniscule compared to the volume of data coming through them. Airlines complain that the fees they pay to
    have their fares show up on GDS is inequitable. But, if a law is put in place requiring some new data presentation, GDS entities will write the software, bump up their fees to the airlines, who will add it as another fee back to the consumer. Even then, if there is a field for baggage fee, what number goes into it? Neither the airline nor the GDS knows how
    many bags you plan to bring. Some airlines limit or have surcharges at 40lbs and some at 44lbs (20kg), and sometimes even 50lbs. Are you going to have the customer put in the weight of their bag before the price is searched? If not, the baggage fees become estimates and inaccurate. If you have status on Delta, your bag might be free, but you pay on United.
    How does the GDS present that data accurately without you creating a
    dossier of info before starting the search? Every fee becomes a morass. You would have to specify if you want a window or aisle before searching for flights. But GDS can NOT know which flights even have
    that available. They only know Flight 123 on airline ABC has 11 seats at this price. It doesn’t have a seat map. So, those fees can not be shown.

    “The Spirit Airlines of the world want to have their cake and eat it to.” Well, yeah. Who wants cake if they aren’t going to eat it?? Of course the airline wants to make money. Every business does!
    Your proposal of what happened “before the internet” is still available. You can still go to each airline’s site and seek the prices. And, airlines would FAR RATHER you go to their website, and buy on their website, and then not have to pay the GDS fee at all. That is partly why Southwest
    doesn’t use the GDS. They want you to look on their site and buy on their site, and they also don’t want their prices next to competitors. Nothing ruins a reputation of “low cost” like seeing your fare next to a competitor with a lower fare, regardless of the final cost.

    As much as I dislike LCCs and ULCCs, your argument on infrastructure is wholly inaccurate. Landing fees are based on aircraft weight. Passenger Facility Charges and Security Fees are per passenger. 190K lbs aircraft with 165 passengers will pay the same fees regardless of the paint scheme on the tail, or how many people checked bags, paid for them, or how. Ticket prices simply have no bearing on that. And whatever tax is assessed is passed directly on to the customer. So, add a 5% tax to fees, and it is just another line item at the bottom of the quote. The airline (not Spirit, not United, not Southwest) does not absorb that.
    And the Federal Sales tax on the fare goes to general funds, with no promise or indication that it is going back into the infrastructure than made it possible to gain that revenue. So even if Spirit were gaming the system, it doesn’t change the infrastructure. That is why the “NextGen” air traffic control system promised by the FAA about three decades ago still isn’t funded. The aviation taxes don’t go to the aviation sector.

  • Michael__K

    the Federal Sales tax on the fare goes to general funds,

    Other way around.

    90% of the $14+ billion in revenues that go to the Airport and Airway Trust Fund (AATF) come from the 7.5% Excise tax on airfares. Ancillary fees are exempt from this tax. AATF covers both capital and operating costs, including 80% to 90% of the FAA’s Operations account. The rest of the FAA’s Operations budget comes from general US Treasury funds (i.e. non-flying taxpayers subsidizing the FAA’s activities).

  • Michael__K

    “real out-of-pocket prices” are NOT a representable line item.

    Sure they are. Yes, I would need to provide some details up front, such as how many bags I have and an upper-bound estimate of their size/weight range. But this kind of UI wizard/dashboard is exactly what online search tools excel at.
    ___
    Your proposal of what happened “before the internet” is still available. You can still go to each airline’s site and seek the prices

    Before the internet and up through 2004, GDS search result behavior was highly regulated. Because “screen bias” studies found that **travel agents** were highly and unduly influenced by the ordering of GDS search results, even for flights that were priced exactly the same. And airline executives testified before Congress and complained about the unfair practices of AA which was taking advantage of these human bias effects for their market advantage.

    Today, passengers are exposed to that same bias that travel agents previously needed government intervention to be protected against….
    ___
    Airlines would FAR RATHER you go to their website, and buy on their website, and then not have to pay the GDS fee at all

    That’s not true for airlines like Spirit, which pass along the GDS fee to the customer. They FAR RATHER you book on an OTA website, which can’t display their complicated and variable fees. They’re not going to collect 50+% of their revenue in fees from the [generally savvier] customers who book on their website, where fees must be prominently disclosed. Their business model relies on collecting 50+% of their revenue in fees from the clueless infrequent flyers who find Spirit’s flights on search engines, and who also pay the GDS fee, and who are easier to blind-side with more fees.

  • SierraRose 49

    Term limits: I so agree with this one. What’s really crazy is that the day a US Representative is elected, he/she begins to re-fill his/her War Chest. It just never stops, especially now that it takes millions of dollars to get elected/re-elected. And when it comes to Senators – well, look what’s happening in our state. Kyrsten Sinema vs. Jeff Flake. Can you imagine the dollars that will pour in for BOTH of them?

    Health Insurance: A few of our 100 + 435 are eligible for Tri-Care for Life – like Senator McCain and Rep. McSally. It is the BEST insurance and very inexpensive. And then there are others who get it top-notch insurance via family plans, like Ted Cruz did when his wife worked for Goldman-Sachs. I really wonder how many had to purchase insurance through the health exchange. In the meantime, I certainly agree that they should not be exempt from ANY law they pass.

    No Pensions: Yes, they get very, very rich – not only from pensions, but from their connections. Did you know that even after serving for 1 term (2 years for a Rep; 6 for a Sen), they receive their current annual salary – about $174,000 or more – for the rest of the lives, and when they die, their spouses receive it.

    Lifetime Ban from being a lobbyist: Sen. Bob Corker is not going to run again. Let’s see what will happen to him in the next 12 months. After the waiting period, a former Sen. or Rep can enrich themselves as a lobbyist. Sometimes sooner if they become stealth lobbyists as a certain US Rep from NM did a few years ago.

  • joycexyz

    And in that same vein, I’d like to hold companies totally responsible if their computers are hacked. As things stand now, they shrug their shoulders, maybe offer a non-apology apology (“we’re sorry this happened”–like they’re not responsible), and leave it up to the victims to clean up the mess.

  • joycexyz

    We have term limits. They’re called elections. The reason so many people stay in office forever is the constituents are too lazy to vote. We get the government we deserve.

  • BubbaJoe123

    I hadn’t be aware there are laws that prohibit charging for tap water. I would be happy to see those laws repealed tomorrow, although perhaps a notification that tap water isn’t free should be required for 6-12 months to manage the transition.

    As for the EAS, I’d drop it tomorrow, along with a wide range of other unjustified subsidies to those who choose to live in remote areas.

  • BubbaJoe123

    1. Terms limits for Senators and Representative..
    Great idea, if your goal is to increase the power of staff and lobbyists.

    4. No pensions…
    Our legislators and President are already wildly underpaid. Let’s not make it worse. Given the level of responsibility, the President should be making at least $10-20 million a year, and Congressmen and Senators at least $1 million.

    5. After serving in the Senate and/or the House, they will have a lifetime ban from being a lobbyist, competing for federal contracts, etc.
    Fine, so long as they’re adequately paid while they’re there, and have a pension thereafter.

    6. Balance the budget…
    Really terrible idea. The economy is not a household, and requiring a balance budget in a recession will only make economic downturns worse.

  • Michael__K

    You mean you were blissfully unaware that our restaurant market is “Communist”, like “Venezuela?” ;)

  • BubbaJoe123

    Venezuela isn’t Communist (more of an incredibly incompetent effort at social democracy combined with an increasingly authoritarian government).

    Requiring restaurants to provide free tap water is also not Communism.

    That said, are you sure that it’s actually illegal to charge for tap water? A bit of Googling finds references to it being a requirement in the UK (but only for venues that sell alcohol), and references to it NOT being illegal to charge for tap water in New York, but no references to it being illegal to charge for tap water anywhere else in the US.

  • Michael__K

    C’mon, I used quotation marks and even an emoticon. I’ll take it as a complement if you couldn’t distinguish between the use of the quoted buzz labels elsewhere in this thread and my satire of them.
    In the US, it would fall under state/local laws and alcohol licensing requirements.

  • BubbaJoe123

    I knew you were kidding.

    On the water topic, can you point to evidence that restaurants ARE required by law to provide free tap water in the US? If not, might not want to make such sweeping claims.

    PS Compliment, not complement. :)

  • Michael__K

    We want a TRANSPARENT price that is based on supply and demand in a truly open and competitive marketplace.
    We don’t have that. Ideally we improve the marketplace to support that.
    If that’s politically impossible, but it is politically possible to crack down on a few specific abusive practices, then maybe we crack down on a few specific abusive practices for the time being.

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