It’s no secret the airline industry wants you to pay extra for everything.
And I really mean everything.
A fee to pay? Allegiant Air and Spirit Airlines already charge a “convenience” fee to use your credit card.
A water fee? It’s hard to find a discount carrier that doesn’t make you pay for soft drinks, including bottled water.
A fee to pee? Yeah, Ryanair’s working on pay toilets, if reports are to be believed.
But this isn’t another story about airlines and their misguided fees. It’s about the surcharges that are worth paying — and why you should consider saying “yes” to them. That’s right, I said “worth it.” While many fees are outrageous, some aren’t entirely out of line.
If nothing else, fees are unbelievably profitable. The domestic airlines collected roughly $1 billion in ticket change fees and more than $1.2 billion in baggage fees during the first half of 2009, according to the government. American Airlines took in the most baggage fees — it raked in $226 million — while Delta Air Lines won in the change-fee category, collecting a cool $392 million.
Most passengers I know don’t mind paying fees, as long as they do all of the following:
They’re optional. And it must be a real choice. Everyone uses a credit card, so a “convenience” fee to pay with plastic isn’t a true choice. Neither is a fee for the first bag, because at a time when the TSA has banned toothpaste and hair gel in reasonable sizes from all carry-ons, almost everyone checks a bag.
They don’t charge for something that used to be free. The best fees add something instead of taking away. For example, after 9/11 many airlines upgraded their in-flight menus and then began charging for food. Almost no one complained, because airlines had already done away with in-flight meals on most domestic flights. Taking a bag of pretzels that used to be free and charging for it would have been the wrong move.
They add value. JetBlue does this well. Whether it’s pillows or movies, the airline seems to know that adding to the product is the best way to do fees — not by removing amenities and services. I have a full interview with the airline in which its fee philosophy is explained. Giving passengers more for their money has made the airline profitable.
They’re reasonable. Charging a $150 change fee on a $49 ticket is completely unreasonable. A change fee should be a percentage of the ticket. Or better yet, there shouldn’t be one at all. I mean, how much does it really cost to change the date on a ticket?
So why have so many bad fees prevailed? Probably because we’ve let them, says airline analyst Michael Miller. “For example, the bag fees were done because fares were depressed and airlines were looking for other revenue sources to stay afloat,” he says. “They had no idea passengers would pay so much, so it’s permanent.”
Or so it seems.
The trend toward bad fees is reversible if passengers would only pay the surcharges they believed in. I asked travelers to help me identify those “good” fees. Here’s what they said:
In-flight wireless: This is yet another example of adding value. As long as the costs stay reasonable and the service is reliable, in-flight Wi-Fi is a winner, according to passengers like Peter DeForest, a San Rafael, Calif.-based risk management consultant. “I had Gogo on both Virgin America and AirTran, and both services were good, and worth it,” he says. With a coupon, he paid just $4.95 for six hours of connection time. “I was even able to use video instant-messaging services in flight, and it was stable and reasonably fast.”
I completely agree. I tested Gogo on a flight from Orlando to Chicago earlier this year, and it was problem-free. Definitely worth the $6 it costs to get connected.
Sections with more legroom: Janice Dottin likes the extra-legroom seats on JetBlue, because it’s affordable and you get a lot. “It’s $20 and there is a significant difference in the amount of leg space,” says Dottin, who works for an insurance company in Boston. “My husband is 6’5” tall and it’s well worth the investment for his comfort.” She’s paid for “extra legroom” seats on American Airlines, too, but was unhappy because she was just offered a seat in the exit row.
Other travelers I spoke with said they liked United Airlines’ premium economy class, because they felt less wedged into their seats. We have to be careful with this one. A customer-focused airline won’t reduce legroom in the back at the expense of those in the front — that’s a fee no-no.
Elite treatment: A fee that allows you to get preferential treatment without having to spend half of your life on a plane is a pretty good deal.
That’s what readers like Jennifer Rigdon have told me. She recently tried Southwest Airlines’ new EarlyBird program, which lets you cut to the front of the boarding line for an extra $10 per flight. (Other airlines let you use their lounges or elite check-in and screening lines for a fee, too.) “I’ll definitely do it again,” she told me. “It’s more reasonable than the upgrade to Business Select, and for $20 I think it’s worth it.” You can read the whole account here.
How about the bad ones?
Seat and reservation fees: I’ve already touched on these ugly surcharges. Permit me to beat the horse until it’s dead: Schemes that defraud passengers of $15 to sit in a more desirable economy class seat, or that force them to pay for a confirmed reservation, are utterly wrong.
Laura Wilcox, an event planner in Orlando, paid $15 for a window seat on a recent Delta Air Lines flight from Detroit to Orlando. “But when I got on the plane my seat was filled because another passenger was displaced — people go crazy to sit together as families on the Orlando flights,” she says. The airline never returned her $15.
These seat fees aren’t right because you’re paying for something twice: once for the ticket, once for the seat reservation. Aren’t they one and the same?
Convenience fees: Paying to pay is, as I’ve mentioned earlier, outright immoral. And it’s not just Allegiant and Spirit playing this fool’s game. Most of the big airlines charge extra to book by phone, another form of “convenience” fee.
Henry Harteveldt, Forrester Research’s travel analyst, believes convenience fees for credit card payments are about to spread to other airlines. That would be bad news for air travelers.
Luggage fees and other nonsense surcharges: You know a silly fee when you see one. Unfortunately, most airlines don’t.
Sharon Strelzer, a marketing manager from Fairfield, Conn., says the recent moves to start charging for the first checked bag are just impractical, given the TSA’s liquid and gel limits. She also considers seat reservation fees to be out of line, and I’ve spoken with others who would include charges for soft drinks, and especially for potable water. “The airlines should raise the rates $50 or so and be done with the nonsense fees,” she says.
Actually, not a bad idea. But carriers know that nothing sells seats like a low fare, so they’re not going for it. Until they do, these absurd surcharges will probably keep popping up everywhere.
In a perfect world, if enough airline passengers paid for the right fees and avoided the wrong ones, then market forces would compel airlines to do the right thing. But it’s not a perfect world. Some carriers have a near-monopoly in certain cities, making it difficult for markets to operate the way they’re supposed to.
Jim Goyjer, a Los Angeles-base marketing consultant and experienced air traveler, believes more drastic actions are needed. “Since deregulation of the airlines, service and quality have suffered,” he told me. On his preferred carrier, American Airlines, “almost all” of the seasoned cabin crew don’t like the company anymore. They blame top executives for mismanagement and greed, he told me. “They hate nickel and diming the passengers,” he added. “They feel more like vendors and waiters and waitresses than professionals.”
“We need to re-regulate the airlines,” he says.
Now there’s an idea.
(Photo: william couch/Flickr Creative Commons)
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{ 27 comments… read them below or add one }
If airlines would enforce their carry-on limits, I would be much happier. As someone who travels with a small roll-a-board and a laptop, I’m constantly frustrated by Delta who allows families to drag on everything but the kitchen sink and then put it all in the overhead and nothing at their feet.
So Sharon would rather the airlines raise the rates by $50 and be done with the nonsense. God I hope she never gets her way. Basically, she is saying it is better to be forced to pay for goods and services that I 1) might never use of 2) might be exempted from due to my frequennt flyer status.
Unlike any other though, at least she understands that these fees will either be a la carte or rolled into the prices. They don’t just do away.
Fees are obviously an emotional item given the amount of ink on this subject. But that’s all it is. Emotion. Anyone with any economics or finance background undertands that you will pay either way. Either as part of the ticket or a la carte. At least a la carte gives you the option to avoid the fees.
And the good fee bad fee distinction is arbitrary. Charging for Wi-Fi in planes if good, but the same charge by a hotel is bad? Like I said, arbitrary.
“These seat fees aren’t right because you’re paying for something twice: once for the ticket, once for the seat reservation. Aren’t they one and the same?” Not necessarily. The ticket is for A seat, not a specific seat. European trains often charge extra for seat reservations, too.
And I totally agree with Roxy. It’s unfair to charge for checked bags, and then let people overload on carry-ons. It’s also stupid – planes board much faster if you limit carry-ons.
I don’t fly much, but I feel like a seasoned expert and knowledgeable consumer thanks to your blog posts here and writing elsewhere. Just wanted to tell you how much I enjoy your thoroughness when reporting, reader examples and quotes (they add a ton), and, well, good writing.
Roxy, above, I don’t really feel your pain. It sounds like you have a small bag and a laptop, and that works for you. When I travel with my kid, that’s just not my life. There’s a little more stuff, and although our onboard stuff is always within the carry-on limits, putting it all away is a little more of a show because we’re juggling a kid or two with the luggage. Besides, what unoccupied room is at our feet?
I think that people feel like cattle when they get nickel and dimed for things like water. C’mon you’re going to force me to pull out my credit card to get a bottle of water on a flight? Classic bait and switch with the low fares to bring you into their web and then milk you for more once you’re caught.
Just raise the fare and make it all inclusive so I don’t have to be reminded of everything I am paying for. I think that is what really annoys people.
@Lauren:
The space under the seat in front of you is where you are supposed to stow your smaller carry-ons. If you are putting them ALL up top, you’re one of the guilty parties.
Speaking of Allegiant Air, their CEO was recently interviewed:
http://www.usatoday.com/travel/flights/item.aspx?type=blog&ak=76795.blog
http://www.usatoday.com/travel/flights/item.aspx?type=blog&ak=77088.blog
One thing he said especially caught my attention:
Like it or hate it, at least he gave an honest point of view from their side of the fence. Not that some people probably care, anyway.
The airlines are surely aware of that. It’s been said before and it’s a seemingly simple thing to do, but many airlines can’t because some “seemingly” lower their fares to beat their competition.
This whole discussion makes me think of the new Griswold Family Hotel Hell Vacation Videos on HomeAway.com. These guys brought Chevy Chase and Beverly D’Angelo back to pitch the benefits of renting a home versus a hotel specifically b/c of costs, bad service,and ridiculous fees.
In Part II of the Hotel Hell Vacation Video, Clark and Ellen are checking out and Clark goes ballastic with the snobby desk clerk at the extra fees added to his hotel bill. Clark, screams “What is this $42 optional fee????” The clerk says, “Oh, that’s optional. I can remove that if you like.” Clark’s reaction is priceless. Some airline should bring the Griswolds back for the same reason.
Check out the video. There’s 2 parts. Very funny stuff. Debuted on the Super Bowl.
http://vacation.homeaway.com/vacation/?icid=IL_Sparky_PR_T_Hero_Hero_Micro
Airline fees run amok . . . .
“We ate AmericanUnitedUSDelta are away of the preferences of our passengers is for more choice, in that vein we are rolling out a new series of optional fees for your traveling convenience –
Pilot: $10 [Add $25 for an experienced pilot]
Fuel: variable but base cost is $50 per segment [you wanna get there, right?]
Jetway Boarding: $10 [you have the option of using the boarding ropes in lieu of paying this fee]
Exit Doors: working emergency exit doors are helpful in the event of an emergency evacuation – this refundable $5 fee will be returned if the exit needs to be used;
Restroom inclusion fee: $5, some airlines charge to use the restroom, we charge to provide you an airplane that has restrooms in them.
takeoff charge: $4 – taking off on time is an essential element to a trip, if more than 50% of your flight chooses this fee we guarantee an on-time gate departure time to arrive within 15 min of scheduled arrival time.
The list is endless .. .
@Roxy That’s where my diaper bag is, full of water, juice, snacks, toys, books, blankets and diapers to keep baby happy as a clam as to avoid a meltdown at cruising altitude.
@Lauren – how do you get all that TSA? do they have sippy boxes that fit in the quart baggie now?
@Joe Farrell You point out a “fee” Chris forgot – the “buy after security” fee. Water, juice, milk, etc.with a 300% markup, of course.
I’ve come to view flying, its new pricing, and time spent as a game.
Nowadays before I fly I figure out how much the seat is going to cost me and add up the other incidentals (cost of checked baggage etc) then figure out the amount of time it will take me from home to airport,add in the time at the airport needed prior to flight (going through security etc),and finally add in the length of actual flight. (sometimes I also include how long it will take me from the airport to my destination). If I think the driving time is about 4 hours or less. I figure out how long it will take me to drive from home to my destination add in the cost of gas (I haven’t gone so far and figured out wear and tear on my car) If the time is about the same to 1/2 hour longer and the cost is cheaper I consider driving . Or, I have even taken a bus from NY to Boston that cost about $20. Or, I have taken Amtrak to Washington, DC.
I used to enjoy flying. I am sure most people will agree it has become a pain instead of a pleasute and being nickeled and dimed by the airlines doesn’t make one feel as if there is any value left
@David
Part of the reason why the airlines don’t just raise the fees and make things all inclusive is that many customers, especially business travelers, don’t pay these so called bad fees. Most of my travel is to commute from SFO to LAX. As such, I don’t need to check bags. I have a properly sized carryon with clothes and a second bag for my computer. I certainly don’t want the fees raised to pay for a service that I don’t use.
Its also great marketing for frequent fliers. On American, frequent fliers of Gold or higher status get two pieces of checked luggage free. I suspect that if you aren’t at least a gold member, the airlines take is that you are either an infrequent flier, at least on their airline, or completely price sensitive that you just book the cheapest rate.
I’ve said it before, and I’ll say it again. If it’s not something I can legitimately decline, then it should be bundled into the base fare, period. Fuel charges, airport taxes, landing gear maintenance…whatever. That is the airlines’ cost of doing business. I don’t care what it is – if I HAVE you pay it, they should be required to disclose it upfront – end of story. On a side note, it would be nice to see some websites pop up allowing me to check options like checking bags and whatnot prior to searching, and displaying ranked prices based on that – it would certainly call the airlines on their pricing shenannigans.
@Roxy It may look like families are getting away with bending the rules, but when I travel with my family of 4, I have to buy 4 adult tickets. That means I’m entitled to carry on 4 carryons and 4 personal items.
I sympathize with you that this looks like a lot, but I paid for the privilege, so your complaint is without merit.
One thing that needs to be enforced (by the FTC or FAA if necessary) is that the fees correspond to *delivered* services:
If you pay $15 for a seat assignment, and that seat is not available for whatever reason, the fee should be cheerfully refunded. A reasonable substitute (another window a few rows away) might be acceptable; a middle seat in the back, or separating a couple who paid the fee is not.
Same for bag fees — if the bag isn’t delivered on that flight, the checked-bag fee should be refunded. I’d certainly dispute the charge immediately, and consider small claims court if the credit card company didn’t side with me.
@Lauren, @Roxy, et al — as someone who flies with the wife and 2 kids (and sometimes my wife flies alone with the kids), we are generally able to fit everything for the flights into carryons that can fit under the seat. We did always purchase seats for the kids and use the carseats when they were under 2. Everything else gets checked.
Usually the only thing I put in the overhead is my coat, and I’ve managed to leave 2 on the plane (different times!); my wife taught the kids to say “Daddy, don’t forget your jacket” as soon as we land.
@ Ryanair fees: I think it’s cheap and easy to hit Ryanair for their fees. I hate these fees as much as most people, and do not understand the economics, because my guess is that a lot of the fee goes to paying for the collection and administration of the fee.
However, Ryanair is a different case. Their business model is different. Their flights are pretty much free. Seriously, check these fares. Five quid to fly from Liverpool to Krakow. Try and find me a flight from Key West, FL to Kansas City for $7, including taxes and fees (oooh, evil regulation). For me the difference between Ryanair and all other airlines is that al the other airlines forgot to eliminate their ticket pricing, while adding fees.
Having paid nothing for a ticket, I kinda expect being nickeled and dimes. Having paid $359+taxes and fees, I kinda get pissed of when I get nickeled and dimed.
“If it’s not something I can legitimately decline, then it should be bundled into the base fare, period.”
Totally agreed. I also think the fee to simply reserve a seat, or for a window/aisle seat (if it’s a standard seat and not the exit row or one with more legroom) is ridiculous, too, and an example of a pure money grab.
But I don’t have a problem with checked bag fees or any other fee that I can choose not to pay based on not needing a service. I also don’t buy the argument that TSA restrictions make it necessary to check a bag, because I can easily buy travel-size containers of whatever liquids I need to bring, and even though I’m paying more per ounce the convenience of not having to wait for my bag – if the airline didn’t lose it – is well worth it. I check a bag when the amount of stuff I’m bringing makes it necessary to, and I fly whatever carrier is cheapest after I’ve factored in the bag fees.
@Steve
Completely agree.
Credit cards make things interesting though. In theory you can avoid a credit card fee by paying cash. But paying in cash is highly discouraged. With walk-up penalties, penalties for in person payment, lack of city offices, etc., its really hard to pay for a ticket with cash.
But at the same token, the credit card companies charge airlines a fee for accepting credit cards so it is defensible to encourage people to use other methods.
For example, go to any store where you self swipe your credit card. If its a Visa Debit card, the machine tries its best to get you to use the PIN rather than the VISA because the PIN cost far less to the merchant.
That info about pay toilettes on RyanAir is true – I read an interview with the CEO in the WSJ in December and he mentioned it then. He said if the flights are short, the airline wants to encourage people to go before they get on the plane. He also said they are thinking of getting rid of some seats and adding a standing room section that would hold more people (not sure about the safety of that one!).
For wireless to be truly worth it on planes, I think the airlines need to think about adding outlets. I know my laptop battery doesn’t last very long, even on a short flight.
As to charging convenience fees for paying by credit card – the fee that the card companies charge to the airlines is a cost of doing business and has been for years. It’s not defensible to encourage us to use other payment methods. How many people in the US honestly go to the airport any pay in cash? That’s supposed to be a red flag to the airlines, anyway. The NRF is putting together a big lobbying effort to get transaction fees eliminated or reduced, and if that passes it will affect all companies that accept credit cards.
I agree that all non-optional fees should just be included in any quoted price. I think it would be easy for a travel site or airline site to add line item costs for optional items; for example, if you are checking a bag, add X amount. Then consumers could read the list and add the costs to their ticket price themselves and get a better idea of the total investment in their trip.
@frosty
Except that business routinely try to get us to use other payment methods. Been to a gas station lately. The cash price is cheaper. Even the grocery store tries to get you to us a PIN instead of a signature based purchase.
@Frosty
I completely agree that the websites could be modified to include optional costs such as luggage. The airlines are lying if they say otherwise. Curiously it didn’t take long for them to add fuel charges. I think the real problem is that if suppose someone buys a ticket and include 2 bags, but only shows up with one. They’ll want a refund for the second bag, which is of course correct. I suspect that the airlines don’t want to manage that.
@Lauren, @Roberto -
While you may be entitled to 4 carryons and 4 personal items with a family of four on purchased tickets (and I don’t think anyone is arguing that), that does means that *all* of those 4 personal items need to go under the seats. You don’t get to put just the diaper bag under one of the seats, then stuff 4 carryons and 3 personal items up above. That’s the objection the other posters are making.
And yes, I have 2 kids and each of them started traveling when they were 3 months old. They are a little older now (7 and 3), carry their own “personal items” (small backpacks) and yes, they go under the seat, as did their diaper bags when they were younger.
I’ve seen my share of strange fees – my personal bugbear is being levied a “Fuel surcharge” – something I’ve seen TUI airlines do before – as it makes their fares seem cheaper on price comparison sites. I am booking transport from A to B – surely the fuel should come included?
I’ve had european airlines play on my fears by trying to charge me “cancellation insurance” – by European law, airlines are required to refund or exchange any flight cancellations, and feed me or put me up in a hotel if the flight is delayed beyond a certain number of hours. (Air Europa, I’m looking at you)
I don’t know if the European rules regarding liquids and gels are that dissimilar to the TSA ones, but I don’t mind paying extra for checking bags in on what are basically commuter flights. The mere existence of these charges makes people less likely to check luggage in, and so having to handle the luggage is more costly per passanger now. However, I do object to ludicrous excess weight fees, and I find some airlines’ idea that you can pay for extra bags, but that doesn’t allow for extra weight quite unfair (easyJet, I’m looking at you) – similarly, using non-standard measurments for allowable hand luggage in the hope that people will be forced to check cabin-sized bags in for extra fees downright insulting (Ryanair, I’m looking at you).
Whilst others seem to be happy to pay for extra legroom, as a tall man, I’m in two minds. I think of it as discrimination – and whilst I can vaguely accept it from so-called “low cost” airlines, I find it despicable that big traditional airlines such as Iberia are now decreasing seat pitch to whatever the minimum allowable is. Especially, as you cannot necessarily reserve these seats online, the class separator moves around enough that sometimes (on some airbusses with emergency exits at row 9 or 10) you’re unsure even of which class to get to find a wide legroom exit seat, and anyway, population in Europe is getting taller on average.
Finally, some schemes have worked well in the past and have just mutated into hollow shells of themselves. easyJet has a priority boarding fee which allows customers who pay for it to use the short queues for checkin, and also be “first onto the plane”. Unfortunately, this has proved so popular that between people who pay the fee, and people who have purchased their frequent flyer card, which basically gives the same benefit, half the plane is now eligible for “speedy boarding” – which makes a mockery of it all. This isn’t in all routes, mind you, but certainly a lot of the more business-flyer heavy ones.
So, yes, there are fees, and I don’t mind paying some of them, and I genuinely prefer good value ones. But some companies do seem to like extracting the urine – somethign apparently Ryanair wants to charge for soon…
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