When you think of stealing from a travel company, swiping a towel or bathrobe from a hotel probably comes to mind.
Howard Lo admits he’s taken an item or two when he was younger. Lately, he says, he’s come to understand that stealing is stealing. Staying at an Airbnb rental, where the towels belonged to a person and not a corporation, really crystallized the issue.
“I know better now,” says Lo, who runs a technology company in San Francisco.
When a travel company thinks of stealing, it’s probably not worried about soap or mugs. Instead, companies are concerned with the opportunities you take from them — specifically, opportunities to make more money.
Two recent events have brought this peculiar definition of theft to the fore. The first is proposed new legislation that would stop airlines from imposing fees that are “unreasonable or disproportional to the costs incurred by the air carrier.” That bill, which I mentioned in last week’s column, illuminated the high fees charged by travel companies, especially airlines. The second is a recent report that the top three U.S. airlines — American, Delta and United — made a combined $14.5 billion in so-called ancillary revenue from fees and the sale of frequent-flier miles.
Travel companies depend on fees obviously. If you’ve wondered why these surcharges are so high — why an airline can charge up to $500 to change a ticket or why a hotel bills you for one night’s stay when you cancel — you’re probably not thinking like a travel insider.
How do insiders see it? Monte Gardiner, the senior director for revenue management at Best Western Hotels and Resorts, explains that every room is an opportunity for a hotel to earn money. When you cancel your reservation, you’re depriving the hotel of the ability to resell a room, maybe at a higher rate.
“That’s especially true when the hotel is full,” he says.
Similarly, airlines charge sky-high change fees not because it costs $200 to change your ticket but because they lose the opportunity to sell a seat, perhaps increasing their margin in the process. Airlines don’t necessarily see change fees as related to the cost of the transaction but instead as covering a lost opportunity cost.
“There’s no cost-based justification for these fees,” says Robert Cross, chairman of Revenue Analytics, an Atlanta-based consulting company.
“I think the fees are meant to close the gap between what the airlines could be getting for their seats and what they get,” he says, noting that high change fees could be seen as a sign that “they’re not pricing the seats properly to begin with.”
It’s hard for passengers to wrap their heads around that kind of travel-think, so let me put it in different words: It’s not just that travel companies want the money for your room or your seat. They also want you to pay for depriving them of other opportunities to make money.
Hence this novel version of theft: You’re stealing a travel company’s opportunity to make money.
In this framework, such “theft” is justified by companies in much the same way it is by guests, says Michael Brein, a psychologist who specializes in travel. For example, a guest might rationalize stealing a bathrobe or towel, “because the hotel room is expensive,” he says. In the same way, a company might argue that the high cost of doing business, or consumers’ demands for the lowest rates, justify exorbitant change fees.
Letting this travel-think stand unchallenged is asking for trouble. Imagine if the tables were turned, and you could bill an airline after your delayed flight made you miss an important business meeting. Is the company responsible for the deal that never happened? What if you could recover the cost of a missed vacation day? Can you say “chaos”?
That’s how travelers see it.
“Are you kidding me?” asks Paul Jones, a former airline employee and current massage therapist from Buffalo. “Of course, a business shouldn’t be able to charge for lost revenue for a missed opportunity to sell something at a higher price.”
Jennifer Owens, a retired librarian from Lake Villa, Ill., says charging for a missed revenue opportunity sets a troubling precedent because it means companies might be responsible for her missed opportunities.
“It puts a false price on your service or commodity,” she says. “Seems to me a circumvention of the idea of free enterprise.”
The fix is easy: The fees must be appropriate. All charges must be refunded when the room or seat is resold. Anything else is stealing.
How to make fees fair again
• Support legislation like the FAIR Fees Act. The Forbid Airlines from Imposing Ridiculous (FAIR) Fees Act, introduced by Sen. Ed Markey, D-Mass., may be taken up by Congress again when it considers the next Federal Aviation Reauthorization Bill. It would prohibit airlines from imposing fees that are “unreasonable or disproportional to the costs incurred by the air carrier.” Such legislation could even out some of the unfair fees.
• Tell the U.S. Department of Transportation (DOT). The DOT collects and reports complaints from air travelers. If enough passengers complain about fees, the department may act to stop these fees from expanding. The easiest way to complain is through its website.
• Vote with your wallet. Don’t buy rooms or tickets from companies that have overly restrictive change policies or high change fees. Giving them your money only encourages them to raise those fees — and to make their policies more restrictive. You should get more for your money, not less.