business news in context, analysis with attitude

MNB yesterday took note of a Los Angeles Times story about how a number of airlines - ranging from United to Southwest - are introducing new fees as a way of bolstering their bottom lines. (Fees contributed $36 billion to airlines' balance sheets last year.)

"Among the fees airlines have announced in the past few weeks are a charge to zip through airport screening gates and board early, a fee to watch streaming movies and a fee to have your bags delivered in  36 cities around the country," the Times writes.

United is the airline said to be charging fees for early boarding, a privilege that used to be saved for frequent flyers and people paying for first class or business tickets, while Southwest is charging one fee for Wi-Fi access and another for people who want to stream movies onto their laptops or tablet computers.

I commented:

While these moves may be seen as positive in the short-term for airlines, the question that remains to be answered is whether, in the long-term, they are damaging airlines' value propositions and their relationships with frequent flyers. Privileges used to be earned, which resulted in passengers - like the character played by George Clooney in "Up In The Air" - being loyal so they could get preferred boarding/seating advantages.

But now, in search of the short term buck, airlines are selling those advantages to the highest bidder. It remains to be seen whether they are really selling themselves short.

Got a number of emails in response...MNB user Richard Boyd wrote:

On a recent flight after the door was closed I asked if I could move to the exit aisle. I was told yes but it would cost as those seats were an upgrade. It wasn’t like I was asking to be put in first class so I stayed where I was…

Because I have so many miles, I usually get those good seats for nothing. But I've always thought that it is short-sighted not to allow other folks to move up to empty premium seats. After all, the seats are empty ... and I think it is good customer service to give folks in the back a free upgrade. It costs nothing, it doesn't hurt me at all, nor does it make me feel less special. (And let's face it ... it is making me feel special that is what is really important here.)

From another reader:

Re: Southwest charging for boarding preference...

Many years ago as I was in the short "frequent flyer" line at the airport a man in the adjacent long snaking line to the ticket counter loudly and publicly berated me for my special privilege.  My explanation that the airline extended this courtesy to me because I was one of their better customers did not resonate with him at all.  I think the pay for privilege model will garner even more resentment as it will be perceived as a class warfare issue - the 90% vs. the 10%.   However, as one who would probably never pay to board early I appreciate that the suckers who are willing to pay extra for that privilege are helping to keep my ticket price low.

I always sort of feel bad when my status allows me to get through security faster, board the plane first, and then get better seats.

But only sort of bad.

There is a great line in Tom Stoppard's 'The Real Thing" in which one character explains rationally why the class system is not really a negative thing, which another character says only really works when you're saying it in first class.

Which is true.

But I've earned those privileges, damn it!

MNB user Mark Boyer wrote:

I was waiting to board a flight yesterday and observed another flight being boarded where they made every passenger with a roll-aboard prove that it would fit before boarding. Probably 8-10 wouldn’t fit in the device they use for sizing, and each had to check their bag at the gate and pay $25. So an additional $200-250 for the airline, but also 8-10 passengers who are now pissed.

I’m not a big fan of passengers who try to bring everything they can on board, so while I applaud the airlines for stopping that, there must be a better way.

MNB user Rich Heiland wrote:

Let's connect dots on early boarding fees. United, and others, start charging for checked bags. So, more people take bags onto planes, which eats up overhead bag space. So, getting on board early becomes required to ensure you have a place for your bag. So now they start charging for early boarding, which devalues the frequent flyer perk. Have I got that about right?

Sounds like it.

And from another reader:

Excellent points in your column this morning, as you are “right on”.  Airlines continue to diminish the value of being loyal, due to so many “perks’ being offered for sale to anyone who will pay for them.  The end result is that my loyalty is not as strong to one airline anymore, as it was in previous years of travel.

Unfortunately, I still travel extensively.  In the past, I would do almost anything to fly my preferred airline.  However, nowadays, it takes less for me to consider (and buy) other flights on other airlines, due to the diminished value of being in the highest tier of my preferred airline’s frequent flyer programs.  Obviously this has cost my preferred airline revenue.

And MNB user Glenn J. Rosati wrote:

As a frequent flyer for more than 25 years who has earned, at one time or another, top level elite status on American and US Air (and on Continental and America West before they faded into memory), I have to admit to being put off by the airlines’  attempt  to “sell” these privileges. 

As frequent flyers whose ticket prices are generally higher than the casual flyer, we bear the brunt of the cost to operate a plane.  And, as we are the most loyal source of revenue for the airlines, such privileges we earn are greatly appreciated.  I understand the airlines have a right and a duty to shareholders to maximize revenue and profit, but to lessen the value of an earned privilege is a blatant disregard for your best customer. 
Loyalty works both ways; it’s round trip, not one way.


On another subject, a revealing email from MNB reader Jerome Schindler:

I had a fraudulent practice complaint I wanted to send to the US Post Office Inspector General's office.  It is very difficult to find a mailing address for them - their preferred method for complaints is an e-mail form on their website.  Go figure!

I've been saying that there must be a lab report in the hands of the plaintiffs that makes them confident about their lawsuit claiming that A-B is watering down its beer. Which prompted MNB user Matt Mroczek to write:

Someone might have a lab report that A-B should be worried about, but that doesn’t mean the report is correct.  While I don’t know if A-B was selling less potent beer than labeled (after all, who would know?  It already tastes like water.) , I give them the benefit of the doubt.

This story reminds me a lot of the lawsuit filed against Fred Meyer (the week before Thanksgiving 2004) alleging a conspiracy of many minuscule proportions: tare weights.  A math professor, from the university that I’m normally proud to have attended, weighed meat after purchasing it and compared it to the weights on the labels.  The problem with that unscientific (no control subject) study was that by the time the product was purchased, the meat had released liquid into the packing material.  This made the meat weigh less and the packaging way more than when the product was initially weighed and labeled.

If A-B is found to have done no wrong here because of a flawed analysis or simple fraud, I might try choking down a six pack of ice cold Buds to help right a wrong.  However, like in the Fred Meyer case, we’ll probably never get finality on this issue because it won’t make for a sexy story and we’ll have moved on from horse meat and watered down beer to the next scandal about product adulteration.


But let's keep one thing in mind. Stories about horse meat and watered down beer and whatever the next thing happens to be keep people like me in business. So I'd like to think there is a silver lining...

And finally, this email from MNB user Karen Shunk:

Your spotlight on how much technology has changed since 1969 reminded me of something a French professor once said about the Empress Eugénie of France; he noted that she was born in 1826 and died in 1920, and in his opinion her life spanned the period of the greatest technical innovations to date (I had this class around 1990).  He cited electric lights, air travel, telephones and the like as technological game changers, not to mention changes in manufacturing processes, etc. as the basis of his opinion.

I wonder if later generations will say the same about us?  I really appreciate the fact that I ponder these things as a result of reading your newsletter.

Then my work here is done. And will continue...
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