31 replies to this topic

[jis]

It was reported elsewhere on this board that Spirit (at least, I think it was Spirit) assesses a $2 "unintended consequences" fee due to the limits on runway waiting times and so forth...but I cannot find that fee in the mix. The total "being clear" means that:
1) I can figure out what I am being charged (i.e. the total amount, as well as a reasonable breakdown); and
2) I can figure out why I am being charged that amount (i.e. What each fee going to the total is, and/or what is affecting it).

For example, on the fuel surcharge: Let's say that it lists at $49.88 (which is what it lists for several of the flights listed in your example). I can't clearly tell how it calculates, and that particular price may vary. Spirit's pains to break that amount out seems, quite frankly, to be "priming" people for that amount to move up without it actually involving a change in the fare. Again, I've seen this mentioned with respect to cruises.

All airlines break out the fuel surcharge in the listing of components in the total, fare, at least for those that care or are paying attention. They have done so for a long long time, and yes those change from time to time, usually going up.

And Alan hit on what was going on in my mind: While the ad I cited was old, there is a general tendency for folks to look at the stated fare and not the pile of fees that doesn't show up in the ad in question. "Additional fees apply" is exceedingly (and I would argue, purposefully) vague...particularly if one line has higher fees than others (which Spirit certainly tends towards the high end of)...and it is misleading when I'm showed a price of $XX.XX* and then when I get to the end of booking, I see a number substantially higher than $XX.XX

The rules have changed and they cannot do so now. When the rules changed, it was not just Spirit and Southwest that were dinged. Almost every major carrier was because they piled on various charges between the time you saw the advertized fare and you bought the ticket. Only Spirit and Southwest complained loudly, while others simply started listing both the numbers up front.

To be fair, I'm willing to allow that there aren't many saints left in this regard...but that doesn't mean that Spirit isn't a particularly nasty abuser of this. I would also note that some airlines take efforts to keep their fare/fee prices off of comparison sites (Spirit falls in this vein...note that the login function certainly serves to complicate bottom line comparison shopping). Also as noted, I can't get to a "total cost" for my flight without logging into their website in some fashion...again, making it hard to know what a flight is actually going to cost aside from "additional fees".

In a society that is set up specifically to be duped in various ways, why complain about some specific duping techniques as opposed to others? Afterall we are in general unique also in listing prices of things exclusive of taxes.

BTW, how do you figure out the total cost of a flight on any airline without pricing out an itinerary? How do you do so on Amtrak?

[Texan Eagle]

If I run a store and advertise that I'm putting Lee Jeans on sale for $24.99 and then when you show up I tell you that you also need to pay me $4 for shipping fees, $2 for the bag to put the jeans in, $1 for folding them nicely as opposed to just shoving them into that bag, $3 for using the changing room, etc. I'm going to have a visit very quickly from some official people who are at a minimum going to fine me, if not do other things that are even worse, for unfair business practices.

Ok, lets use your store example itself. If the store wants to be like Spirit, they would put up an advertising stating "Lee Jeans on sale for $24.99* *Other fees apply" At this point it is clear that you will not get the jeans for $24.99, so if you walk into the store and get annoyed that the jeans cost $30, it is not the store's fault, it is your own fault.

BTW, in this country, which business is honest about stating prices? First of all, businesses never mention that the prices they quoted are exclusive of taxes and you will end up paying more. Last week a friend came from Delaware (which I guess has no sales tax) to Texas and she was taken aback when a dress she thought costs $50 actually cost her credit card $54.12 because TX stores add 8.25% sales tax which is not mentioned in the store ad. Going back to your jeans sale strategy, most stores in malls advertise their sales like this-
"Upto 70% OFF" Most customers walk in thinking stuff is at a 70% discount only to realize the UPTO is the most important word in the ad and there might be only one item in the entire store at 70% discount. Look around and such examples are everywhere from car rental places to restaurants. Luring the consumer into the business by not-so-honest low prices is a trick that's not unique to Spirit.

[George Harris]

Much of the absolutely wacko things we see going on in airfares is not that far off from what was going on in the 19th century railroad passenger and freight rates that led to the very thorough price regulations that prevailed until fairly recently. Yes the system had many defects, but at least you knew what the ride would cost without having to do any research at all. As it is now, the guy in the seat next to you on the plane may be paying three to five times what you did or one-third to one -fifth of what you did for the exact same thing. That would be the essence of the definition of unfair business practices, cheating, price gouging or any of several other things you could think of calling it that would get you fined or in jail in most other businesses. And of course you know that if you are going between points with little to no competition or demand out of scale to supply you will be paying through the nose, while if you going between points served by several carriers, you may be able to get a seat for less than the cost of gas money to drive the distance.

I see no move by either the carriers or the government to develop some relationship between the cost of providing the service and the price charged for it.

[Anderson]

Much of the absolutely wacko things we see going on in airfares is not that far off from what was going on in the 19th century railroad passenger and freight rates that led to the very thorough price regulations that prevailed until fairly recently. Yes the system had many defects, but at least you knew what the ride would cost without having to do any research at all. As it is now, the guy in the seat next to you on the plane may be paying three to five times what you did or one-third to one -fifth of what you did for the exact same thing. That would be the essence of the definition of unfair business practices, cheating, price gouging or any of several other things you could think of calling it that would get you fined or in jail in most other businesses. And of course you know that if you are going between points with little to no competition or demand out of scale to supply you will be paying through the nose, while if you going between points served by several carriers, you may be able to get a seat for less than the cost of gas money to drive the distance.

I see no move by either the carriers or the government to develop some relationship between the cost of providing the service and the price charged for it.

I am reminded of the "segment abandonment" stunts that have been mentioned in places (i.e. booking an A-B-C ticket and purposefully missing the B-C connection because the A-B-C fare was a fraction of the A-B fare).

Mind you, I'm not opposed to there being a certain amount of disconnect between cost of services and cost to customer (such is the definition of loss leaders and cross-subsidization...heck, even an operationally self-sufficient Amtrak demands that profits on some routes offset losses on others), but at the same time some regulation of bucket variations wouldn't be the worst thing to happen to the market.

Sadly, the lords of misrule at the ICC and CAB did more to make a case for deregulation than any group of economists ever could. To be fair, I do fault the enabling legislation for giving them too much discretion...but it's a shame that they screwed up so badly.

[jis]

And yet, no one complains about prices they pay for computer equipment and services (most fortunately for us in the industry), I suppose because they keep coming down and are perceived to be low enough for the value of the service for the customer. But what it has to do with the actual cost of providing the service is another matter altogether.

[George Harris]

Sadly, the lords of misrule at the ICC and CAB did more to make a case for deregulation than any group of economists ever could. To be fair, I do fault the enabling legislation for giving them too much discretion...but it's a shame that they screwed up so badly.

Ain't it the truth. It is what is known in highly technical formal terminology as "Shooting yourself in the foot!"

Edited by George Harris, 06 May 2012 - 12:43 PM.

[Devil's Advocate]

Almost every major carrier was [dinged] because they piled on various charges between the time you saw the advertized fare and you bought the ticket. Only Spirit and Southwest complained loudly, while others simply started listing both the numbers up front.

1. What surcharges did Southwest "pile on" between the first query and the final fare?

2. What sort of "loud complaint" came from Southwest regarding changes to fare publishing?

[PRR 60]

Almost every major carrier was [dinged] because they piled on various charges between the time you saw the advertized fare and you bought the ticket. Only Spirit and Southwest complained loudly, while others simply started listing both the numbers up front.

1. What surcharges did Southwest "pile on" between the first query and the final fare?

2. What sort of "loud complaint" came from Southwest regarding changes to fare publishing?

The charges that were added by Southwest included various flat-rate taxes and fees including the federal segment tax, the 9-11 security fee, and airport PFC's. The 7.5% excise tax was included from the start. Southwest joined Spirit and Allegiant in asking the federal courts to block the new rule.

Dallas Morning News

[Devil's Advocate]

The charges that were added by Southwest included various flat-rate taxes and fees including the federal segment tax, the 9-11 security fee, and airport PFC's. The 7.5% excise tax was included from the start. Southwest joined Spirit and Allegiant in asking the federal courts to block the new rule.

Dallas Morning News

Thanks for the link PRR 60.

I still have a problem with the idea that Southwest was "piling on" hidden charges that would have previously been included in the original ticket rate. The growing list of hidden costs that were confusing and annoying consumers were related to things like arbitrary fuel surcharges and baggage fees, but Southwest did not levy those fees in the first place. More than anything I'd like Jis to explain to us which US airline he thinks was doing a better job than Southwest of resisting the temptation to unbundle everything into a confusing myriad of secondary surcharges and fees. I'm hard pressed to come up with anyone.

It's true that some of the fees that Southwest charges are of questionable value to passengers, but it's not like Southwest has much control over when they're levied or how they're used. The security fees are of questionable value when compared to the extremely small chance of being on a Southwest-sized aircraft on a Southwest-issued flight plan that is a target of actual terrorism. Even in the heyday of hijackings back in the 1960's and 1970's, when the most we had were early generation metal detectors and anyone at all could legally approach an open gate, it was extremely rare to be on a flight that was a direct target of any terrorist group. For an airline like Southwest the risk/reward equation still probably doesn't add up the same way it would for an airline like United or American.

PFC's as currently managed are also of questionable value in my opinion. Here at SAT we recently demolished an extremely well maintained and renovated terminal just so we could build a brand new replacement terminal with the exact same number of gates and even fewer active airlines. If American Airlines happens to go belly-up or is bought out then this brand new terminal will have no more than a couple of active United gates left in the whole building. Why did we waste all of that money on a brand new terminal that nobody was asking for and the vast majority of our city's visitors won't ever see? I really don't get it.

I can certainly understand Southwest's position about this being a rule that is applied almost nowhere in our caveat emptor society outside of a handful of arbitrary exceptions such as airfare, gasoline, and concession venders. That being said, I can also see the benefit to giving the consumer the total cost up front along with a clearly itemized receipt before the last click. If it's unfair that these rules are only being applied to airfare then maybe the real solution is make them applicable virtually everywhere like they are in Europe?

As Southwest explained in the article it's true that many of the fees that make up the final cost people pay are based on factors that may not be possible to quantify when creating a new nationwide advertisement. Well, that's what happens when you let your supposedly united market devolve into a huge mess of competitive tax districts actively sparing against each other for a dwindling number of tax dollars. As with many of America's problems, you reap what you sow.

Edited by Texas Sunset, 06 May 2012 - 05:40 PM.

[Anderson]

And yet, no one complains about prices they pay for computer equipment and services (most fortunately for us in the industry), I suppose because they keep coming down and are perceived to be low enough for the value of the service for the customer. But what it has to do with the actual cost of providing the service is another matter altogether.

Oh, there are plenty of areas where there is little apparent connection between cost and price. Some attract a lot of attention (uninsured medical care jumps to mind), some virtually none (list prices for a lot of technical things; part of this is that nobody actually pays those prices as far as I can tell).

Texas: I would at least like to see a better regime of regulation on this front. Broadly speaking, I have very little issue with letting the market set prices...but I've got an issue when that market ends up rewarding businesses that engage in bait-and-switch tactics to fuel sales. In general, I'd like to see "special surcharges" (the big one here is the "fuel surcharge") put under a microscope...and not just for airlines (I know that shippers assess these charges as well, as do cruies lines). While I do not have a problem with such a surcharge existing to deal with, for example, rare spikes in fuel prices in sensitive industries, I'd at least favor restricting when and how they can be applied (i.e. setting a standard for requiring companies to either bake in or eat oil prices below a certain level and preferably banning hikes assessed after the time of purchase). In particular, I'm thinking of the tendency of cruise lines to set their triggers between $65 and $75/barrel (in the case of a $65 trigger, the price of oil hasn't been below that since 2009).

[PRR 60]

Over the weekend, the Wall Street Journal on-line had an article about Spirit (the airline passengers hate but still fly), and an interactive game to match the Spirit fee with the service. Very amusing.

WSJ.com is a subscription service, but for those who can access it (Starbucks offers free access), here is the link:

Spirit Fee Game

[jis]

They ought to put one together for Ryan Air that should be even more fun