Airline industry analyst Terry Trippler predicts we’ll see surcharges for assigned seats and aisle seats by the end of the year. Airlines have already started charging for “meals” that make the mediocre, overpriced airport fare seem like a good deal. (Can you tell that I fly too much?) American Eagle is piloting a program to charge for soda. Oops, no pun intended.

Trippler makes an interesting point, and it’s worth noting that airlines, for all their fancy price optimization, do not really optimize other than by schedule and cabin. But within the cabin, fliers assign different values to different seats. How much more is a fully reclining, exit row seat with a power outlet compared to a middle seat in the back of the plane with no power outlet? The difference is more than $0 for most of the people who end up sitting in the exit row seat. However, that person probably paid a lot more for the seat in the first place.

Introducing seating surcharges would cause substantial changes in pricing policies, systems, and customer perception. Perhaps a better way to monetize the value of certain seats would be to hold them for certain fare classes (the airlines already reserve some seats for premium customers and frequent fliers). This would reduce the visibility of the price increase on certain seats, and could be adjusted more easily to accommodate varying load factors on different flights.

7 Comments

  1. Jon

    Hey Reuben,

    Seat surcharges are already happening in some parts of the world, so you can bet your cotton-picken’ dollar your airlines will be doing it very, very soon. Virgin Blue charges $A30 extra for bulkhead seats which have a 40in seat pitch on 9 seats per aircraft only.

    Also, airlines in the UK are now starting to charge passengers to check in their luggage…at the same time, increasing cabin baggage allowances.

  2. Jon

    Reuben,

    Maybe Terry has just been to Australia, and flown on Virgin Blue, who charge $A30 for teh nine seats on each aircraft that have a 40in seat pitch.

    Jon

  3. Runako

    Interesting, I was just about to blog on this very topic after taking 3 flights yesterday. A few things about differential pricing based on seat price is that a) they will have to admit that the middle seat is nearly worthless; b) larger people will end up paying more for the same level of comfort; c) my girlfriend will never notice the difference, since she’s so small. Also note that the airlines tried b) recently and it failed due to consumer backlash.

    I would love to get your thoughts on the fraud that is codesharing. For instance, if I buy a $300 ticket on Northwest and I am Elite, I will have a shot at a first-class seat. If they put me on a codeshare flight, I will definitely be in coach. Also I won’t get any of the other perks that go with my status on Northwest. It’s pretty clear to me that these are two totally separate products — why don’t the airlines monetize this or get sued for deceptive practices? One airline even does a codeshare with a BUS LINE in the New England area. The BUS has a FLIGHT NUMBER!

    Also would love to hear your thoughts on why more airlines don’t sell at-the-gate upgrades. And why American is the only carrier with widespread in-seat power.

  4. Jon

    Hmmmm…codesharing. Great for the airlines, not so great for the passengers.

    Evolved because (a) airlines wanted to make out they had bigger networks than what they really do and (b) to appear higher up the list of avaialable flights in Computer Reservations Systems (or CRS’s, like Sabre, etc).

    So they are all about “transactions” (ie bums on seats) than “relationships” (which, as an aside, is also what auctions are all about). And thats why your Frequent Flyer membership means diddly-swat to the airline thats carrying you (sorry).

    My hunch is that it will probably get worse before it gets better. In fact, there is nothing to prevent the creation of a virtual airline (lets call it “ReubenAir”) that doesn’t have one aircraft – all it does is buy inventory on other airlines flights.

    As for code-sharing buses, well there are also code-shared trains and launches (boats) in various places around the world.

    Not sure exactly what you mean by “in-seat power”. If you’re talking pricing power, I would have thought Southwest was the only carrier in the US with that?

    Jon

  5. Reuben Swartz

    “In-seat power” is literally that– an outlet like the one in your car that allows road warriors to charge laptops or other devices. Really useful for long-haul flights.

    In related news, Boeing is
    tweaking prices
    on its Connexion in-flight internet service, trying to get more people to try it.

  6. Jon

    OK…”in-seat power”. I’m with you now.

    Its been a while since I’ve flown on an American airline, but my guess would be that AA is the only carrier giving you enough seat pitch to open a laptop. All the rest just give you enough room to open a paper bag.

    I sympathise with you though. I’ve got a 16hr flight to Dubai this Thursday and my laptop battery will be dead before I fly over Ayers Rock/Uluru.

    Jon

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