Bitten by rising fuel costs and a weak economy, airlines are struggling. Naturally, they have turned to their creative pricing departments to design new fees. These fees include checking bags, water, and the extra leg room in exit row seats. Where can they go next? Here are a couple of ideas: the ultimate in usage fees and the ultimate in carry-on fees (in serious and profanity-laden form).

While it’s easy to poke fun at some of these ideas, there is obviously a strong economic motivation for them. Online travel sites make price comparisons really easy. Many airlines would rather present a low initial price and then tack on fees under certain conditions than risk losing the sale to a competitor offering a lower starting price.

Significantly, Southwest, which opts out of travel sites like Expedia, does not charge a long list of fees, and they have made that the centerpiece of their pitch.

There are certainly other areas that would permit further price discrimination. Sure, for $3 you can get a crummy snack, but for $10 we’ll give you something good. An attractive beverage cart, designed with utility and merchandising in mind, would likely increase the profitable sales of alcoholic beverages significantly. Why not let partners wheel a cart with rent-able DVD players through the boarding area? Sure, many airports have stores that offer this service, but that requires so much forethought and walking for something that is often an impulse buy.

I have never been able to figure out why airports insist on separating retail, which is something corporate America does brilliantly, from the departure “lounges”, which are a cross between a penitentiary and a dentist’s waiting area.

The word penitentiary leads me to what I really wanted to talk about. The good news for airlines is that they are no longer their own worst enemy. The bad news is that they achieved this status not by improving the customer experience, but by allowing an entity with even lower customer service standards to get between them and the customer. This is the TSA. “Going through security” adds long delays and unpleasantness to the whole flight experience, without really doing anything meaningful about “security.” For people who don’t actually fly who think I’m just being cranky, see noted security expert Bruce Schneier on TSA Follies.

(Humorous aside: my personal TSA favorites:

  • An entire security team at one line– 4 agents– needed to meet to discuss the amount of baby food we were trying to bring on board. After a little back and forth, they decided graciously that since we were dealing with 2 babies and had a 2 leg flight, that we were probably not terrorists.
  • The time I accidentally took a Swiss army knife with a 3 inch locking blade through security, had my bag searched by hand, and was cleared to go.)

No one cares more about airline security than the airlines. Why can’t they help the government design a meaningful, less unpleasant process? And let anyone through security, as long as they pass through security. So if you want to wait for someone, you can do it “inside”. This will help struggling airline retailers. I could go on about redesigning the terminal experience but that would take time and money, along with significant construction. Redesigning the security experieince could improve both the customer experience and the end result.

2 Comments

  1. Jon

    Reuben,

    I had a similar experience at Los Angeles in 2002. My family and I were grilled as if we were terrorists, because we only had one-way fares. We were in fact relocating to Australia…which took much convincing.

    Airlines like Jetstar do in fact rent out portable DVD players. I haven't flown on them, but I believe they can be pre-booked, along with a choice of bronze, silver or gold in-flight meals. Which, with their one-wa fares, makes cutomer segmentation all but impossible.

    Finally, there is a lot of smarts that goes into where retail shops are located in terminals….to the extent that airport operators & airlines are almost at each others throats. Airlines want all the passengers in the gate lounges for a quick turnaround, while the airpot operators (certainly the one I'm familar with) take a percentage of turnover from the retailers, and want customers in the shops as long as possible, spending as much as possible.

    Regards,
    Jon

  2. Runako

    One of my favorite airline fee problems came as I was trying to change an itinerary on the nwa.com website. Here’s the message I got as the last step of the pricing process for the change:

    We are unable to process your request and no changes have been made to your reservation.

    * We are unable to price the requested itinerary
    * Please contact Northwest Reservations at 1-800-225-2525 for assistance

    Huh? You can’t figure out how much to charge me? They definitely need pricing help.

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