10 Ways Monopoly Airlines Use 'Calculated Misery' to Make Flying an Increasingly Overpriced Nightmare
If you’ve ever seen those pictures of flight from the air industry’s “Golden Age” – roughly the 1950s to the 1970s – you know how hard it is to reconcile those images of spacious cabins, piano bars and in-flight freebies with today’s bare-bones, claustrophobic, no-free-lunch (or anything else) flight experiences. You might even say the discrepancy is a bit infuriating, especially considering that we’re in the midst of a boom time for airlines. In the three months of last quarter, America’s commercial airlines collectively made $5.5 billion, up 53 percent over the same period a year before and the highest tally since the pre-Recessionary days of 2007.
And yet, customers have never been more unhappy. The Air Travel Consumer Report from the U.S. Department of Transportation finds that in the first six months of this year, complaints from air travelers were up 20 percent over the same timeframe in 2014. It’s nothing short of confounding that as commercial airline profits and revenues skyrocket, customer service is worse than ever.
Confounding – though not confusing – when you consider airlines’ singular focus on their bottom lines. In an illuminating piece titled “Why Airlines Want to Make You Suffer,” Columbia Law professor and New Yorker contributor Tim Wu posits that bad, no-frills service has become a cornerstone of commercial airlines’ business strategy. “Here’s the thing: in order for fees to work, there needs be something worth paying to avoid,” Wu writes. “That necessitates, at some level, a strategy that can be described as ‘calculated misery.’ Basic service, without fees, must be sufficiently degraded in order to make people want to pay to escape it. And that’s where the suffering begins.”
In other words, customer dissatisfaction pays off big for airlines. The industry figured out that if it only made flying a nightmarish experience for the average traveller – one in which things like food and comfort come a la carte and at additional cost – customers would pay extra for even the most basic services. Airlines get to pretend that they’re offering customer choice, and passengers are duped into believing they’re spending more for premium service. It’s a case study in basic consumer psychology – this tendency to pay more for less and then somehow think you’re getting a deal – and airlines are capitalizing on it like never before.
Generally, if you are unhappy with a business, you may take yours elsewhere, but that’s no longer true for the air industry. Following a series of mergers over the last seven years, the New York Times finds that “80 percent of the nation’s air traffic is concentrated among four airlines – American, United Airlines, Delta Air Lines and Southwest Airlines.” An Econ 101 student with a low “C” in the class might’ve predicted those mergers would result in consumers getting screwed. But back in 2013, the Department of Justice Assistant Attorney for its antitrust division, General William J. Baer, defended the agency’s decision to allow an American Airlines-US Airways merger because it “open[ed] up the marketplace as never before.”
Two years later, as New York Magazine reported in June, the DOJ has launched its own investigation into America’s major airlines, which it suspects of collusion in order to bilk passengers out of billions. Per New York, “Investigators hope to find out whether these airlines let each other know about added flights and extra seats, in an effort to keep the number of open seats low and prices high.”
With the recent earnings announcement confirming airlines are profiting like crazy, it seemed like a good time to look at some of the many and various indignities visited upon air travelers. And by every data-drive measure, things are pretty bad out there. So let’s get into it. Here are 10 Ways Monopoly Airlines Use 'Calculated Misery' to Make Flying an Increasingly Overpriced Nightmare.
1. Charging hefty fees for checked baggage.
Between January and March of 2015, American commercial airlines collected $1.6 billion in fees for checked baggage, according to a report from the AP. That’s an increase of 7.4 percent over the same period a year prior. Between June of 2014 and 2015, they made an astounding $3.6 billion off of fees on checked luggage. Which is an impressive haul by any measure, but particularly stand-out considering it used to be free.
Most airlines now demand $25 for one piece of checked luggage, with costs increasing for each additional bag, and reaching as high as $200 in some cases. JetBlue, which for years distinguished itself from the pack with free baggage check, finally caved in November, and began charging for checked bags this past June. That leaves Southwest as the lone airline that doesn’t charge checked baggage fees.
The whole issue has gotten so out of hand that in June, Republican Representative John Mica introduced a bill that would prohibit airlines from charging more than $4.50 per checked bag.
2. Charging exorbitant fees for ticket changes.
Consider United an innovator in the shameless cash-grab that ticket change fees have become. In 2013, the airline became the first to make people pay dearly for changing their travel plans, raising its ticket change cost from $150 – already nothing to sneeze at – to $200. (For some international flights, that figure can rise to $300.) That’s now the industry standard, earning American commercial airlines a collective total of $3 billion in flight change fees between June of 2014 and 2015.
As the Washington Post reports, a small backlash has been brewing. Since change fees can sometimes be pricier than simply buying a new ticket, no-shows have become more common. The practice not only saves the customer money, it also prevents the airline from reselling their seat. The Post piece includes the awesome story of a woman named Laura Attwood who, instead of paying the change fees for an earlier flight, cashed in miles for the ticket she needed – then purposely made sure the airline couldn’t get paid twice for her seat.
“In fact, I checked in and picked my seat on the flight I wasn’t going to make, and confirmed it,” Attwood told the Post. “That way, they couldn’t resell my seat. I was so mad that I had to pay a change fee.”
3. Being late.
Look, while it’s true that inclement weather and airplane maintenance can muck with flight times, it’s also true that some delays are completely unnecessary. The Air Quality Rating report, released in April this year, found that industry on-time arrival percentages worsened between 2013 and 2014, dropping from 78.4 percent to 76.2 percent.
Some offenders were much worse than others. Spirit continued its streak of seemingly being awful at everything; it’s flights have only a 50-50 chance of arriving within 15 minutes of schedule. The AP reports that’s “the worst on-time performance by a major airline in 10 years.”
United was a distant second, with 33.7 percent of its flights arriving late to their destination.
4. Booking (and often overbooking) flights.
For most of the last century, most flights were 50 to 60 percent full, because that was enough to make a flight profitable. That all started to change in the 1990s, as Bill McGee notes in USA Today, when flight loads were raised to 70 percent. By 2014, flight loads on average stood at 84 percent. And as McGill points out, “such a high average, of course, means many flights are at 100 percent.” His also notes that this figure is an historic high with only one precedent. “Domestic cabins are fuller than at any time since airlines were troop carriers during World War II, and the misery index keeps rising.”
Jam-packed flights have a bunch of obvious downsides for travelers, among them “boarding headaches, overhead bin shortages and increases in involuntary bumping.” When airlines push for profits even harder, overbooking flights, some customers inevitably lose – the seats they paid money for. Between 2013 and 2014, there was an increase of 3 percent in customers that were bumped from flights.
5. Expensive ticket prices.
Remember when airfare prices shot up, and everyone went along with it begrudgingly because fuel was really expensive and that all seemed to make sense? Well, gas prices have plummeted since then, but ticket prices haven’t budged. In fact, domestic fares actually crept up by about 3 percent last year. And the reasons why mostly come down to supply and demand, with a little market manipulation thrown in for good measure.
As transportation economist George Hoffer pointed out to the Huffington Post points last year, there have been a whole lot of airline mergers over the last few years, “between Continental Airlines and United Airlines, Northwest Airlines and Delta Air Lines, AirTran and Southwest Airlines and, most recently, American Airlines and US Airways.” All of which amounted to a fairly tidy (and totally legal – don’t forget our Justice Department approved those mergers!) way of eliminating annoyances like, you know, competition.
At the same time, Department of Transportation numbers show that more Americans are flying now than ever before, even surpassing totals seen prior to the Great Recession. Airlines are careful to ensure that the number of flights offered almost, but not quite, meet demand – creating the perfect conditions to maximize profits while nearly abandoning customer service.
Miami University economics professor James Brock, speaking to the Huffington Post, explained, "The industry has become more concentrated, more oligopolistic, less competitive, and with greater market pricing power. In a more competitive market, lower fuel costs would flow through to lower fares. In a less competitive market? Not so much."
6. Limiting where you can buy tickets.
Comparison shopping is the key to getting the best price on airline tickets. Which is why airlines are trying really hard to make sure you can no longer do it.
Over the last few months, a few commercial airline companies have been removing their ticket pricing information from online travel sites, making it harder for ticket buyers to bargain hunt. Instead, the goal is to send them to official company sites, where airlines can limit pricing options and more effectively peddle extras that bring in more money. It also means that airlines don’t have to pay commission fees to third-party vendors.
A recent New York Times piece notes that Delta has pulled ticket pricing information from TripAdvisor as well as a number of European sites. While Lufthansa has actually begun charging people $18 when they book from any non-Lufthansa property. So far, airlines haven’t pulled out of the top travel sites, like Expedia (which recently bought Orbitz and Travelocity), Priceline and Kayak. For now, at least.
The cost of not being able to compare ticket prices is paid, of course, by the consumer. The Washington Post cites a recent study from the Travel Technology Association which finds “restricting what seat price and schedule information was shared with third-party sites could cost passengers more than $6 billion a year.”
7. Bundling services aka upselling you on pretty much everything.
With no-frills travel now the norm, and every amenity that used to come with the price of ticket incurring an additional fee, airlines have had the brilliant idea of “bundling” services, which essentially swindles people into thinking they’re getting a sweet deal on the most basic of offerings. You want to check a bag, extra legroom, and a few beverages on your flight? You can pay for those separately, or you can buy a bundle that includes all three, and save money. (Just kidding. You’ll only think you’re saving money.) Scott McCartney, who writes about air travel for the Wall Street Journal, gave a few more examples during an interview with NPR:
American has started a new bundling where they include Group One boarding and a free checked bag round trip, in a waiver of that dastardly domestic change fee that makes everybody crazy. And that's $68 roundtrip, flat fee. Delta has a bundle that they call A Send that's priority boarding, plus 24-hour Wi-Fi. That's $42, a bit of a discount over what you would get if you buy those separately. Southwest has a new thing where they'll give you early boarding that they sell at the gate, and that's $40 for each flight.
Interestingly, as the New York Times notes, this ruse only works because of a bit of psychological trickery. First, consumers like the option of having three choices, because it simply feels safer: when airlines present bundles as somewhere between a perk-free economy ticket and top dollar business or first class ticket, the bundle is transformed into a sensible midpoint. What’s more, consumers feel like they’re getting an “enhanced flight experience,” instead of what's actually happening – that they're just paying for stuff that used to be free. And there’s this:
J. D. Power & Associates found that when people paid for benefits like more legroom, early boarding and in-flight Wi-Fi, their satisfaction with the costs and fees was actually higher than if they got those amenities free.
That's right. Even our brains are conspiring with the airlines at this point.
8. Boarding in the least efficient, most misery-causing ways possible.
Last year, the New Yorker’s Tim Wu wrote about his reasons for parting ways with United as his airline of choice. He had already weathered a series of maddening changes following the Continental-United merger – pricey baggage and ticket change fees; increasingly rude employees; and rickety planes – but remained a United loyalist. But after a flight when Wu notice boarding procedures had been amended “to favor a few Ã©lite fliers over the convenience of everyone else,” he finally lost his patience with airline, and decided to not only take his business elsewhere, but to deliver an entire column detailing United’s flawed and counterintuitive post-merger practices.
Wu isn’t alone in his annoyance with airline boarding methods. Last year, a Bloomberg piece titled “The Dumb Way We Board Airplanes Remains Impervious to Good Data” looked at just how flawed the current system is. Most airlines allow business and first class passengers to board first – that keeps them safe from the riffraff, obviously – before loading other passengers, back-to-front. Which, as a Mythbusters investigation confirms, is the absolute slowest way of getting everyone on the plane. (“Free-for-all” boarding actually takes the least time, but customers also like it the least.) There are plenty of boarding options airlines could choose – so why do they consistently opt for the one the least efficient? Bloomberg has a few ideas:
One possibility is that airlines have no incentive to improve the process. As long as it remains terrible, they can sell early boarding privileges. Southwest, for example, charges $40 to be among the first 15 to board. Consider the indignity: The stress of boarding is so bad that people are willing to pay money to wait in the plane, rather than outside it – and they pay money to the very company causing that stress...Another minor perk that's growing throughout the industry is the increased use of zone boarding as a way for airlines to reward passengers with a small status perk. Just owning a Delta Amex Card brings early boarding privileges. These customers may not be able to upgrade to a higher class, but they can be consoled by making it to their bad seat earlier than others.
Wired notes that Jason Steffen, an astrophysicist, has done the tedious work of figuring out how best to speed up the boarding process. He told the magazine that only Virgin America has bothered to reach out to him for more insight, though that yielded no concrete changes.
9. Seats that are small and getting smaller.
Once a place to luxuriate under your (free) blanket as you enjoyed your (complimentary) highball and (gratis) three-course meal, airplane seats have grown increasingly smaller as airlines have devised ways to sardine in as many paying customers as possible. In economy class, seat pitch, which essentially serves as a measure of legroom, has shrunk from an average of 35 inches in the 1970s – those heady days before airline deregulation – to just 31 inches today. The disparity is even greater when you include discount airlines like Frontier and Spirit, where seat pitches can drop as low as 28 inches. Similarly, seat widths have been downsized from an average of 18 to 16 ½ inches. As USA Today's Bill McGee noted in a column last year, “[t]he roomiest economy seats you can book on the nation's four largest airlines are narrower than the tightest economy seats offered in the 1990s.” And yet, as has been unceasingly noted, and proven in studies by the CDC and others, Americans are getting bigger – they’re both heavier and taller than in the past.
While flyers’ discomfort is the most obvious consequence of the Incredible Shrinking Airline Seat, safety is a potential issue as well. The Federal Aviation Administration conducts routine emergency evacuation exercises, but has yet to do so using a plane with a seat pitch of less than 29 inches. And, to again cite USA Today, “[f]light attendants say it’s harder to provide passengers with medical care in tightly packed seat rows, and doctors warn of ‘economy class syndrome,’ or deep vein thrombosis, which can afflict passengers who can’t move their legs on longer flights.”
In the meantime, not content with the profits earned by torturing us in a seated position, China’s Spring Airlines is actually trying to make “standing seats” happen. These would place travelers in a sort of upright seat like the one seen here, and potentially increase capacity by up to 40 percent. In addition, Boeing has announced its newest 737 MAX jets, to begin rollout in 2017, will have 189 seats, up from the current total of 169. And Zodiac Seats France, which produces airline seats but apparently dabbles in sadism on the side, has created these weird seats that face each other. Because there is too much joy in the world.
Flyersrights.org, an airline passenger advocacy group, currently has a petition that requests Congress establish a minimum standard for seat pitch. It’s been signed by nearly 33,000 people and can be found here.
10. Wi-fi on many flights stinks.
Back in 2009, everyone was sharing this clip of Louis C.K. on the Conan O’Brien Show kvetching about how we've all become entitled babies about technology. The comedian cited complaints about the speed of wi-fi on planes, which he regarded as a miraculous development we should all be marveling at all the time. It’s a funny bit that made sense in 2009, but in 2015, it feels a bit dated. These days, while in-flight wi-fi could be awesome, it rarely is, and those complaints now seem totally justifiable.
For one thing, it’s often slow and, to add insult to injury, expensive. (JetBlue offers free, speedy Internet access, but it’s the exception that proves the rule.) Why, at this late date, does this remain true? Forbes points out that Gogo has a virtual monopoly on in-flight wi-fi service – it’s used by “American, Virgin America, Delta, Alaska Airlines and some United coast-to-coast flights” – which gives the provider a lot of leverage, price-wise. And since it operates under the assumption that most business flyers are expensing the cost of wi-fi during air travel, they charge what might be called “corporate level” prices.
“Gogo has figured out that you make more revenue by charging as much money as possible to a very small number of people,” Tim Farrar, satellite telecom analyst for TMF Associates, told Wired. The magazine notes that “[t]ypically, only 7 percent of passengers opt to pay for Internet on Gogo flights, but that’s enough for Gogo to cover its costs and send a big check to its airline partners each month.”
The article goes on to indicate the technology used by each provider, which determines speed. Gogo, which again, serves most of the major airlines, "relies primarily on its air-to-ground network, which is essentially a cellular network pointed at the heavens,” though satellite technology would be far faster. In the rare cases it does employ satellite technology, the network is used by every flight in the vicinity. So not only is it slowed by the number of people using the Internet on your flight, but by the number of people logged on in every plane that shares the same flight route.
Forbes notes that, despite all these technical glitches, Gogo has been increasing the cost of its service to customers.