An Interesting Opportunity for an Organized Consumer Rights Group

By Mel Copen June 28, 2011

Sedona, AZ June 28, 2011 – Every now and then, it seems appropriate to have a little fun. This short tale was inspired by a recent airline trip and news about new fees for people who check in at the airport. Although purely fictional today, it may be close to tomorrow’s reality. You be the judge.

The story takes place in the boardroom of a major air carrier – Incontinent Airlines. A group of bright young executives (YE), after conducting an extensive analysis, is making a presentation to top management (TM). The conversation goes as follows:

YE: “After examining the industry, reviewing our financial results, and looking a host of potential alternatives, we are prepared to make a series of recommendations. These are based upon the clear fact that the ancillary charges are much more lucrative than basic transportation fares. Last year, the entire North American Airline Industry generated approximately $5.1 billion in profits. Charges for baggage amounted to $3.4 Billion while fees for changing reservations or making reservations on the telephone added another $2.3 billion. That doesn’t include the revenues generated from all the other charges that we’ve been able to impose. Do the arithmetic and the conclusion is inevitable. We have missed the boat. We are no longer a purveyor of transportation. We are a generator of “extra charges.” With the price of avgas skyrocketing, we propose moving out of the air lanes and focusing our energies on this new business.”

TM: “Yes, we understand the logic. But how are we going to make it happen?”

YE: “Among others, we have three big things working in our favor. First, we have become very skilled at hiding these fees, and even when the passenger is informed, he usually accepts what is presented. Second, we believe that we can get all of the other major airlines to follow suite, once they see the wisdom of our proposals, and consequently the passenger will have no choice.” Finally, there really is no mechanism to protect the consumer. All we are doing is making a logical extension of the time-accepted principle of “caveat emptor.” And as long as the government has its passenger pat-downs and x-ray images, they should be content.

YE: “Our basic approach is based upon a strategy adopted by the razor industry, many years ago. But we have introduced a major new twist. As you may recall, they found that selling the razors cheaply (to lure people in) and then selling the blades dearly, maximized profits. But we can do better – they didn’t have the fine print that we have – and that’s the truly powerful part of our enhanced approach.”

TM: “Hmm, that’s an interesting approach.”

YE: “First, the basic fare will be approximately half that which we currently charge. Consumers seldom look any further, and that will lull them into a state of elation.” However, that will only get you a spot in line to board one of our aircraft. If you want to fly, there will be an additional charge, much like the taxi industry – based upon mileage, with a waiting charge as well. Note that this will change what are currently expensive delays into a major profit earner. Poor maintenance, late arrivals and such will enhance our bottom line.”

YE: “We have also noted that substantial space is wasted with the seating arrangements in most of our aircraft. For example, there is adequate space between the heads of seated passengers and the luggage racks to put an entire row, on each side of the plane, of recumbent travelers. We can charge extra for these “fully reclining” snooze accommodations – and perhaps charge even more for hammocks. Better still, we can remove the luggage racks, put in a second “recumbent row” and by so doing, force all passengers to pay hefty checked baggage fees for what they currently carry on (and obviously, we suggest increasing those fees).”

YE: “Seats take up a great deal of space. We currently allow about 10 inches between the front of a chair and the back of the one in front. But the average human leg is probably half that diameter. So more seats can be placed on the aircraft – and we can sell tranquilizers to make it go easier for the passengers – another profit center.”

YE: “Standing room would also be provided.”

TM: “But that would be a safety issue, and although the government would probably ignore everything else, this might present a problem.”

YE: “True, safety considerations presently prevent our offering this service. But if we pack people tight enough, that should reduce safety problems – people won’t be able to bounce around in turbulent situations for example – while increasing our load factor dramatically. We estimate that, in the current space where 6 people sit, we can stand 16 people – 20 if we eliminate the aisles. And again, the spurt in tranquilizer sales should be significant.”

YE: “We also see ourselves selling various “new” services – toilet access, for example. The charge for toilet paper would be by the square. And of course we would continue our current policies regarding seating – so much for advance seating, so much for extra leg-room, a window seat, etc. The major difference, however, is given the standing room option, we would also institute a basic charge for any seat.”

YE: “Now comes the really brilliant part. It has two aspects. First, all of these charges would have to be prepaid – the passenger would pay a substantial premium for paying at the airport. Consequently, most would put these charges on their credit card at the time they booked. And all of these charges, like those for air-fare today, would be non-refundable.”

YE: “And second (and this is the most creative of all), we will make all flights subject to whether.

TM: “Don’t you mean “weather?” We already do that.”

YE: “No.” In essence, we would state that flights would fly based on “whether” or not we decide to put them up in the air. Few passengers would see the fine print, and those who did would probably assume it was a typo. And since the basic fare would be just for a place in line, and all the other charges would be non-refundable, we could cancel most of the flights and enhance our bottom line enormously. With a bit of advance planning, we wouldn’t even need crews to show up.” We might fly only those flights that had full capacity and strong tail winds.”

TM: “But the tail winds generally blow in only one direction. For example, on trans-continental flights, they generally blow from west to east. How would we get the planes back?”

YE: “We haven’t quite figured that one out yet, but it really doesn’t matter – since we won’t be flying very much anyhow.”

TM: “But won’t the public get upset? Are we pushing too far?”

YE: “Perhaps, but again, it really won’t matter. So what if US air industry-goes down the tubes. We’ll just be following in the great traditions of Pan Am and TWA. If people still want to fly, foreign carriers will likely take over, just as they have with automobiles, call centers, and manufacturing of all kind. But we’ll make a killing in the first few years. By then we’ll have enough capital and experience to extend this concept to other service industries: health care, banking – and think of what we can do with the Internet.”

TM: Great! We’ll get our legal people working on this immediately.

All of this may be written tongue and cheek, but the numbers in the 3rd paragraph are accurate. Although the “proposals” may be a bit extreme, conversations of this nature are likely taking place. To date, neither the governments role nor the uncoordinated efforts of consumers has been effective. If the market-place is efficient, does this mean we are getting what we want? (Or what we deserve?) Seems like an interesting opportunity for an organized consumer rights group!

© Mel Copen, June, 2011

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