It seems like every week, as of late, there’s a new proposed bill coming out of Congress that tries to slap over-reaching regulations on the airlines. In general it’s not a surprise, since that’s pretty much what Congress does. But it still makes one wonder why the airlines are such a regular target. There’s a simple answer and a not so simple one.
The basic rationale is pretty straightforward. Congress is in the middle of the painful process to try to reauthorize the Federal Aviation Administration (FAA), and that means it’s a free-for-all as our elected representatives try to slap a variety of riders on to the primary bill. These efforts all have silly little acronyms to get you to remember them. First there was the SEAT Act to regulate seat size. This was proposed by Rep Steve Cohen (D-TN) and shot down. But it wasn’t down long. Rep Adam Kinzinger (R-TN) signed on as a sponsor giving the bill bipartisan support. Soon after, Sen Chuck Schumer (D-NY) brought this idea over into the Senate. Sen Richard Blumenthal (D-CT) is onboard as well. But that’s not all he supports.
Sen Blumenthal has now buddied up with Sen Ed Markey (D-MA) to try to attach the FAIR Fees Act which would regulate the cost of airline fees to the consumer. It would require that all airline fees (baggage, change, etc) be “reasonable and proportional to the costs of the serves [sic] provided.”
My assumption is that this is all just grandstanding, and we won’t see these in the final bill. (If that’s not the case, then the industry lobbying group A4A has really screwed up badly.) But to assume that means these efforts can be ignored is a mistake. The real issue here is… why is the airline industry being treated in a very different fashion than any other industry?
This is an industry that had pricing deregulated in the 1970s, but this FAIR Fees Act is unquestionably an effort to re-regulate pricing. In a deregulated market, companies get to set their own pricing, but there’s something about the airline industry that causes people to think they have a right to meddle in the free market. Ticketmaster is hated as well, but I don’t believe there are any federal laws regulating ticket service fees. I’ve also yet to see anyone try to regulate the cost of a Coke in the minibar at a hotel. These may not be identical situations, but they’re certainly similar. Yet airlines are always the whipping boys. It still bothers me that mandatory surcharges were forced into the advertised airline price years ago yet hotels can still get away with increasingly egregious resort fees. There is a double standard.
I called Sen Blumenthal’s office for comment on why he viewed the airline industry as being different, and I was told to email the press office. I sent notes to both Sens Blumenthal and Markey, but I received no reply. I guess they don’t have a good answer.
The SEAT Act is another odd piece of attempted regulation. Has anyone tried to regulate legroom on the subway or personal space on a ferry? The bill sponsors try to hide behind the safety veil, but that’s clearly not the intent. Setting minimum seat pitch requirements is arbitrary. Let safety regulators figure out what’s safe and what’s not through specific evacuation tests. And why is safety so much more important on airplanes? It’s already the safest mode of transport. We can’t even get anyone to require seat belts on a school bus, but somehow minimum seat pitch is needed on an airplane.
There’s clearly a problem when we see repeated attempts to do something that really shouldn’t be happening. And as is often the case with the airline industry, it’s probably self-inflicted (to some extent). Salesforce.com brought me out to Dallas to speak to a group of people from American a couple weeks ago, and I touched on this in my talk. While airlines may put out policies and strategies that benefit customers, they never actually create these things FOR customers. When an industry isn’t customer-focused, there’s a natural distrust. And that is one big reason why I think we see so much silly attempted regulation.
Just think about airline fees. Today, we can look at it and objectively say that having ancillary fees enables base fares to be lower than they otherwise would be. Customers get to choose what they want and build a product that fits their needs. It sounds very customer-friendly, and frankly, it is. But that’s not why fees came into being.
Airlines pulled off free meals and eventually started selling them as a cost reduction strategy. They started charging for extra legroom as an effort to monetize a previously-failed effort to get people to pay higher fares. (Yep, that’s you, United, with Economy Plus.) And bag fees were a pure and simple money grab. As airlines lost billions thanks to rapidly spiking fuel, they did anything they could to keep afloat. There was no customer strategy. The strategy was invented after the fact. I like the a la carte strategy, and I like rebundling and packaging even more. But I don’t like how this stuff rolled out in the first place.
Now that airlines are making decent profits and reinvesting heavily in the business, there is hope for change. I’m going to keep my fingers crossed that this means they can actually put forward strategies that are created with the customer in mind instead of just adapting strategies to the customer after the fact. (That means you can’t just copy everything Delta does, United.) Once the airlines start doing a better job of acting that way, then we’ll probably see fewer stupid efforts at re-regulating.
[Original shoebox image via Shutterstock]
