The Airline Industry Is The Most Transparent In The World!!!

The government is investigating a lot of things in the airline industry at the moment, most of them with limited merit, in my opinion. Hating on airlines is popular, so it’s no surprise that politicians are taking the opportunity to act as if they’re “advocating” for consumers against the airlines, and in the process wasting everyone’s time and resources.

Most recently there was a Senate report urging the government to crack down on airline fees. The report tackles everything from checked bag fees to cancellation fees to change fees.

Via The Chicago Tribune:

The report, which is based on an investigation by the Democratic staff of the Senate commerce committee, says there appears to be no connection between the price of checked bag fees and the costs incurred by the airlines that impose them.

The report also says that in most cases airlines charge fees for changing or cancelling a ticket no matter how far in advance of a flight the changes are made. And it criticized airline websites that mislead consumers into believing they have to pay an extra fee to obtain a seat.

I suppose in theory some more transparency wouldn’t hurt. Personally I’m not convinced the government needs to get involved, though it’s an area where an investigation doesn’t seem unreasonable.

But the reason I’m writing about this is because the incredulous quote from a spokesperson of Airlines for America, which is an airline industry trade association. Spokeswoman Jean Medina rejected the report’s criticisms with the following:

“It would be difficult to find an industry that is more transparent than airlines in their pricing,” she said in an email. “The fact that a record number of people are traveling this summer further demonstrates that customers always know what they are buying before they purchase.”

It would be difficult to find an industry more transparent than airlines when it comes to pricing… really?!?!?!?!?!

And yes Jean, you’re right. People are choosing to fly more often than ever before because they love how transparent airlines are. I’m sure it has nothing to do with the fact that in many cases flying is the only practical way to travel between two far off places.

Porscha-Glare

You’ve gotta wonder whether the spokesperson in question even believes what she’s saying?

(Tip of the hat to @ChiefGoodfriend)

Comments

  1. High cancellation fees, such as $150 on AA, represent pure greed in an era when flights are packed and the airline doesn’t lose a dollar due to a cancellation.

  2. I absolutely love your blog! I’ve been an avid reader for over a year now… Is there any chance of seeing more trip reports, I’d especially like to see what your thoughts are on British airways’ J class as I think it’s a very unique product that I personally love… It would also be interesting to see what your thoughts were about a long haul flight in y if you could handle such a thing…!

  3. While the link drawn between transparency and the number of people travelling is of course ridiculous, I do have to agree with them that airline pricing is incredibly transparent, at least to those in the know. When the price of a trip seems high, I can “diagnose” the problem using Expertflyer — is it an issue that the fares filed are too high, or an issue with availability in the right “bucket” (and as a subset of that, married segments), or with allowable routings, etc. I can’t think of anything else I buy where I can have so much insight into how the selling price is constructed. Obviously, the vast majority of travellers are not able to do this, but the information is publicly available.

  4. @ CP@YOW — I don’t think “transparency” and “to those in the know” should go in the same sentence. To me it’s not transparent if you have to be “in the know” to figure out a situation. Just my two cents.

  5. Lucky seriously?

    They mean transparency in terms of publicly available data from US DOT/RITA (http://www.rita.dot.gov/).

    And to be fair, compared to most other industries there is a vast amount of data and transparency that is publicly available. The only challenge is sorting and viewing the public data in a meaningful way that is insightful. That is where services like Diio & MIDT, subscriptions start at about $1500/month. Granted, I can’t imagine much of the public has the interest or desire to dig through all of it, but it is out there for any interested party to review.

  6. When you look at the amount of information airlines are required to give you about the price of your ticket before you buy, and the amount of information they have to file with the DOT that gets published publicly, and the amount of information you can find out about what they’re selling from sources like ExpertFlyer — I would agree that from the perspective of a strict definition, airlines are far more transparent than many other industries. (Though some, notably Delta, are doing all they can to change that.)

    And I would disagree, Lucky, that you can’t be transparent if only those “in the know” know where to look. Government transparency is centered around things like the Freedom of Information Act, which is not exactly easy to use if you know little about government and have never done it before.

    I would absolutely agree that a lot of people traveling does not tell us the least bit about whether airlines are transparent or not, though.

  7. This part shows how little these people know about basic economics: “there appears to be no connection between the price of checked bag fees and the costs incurred by the airlines that impose them.”

    Well, duh. Of course there isn’t. Change the words “checked bag fees” to “iPhone” and “the airlines” to “Apple” and then see if any rational human being would make this statement.

    While there are a few exceptions (cost-plus contracts, for example), in general sellers base their price on what they’ve determined customers are willing to pay for an item or service, and customers do not take the seller’s costs into account when they make their decisions. There is an indirect link in that if the price customers are willing to pay won’t cover expenses (or at least marginal expense), sellers just won’t offer the item at all, but that’s a decision taken on the supply side, not on the consumer-demand side.

    In short, this is why Congress shouldn’t listen to people who don’t know anything about economics (I’m looking right at you, Kate Hanni…)

  8. This is where the airlines are completely shooting themselves in the foot. If they’d provide EXCELLENT service and treated people as humans and not self-loading cargo, people wouldn’t complain or question their practices. It’s kind of like a good maid. You know you’re probably paying them too much, but you’ve been using them forever and they do a great job so you don’t bother questioning anything.

  9. Why does it matter if the airlines charge more for baggage than it actually costs them transport it. Why can’t they charge what they want even if 150% of actual cost?

  10. The system does not always result in fairness or transparency for the traveling public, according to the research. The industry needs oversight by government and independent watchdogs to ensure that airlines engage in fair and reasonable practices regarding ancillary fees and offer consumers transparent information regarding all possible fees when purchasing airfare, it said.

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