Boosting Airlines fees

So i just finished reading an article about how American Airlines plans to offer charging another fee to increase their revenue. This one is paying a small fee ($19-39) in order to get yourself a seat in the front of the plane.

So this is nothing new; we just paid $145 in checked bags fees to get to LA–when before you used to be able to check 2 bags for free on most airlines. It joins a list of fees that airlines are adding in order to increase revenue: charging for checked bags, meals, or seats with extra leg-room.

But this is the part that caught my eye:

While the ancillary fees have annoyed some passengers, it has proven to be a boon for the industry. The Air Transport Association of America reported last month that passenger revenue was on the rise for the first half of the year, including a 25% surge in June compared to the same period the year before. The fees were partly responsible for the increase.

Understanding how to use worldview to practice business successfully is all about understanding cause and effect; if i do this, i get that. So can fees be “partly responsible” for an increase in revenue?

We would say no. Saying something is “partly responsible” is akin to saying that there is no cause and effect relationship. If charging extra fees was the cause for increased revenue, then every company would do that, and they all would experience increases in revenue. But they don’t, so that’s not a cause and effect relationship.

So they why is American considering adding another fee, and why is CNN reporting an increase in revenue as a result of them?

There are several possible answers to this, but i have to admit, i like the one given by American Airlines’ spokeswoman: “”[Passengers] were not able to choose these seats previously… Now they can choose.”

So why might airlines make money by charging an extra fee? Because the cause of getting something is giving something. What are they giving? Choice.

I travel a lot with the founder of DCI, Michael Roach, who is a pretty tall man. When we arrange for his seating, we check to see if the airline we’re flying on offers “premium” seating. What this means is that, for a small fee, we can get Mr. Roach a seat with extra leg-room. Before the airlines started their fee-charging schemes, this wasn’t possible–instead you had to try to get to the airport early and hope there was a seat like this still available.

I remember when i was first charged a fee for checking a bag–i couldn’t believe it. i had never had to pay a fee for it before. But then i thought to myself, why am i angry? Shouldn’t i instead be grateful? Because isn’t it true that for years the airlines have been handling my bags for me, for free? Maybe the problem is i took it for granted all those years.

I hate paying all these little fees; i think it’s a little bit unfair. But if that’s true, then the way for me to stop having to pay for them is to pay them gladly, willingly, and hope for every airlines continued success.

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One Response to Boosting Airlines fees

  1. kayumochi says:

    Interesting. I look forward to more posts on your blog.

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