It may be popular to bash airline fees, but there’s another side to the story. A Wall Street Journal opinion column this week argued that a fare structure that includes fees actually benefits many air travelers.
Business pricing expert Rafi Mohammed, in his column “Budget fliers should love airline fees,” noted that before U.S. airlines were deregulated in the late 1970s, the government set air fares. Deregulation changed that, and airlines suddenly competed on much lower prices. To balance the books, over time airlines went to a tiered revenue system: relatively low fares for fairly basic service with extra amenities that could be paid for via fees.
Mohammed compares this system to an a la carte menu. Don’t want to pay for Wi-fi? Don’t buy it.
Two U.S. senators recently proposed legislation to ban fees that are not “reasonable and proportional” to airlines’ costs. But Mohammed wrote in the WSJ that airlines would need to raise fares to make up the billions of dollars in lost revenue.
“The bill would wind up hurting budget-minded travelers, who would lose the ability to make trade-offs while facing higher base airfares,” Mohammed wrote.
Previously, The Atlantic made a similar argument as part of a video series called “Economics in Plain English.” Noting that the airline industry lost a collective $51 billion from 2001-2011, the piece said fees are necessary for airlines to make money.
Before fees, The Atlantic’s Derek Thompson said on camera, the price of checked baggage, drinks and other items were simply part of the fare that every customer paid. Separating them as options is actually better for consumers.
“This makes us feel like we’re being nickeled and dimed, but actually it reflects that we have more choice than ever,” Thompson said. “We’re getting exactly what we pay for.”