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Author Topic: Airline additional fees
MrSquicky
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A friend of mine pointed this out to me. It's not a super-rigorous analysis, but still. An opening quote:
quote:
When I talk to an airline executive, I'm usually the one ranting about a stupid trick or unfair policy that the carrier has imposed.

But not a couple of weeks ago. In the middle of a conversation about cabbages and kings and meaningless things, an airline guy I speak to frequently went off on "ancillary revenue," the airline-industry euphemism for inventing fees for everything from checked luggage to in-flight coffee.

Accountants have rigged the system. They create a stream to track the ancillary revenue from fees and they look like heroes when they can report they earned the airline millions of dollars of "new" revenue. But ask them if they can track the revenue we lose because passengers booked away or chose not to fly and they look at you like you have nine heads.

One of the telling points to me (and one that kinda shocked me when I got into the business world) was how the revenue from additional fees (or cuts in service, etc.) are treated as this isolated source. It may be the science training, but I'm amazed by people who will laud "We made X amount of dollars by doing A." but don't realize that by doing A, they've pissed people off or done something else that caused them to lose out of X * 4 dollars.
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MrSquicky
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I think, in part, this is because large companies lose control of what they are spending on what and where their revenue is coming from.

My first job out of college, I helped people put together a system that collected and categorized very large companies' (several of our clients were in the Fortune 500) accounts payable data for several reasons, but one of the big ones was that they often didn't really know what they spending money on, as a whole. I assume you had people who knew their own area of it, but there was no big picture, until we came along. In a case like that, you can see something good in one area and not realize that it is killing you in another one.

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scifibum
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I typed out something long but decided it wasn't applicable. I think in this case the airlines are attempting to spin their numbers, and internally people may be obfuscating to try to keep their jobs.

Generally speaking, these people understand how to attempt to measure the impacts of their actions, even when straightforward tracking is impossible (or if they don't personally understand, then they know that other smart people would be willing to make the attempt).

But when you are trying to put lipstick on a pig, sometimes you set aside competence and attempt to focus your energies on making sure as many people as possible agree on the shade. "Ancillary" revenue is a form of consensus reality that is preferable to these people to confronting what is actually going on.

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MrSquicky
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The reason why I don't think that that is the case is that they are still rolling out more or increased fees for things.
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scifibum
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Not sure which assertion you disagree with?

Since the airlines are nearly all doing the same thing, I think they've got themselves convinced that they can't possibly be sacrificing competitive advantage, and are choosing not to look too carefully at that question in any mathematical sense.

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MrSquicky
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I'm disagreeing that it's just an attempt to spin the numbers.

It looks like there's a strong case that adding fees like they are doing is on the whole losing them money. If they were trying to justify it after the fact - "Yeah we lost money, but look at this other revenue stream we opened up at the time. Without that, we'd have lost even more money." while all the time knowing that it was likely that their other revenue stream was one of the things that was costing them money, then I don't think they'd continue increasing the fees and such.

As it is, I think they are treating this as something that is boosting their revenue instead of cutting into it.

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scifibum
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I see. I think there are two separate phenomena:

1) Publicly focusing on ancillary revenue as a positive thing, because it's the only positive thing they have to focus on. Hope that the bigger this number is, the less bad the overall numbers will look. At this level I believe them to be entirely cynical. Spin for all its worth.

2) Internally refusing to engage the question of whether the ancillary revenue efforts are hurting them overall. There are probably layers to this, but I think individuals who are pushing the ancillary stuff probably don't want to be held accountable in a larger sense (if they can wring a bonus out of a bogus measurement they will), and others are mollified by the fact that it's a new industry standard (perhaps even to the explicit level of "if this a bad thing, would [Other big airline] be doing it?").

It is also possible that someone has analyzed the big picture and decided that it's not hurting them overall. Given the way users are probably conditioned to comparing ticket price in choosing an airline, they might have found that users get locked in before they have a chance to make a decision based on the ancillary fees, and are either forgetful enough or travel infrequently enough that this hasn't yet hurt them on return business.

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theresa51282
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I don't know if it works in the big picture or not but it definetly caused us to drive for the holidays this year instead of fly. We need to take four separate flights to get to all of our families. The tickets run in the upper 400 range for the combined flights. We could live with that. However, if we have to pay 25 dollars a bag for each of the flights per person plus taxes and fees plus a 50 surcharge for an infant on each leg the 400 dollar tickets are now much closer to 600 dollar tickets. Add to that the airlines overbooking at the holidays so that we don't know if our tickets would actually be honored and the airlines cutting flights so we are left with long layovers and out of the way connectors and its just not worth it. I don't want to drive with a toddler for 30 hours over the holidays but the airlines have made it too expensive and inconvenient to do otherwise.
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Jhai
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There's a reason why economists sneer at accountants - because their numbers don't take into account some basic economic truths, like opportunity cost.

There's a reason why accountants don't operate like economists - hard numbers are more difficult to hedge or shade the truth with.

Those two reasons are why good CEOs take into consideration what the accountants are saying, but do not let accounting numbers dictate the entire company.

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Mucus
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quote:
In 2002, he was returning home to Canada from vacation when, on a stopover at JFK Airport, he was (a) detained by U.S. officials, (b) accused of being a Terrorist, (c) held for two weeks incommunicado and without access to counsel while he was abusively interrogated, and then (d) was "rendered" -- despite his pleas that he would be tortured -- to Syria, to be interrogated and tortured. He remained in Syria for the next 10 months under the most brutal and inhumane conditions imaginable, where he was repeatedly tortured ...

In January, 2007, the Canadian Prime Minister publicly apologized to Arar for the role Canada played in these events, and the Canadian government paid him $9 million in compensation. That was preceded by a full investigation by Canadian authorities and the public disclosure of a detailed report which concluded "categorically that there is no evidence to indicate that Mr. Arar has committed any offense or that his activities constituted a threat to the security of Canada." By stark and very revealing contrast, the U.S. Government has never admitted any wrongdoing or even spoken publicly about what it did; to the contrary, it repeatedly insisted that courts were barred from examining the conduct of government officials because what we did to Arar involves "state secrets" and because courts should not interfere in the actions of the Executive where national security is involved. What does that behavioral disparity between the two nations say about how "democratic," "accountable," and "open" the United States is?

Yesterday, the Second Circuit -- by a vote of 7-4 -- agreed with the government and dismissed Arar's case in its entirety. It held that even if the government violated Arar's Constitutional rights as well as statutes banning participation in torture, he still has no right to sue for what was done to him. Why? ... government officials are free to do anything they want in the national security context -- even violate the law and purposely cause someone to be tortured -- and courts should honor and defer to their actions by refusing to scrutinize them.

link

a) Interestingly, the Canadian PM at that time (and still) is a Conservative
b) Kinda puts airline fees in perspective when this is the kind of thing I have to risk on business trips

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kmbboots
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My goodness, Mucus. Is there any topic where you can't work in something about how the US sucks?

[Taunt]

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Mucus
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Hey, the author's American and its dated today.
Also, I didn't bring up the US in the other thread and I still haven't mentioned it. The Rabbit did [Razz]

(Assuming you saw the other thread. If you didn't ... its possible, although I'd have to work on it)

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scholarette
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Mucus- A is hardly a fair note as most US conservatives would call Canadian Conservatives socialist.
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kmbboots
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Oh, I often agree with your specific criticisms. You seem a tad obsessed (and a couple of tads rude)though. I am eagerly waiting to see how you work US suckiness into the baby elephant thread.
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Mucus
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scholarette: Thats fair.

However, I would note that there is a decent amount of news on how the Conservative party in fact has taken a lot of advice and hired consultants from the US Republican party, not the Democrats. They see themselves as being akin to the Republicans rather than then other.

In specific, they support the war on terror in a way that the Liberals (perhaps like Obama) claim not to.

kmbboots:

In general, I don't know. I am reminded of BlackBlade mentioning this in the anime thread though.
quote:
Originally posted by BlackBlade:
... I think Cantonese culture lends itself more to boisterous, frank, and rude manners of speaking ...

I haven't been paying attention myself though.

In specific, I do admit I was surprised by your strong(?) reaction when I essentially agreed with you in our two last interactions. Didn't really understand that one.

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Tstorm
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quote:
... but the airlines have made it too expensive and inconvenient to do otherwise.
Definitely. I have to drive more than 3 hours to get to the nearest airport with reasonable, convenient flights. Add in the cost, in gas and time, of that extra travelling to (and from!) the airport. Then, add in the fact that you can't cancel your plans, once you've purchased the ticket, or they steal your money. (Unless you buy their protection, I mean, "travel insurance.")

When the security turkeys get done making me jump through hoops, I've about had it. I'd rather drive than put up with airline stupidity. Short of an emergency or a serious crunch in time, I'm not flying again.

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kmbboots
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Eh...not strong, really. And, as I noted, I do agree with many of your criticisms. I just find it rather obnoxious for someone from another country constantly shows contempt for mine. I get that the US is kind of the elephant in the room and it would be hard (and blind and foolish) not to have an opinion, but it does seem like you leap gleefully onto any opportunity to bash us.

I am not saying you can't, or even that you are wrong, just that I find it tiresome and in this case watching you stretch to work it into the conversation reached the point of funny.

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TomDavidson
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Eh. I'm not bothered by it. Heck, I bash China pretty much any chance I get. And Canada. Damn Canadidians.
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theamazeeaz
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I guess you lose money when people don't fly when you charge for bags. Of course the inevitable consequence is people overstuffing the overheads.

The wonderful irony was that on my last flight, I checked my 10 pound duffel in favor of a 40 pound suitcase as a carryon. (It had more than my salary worth of equipment in it, gotta love work).

Though if you charge for coffee, fewer people will take it, you make money and you don't have to buy as much to bring the plane. I hate the charge-for-food because they run out before they reach the back of the plane and sometimes you can't get something beforehand because of your connection.

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scifibum
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I flew last Thursday and Friday on United flights (operated by Skywest) and the volume of carry-on baggage seemed totally reasonable. Even though United seems to be charging for all checked baggage.

I wonder if the short regional flights on small planes tend to carry people taking shorter trips and smaller luggage.

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The Rabbit
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quote:
lso, I didn't bring up the US in the other thread and I still haven't mentioned it. The Rabbit did
[Confused]
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dabbler
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I was surprised that the food was for pay. Last year I flew on Norwegian and they had these funky included dinners that were definitely different from the usual American airline food. This time on a 7 hr flight I had a choice of snacks and sandwiches from 4-9 bucks. I was not amused after paying $20 for my checked luggage. It's almost surprising that soda and juice are still free.

It's hard to choose a different airline based on practices since almost all the airlines are doing it and I had no idea we'd gotten to the meal-for-fee stage.

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Mucus
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quote:
Originally posted by TomDavidson:
Eh. I'm not bothered by it. Heck, I bash China pretty much any chance I get. And Canada. Damn Canadidians.

This post is opaque to me. I don't recall you actually posting about China or Canada for that matter.

The straightforward interpretation is a "I don't bash China/Canada, so maybe you shouldn't bash the US" but I'd like you to elaborate so I don't have to assume.

quote:
Originally posted by The Rabbit:
quote:
lso, I didn't bring up the US in the other thread and I still haven't mentioned it. The Rabbit did
[Confused]
I had thought that kmbboots was referring to my participation in the thread on the Torah. It looks like maybe not.
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rivka
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quote:
Originally posted by dabbler:
I had no idea we'd gotten to the meal-for-fee stage.

That one (on domestic flights) predates the fee-for-checked-luggage fees by several years. And it's relatively easy to bring along food, or buy it in the airport. It's a lot harder to find alternatives for checking luggage.
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Mucus
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quote:
Originally posted by kmbboots:
Eh...not strong, really. And, as I noted, I do agree with many of your criticisms. I just find it rather obnoxious for someone from another country constantly shows contempt for mine.

Well assuming that I do constantly show contempt for the US, I can't (or rather won't) change where I reside for posting purposes. If you don't actually have much of a problem with the criticisms, then it doesn't seem to make sense to change those.

So we're left with me being gleeful. I think this is not unfair, though not entirely correct either. Usually, I'm posting mockery from a place of dark resigned humour. For example in the current thread, I'm not actually Middle Eastern which kinda affects how seriously I meant b) to be taken.

That said, I think constant is a bit overstating things. I do believe that my last thread resurrection was giving a kudos to Obama about the Diwali celebration.

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kmbboots
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As I wrote, you are free to do as you will. I was expressing my reaction to it.
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TomDavidson
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quote:
This post is opaque to me. I don't recall you actually posting about China or Canada for that matter.

The straightforward interpretation is a "I don't bash China/Canada, so maybe you shouldn't bash the US" but I'd like you to elaborate so I don't have to assume.

Nothing so elaborate, I'm afraid. I literally meant "It is fun to bash China and Canada, because China and Canada are lame (for different reasons.) So if Mucus thinks it's fun to bash the U.S., more power to him."
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Mucus
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Hmmm, strange.
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Juxtapose
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Nothing wrong with a good bit of lighthearted bashing. It's like a nerf fight.
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