I almost was escorted out of the House aviation subcommittee for laughing when John Meenan, executive vice president and chief operating officer of the Air Transport Association, went off the prepared statement and said, “Airports must resist treating air travelers as the equivalent of an ATM.”
While the airlines have been adding new fees and increasing them regularly, I found their claim that increasing the passenger facility charge (PFC) for the first time since 2001 from $4.50 to $7 amounts to direct taxation that would depress travel demand.
Meenan, intoned his passengers-as-ATMs statement with an absolutely straight face — even as the ink has barely dried on the latest US Airways and United Airlines increases in baggage fees.
The FAA Reauthorization Act, or 2009 (H.R. 915), was passed yesterday by the House of Representative and the action will now move to the Senate side of the hill. According to discussions with insiders, the Senate expects to be passing their version of the legislation sometime after the Fourth of July recess.
{ 17 comments… read them below or add one }
All I can say is What a pompous, hypocritical windbag.
Why is the ATM comment so funny? Do you realize the billions of dollars in losses by U.S. airlines in the last decade? Do you know that the U.S. airlines had a multi-billion dollar loss in 2008 and an almost $2 billion loss in 1Q09? Why? Fuel prices and a recession maybe? Shouldn’t the airlines be working for a return to profitability — sustained profitability. With no airlines we have no airports. And, let’s not forget that airports have ready access to billions of dollars in cash to say nothing of access to financing. Airports, government, consumer advocates, environmentalists, and others think that it is perfectly OK to just keep taxing airlines and airline passengers when the airline industry already is one of the most overtaxed industries, Oh yes, fuel prices are on the rise again. Charlie, take a course in economics. Give me a break.
DAC,
It is a bit hypocritical of the airlines to complain about governments getting money from passengers to pay for the airport (where else are they supposed to get the money?), and then turn around and nickel-and-dime passengers to death. How exactly are the airlines supposed to justify a $100+ fee to correct the name on a reservation? Fees just to change to a different flight on the same day when neither flight is full? The short-lived attempt to charge for even water? Fuel fees in no way tied to the price of fuel?
If the airlines want to make more money, they just need to raise the damn fares, and cut out the out-of-nowhere fees.
The irony has nothing to do with airlines or airports needing money. I agree that they need to come up with ways to make a profit. I understand fully the economic pressures on the air travel system. My solution would be to have the airlines charge what is necessary to make flying profitable.
When I can fly round-trip between Washington and Boston for less than I can take the train and less than the cost of gas and tolls, something is amiss in the airline pricing. That is their competition.
But when airlines who are nickle and diming us every step of the way from making telephone reservations, to purchasing meals, to changing reservations, to making frequent flier reservations, to selecting seats, to getting a pillow and blanket, to checking in luggage, etc. have the audacity to claim that the airports are treating passengers as an ATM for asking for an increase in the passenger facility tax after almost eight years, is a bit much to bear.
BTW, my college degree happens to be in economics. Airline ticket pricing defies economic logic when airlines do not charge enough to cover the company’s costs of the flights. For the airports to request an increase in funding after eight years, is not outrageous.
Meenan, intoned his passengers-as-ATMs statement with an absolutely straight face — even as the ink has barely dried on the latest US Airways and United Airlines increases in baggage fees.
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First Quarter Results came out a few weeks ago. One is losing ONE MILLION DOLLARS a day and the other one is LOSING 5 MILLION DOLLARS a day. Care to tell me how to stop/slow the bleeding without fees?
Simple economics, DAC, would then state that airlines could simply raise their prices for tickets rather than levy dumb nickel and dime charges which alienate passengers for things like seats (anything that isn’t a middle seat regardless of capacity), “booking surcharges” which all customers are effectively forced to pay, first bag checked fee, fuel surcharges to compensate for the stupidity of their poorly timed fuel hedging, and other bogus surcharges.
Nevermind the fact that your comment seems to miss the entire point of the original blog entry – which is that it’s hypocritical to incorporate the above-mentioned “ATM-style” of fee, and then simultaneously berate others for doing the same at a much more benign level for a better reason. I guess for some, if it smacks of the government, then it must be a tax, and well that is just plain unacceptable! The PFC isn’t what makes me not want to fly, it’s the stupid fees! How’s that for economics? Nice observation Charlie.
On May 22nd, 2009 at 8:25 am SirWired said DAC,
If the airlines want to make more money, they just need to raise the damn fares, and cut out the out-of-nowhere fees.
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Wouldnt it be nice if it were that simple. Competition dictates airfares. How many fare increases are rescended when the competition doesnt follow? The consumer expects value. The airlines have raised REVENUE by not increasing the airfare by giving the consumer the CHOICE of:
curbside check-in
Meals
Phone reservations
checked baggage
seat selection
Most US airlines have lost money over the last ten years not because air transportation is unprofitable, but because they choose to finance the majority (and in the case of AA the vast majority) of their assets with debt rather than shareholders’ funds. Southwest finances the majority of its assets with shareholders’ funds and has been profitable for the last thirty-five years. If airlines chose to sell shares to their investors rather than bonds, they would all be making a profit. Airlines lose money because it suits them to do so, and for no other reason.
While the airlines have been adding new fees and increasing them regularly, I found their claim that increasing the passenger facility charge (PFC) for the first time since 2001 from $4.50 to $7 amounts to direct taxation that would depress travel demand.
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Wouldnt it be interesting to know what OTHER TAXES come out of an AIRFARE?
NEXT ARTICLE????
If the airlines want to make more money, they just need to raise the damn fares, and cut out the out-of-nowhere fees.
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Hear hear!
@Frank – If competition dictates the airfares, perhaps we should just let the unprofitable airlines fail. With reduced competition those remaining could then increase their fares to sustainable levels – problem solved!
Shouldn’t the airlines be working for a return to profitability ..
Please tell me the last time the industry as a whole was profitable post-regulation? Frank? Waiting…NEVER.
We bailed them out on 9/11, and only perpetuated a dying industry.
The airlines need to make a profit, but with concise, clear, and direct pricing,
NOT this nickle and dime BS! Frank you spend your time on this board defending unethical corporations that would not even be in buisness without taxpayer money-FACT. So please spare us the sob stories. Just because the employees are decent people doesn’t mean the corporate structure is decent.
Don’t you think the airlines do market research every day of the year? Of course they know that they can do better with the “fees for everything” approach than by raising fares. There’s some experimentation, obviously, but it’s not based on a whim. The fact is that they are trying to attract a wide variety of types of passengers (as evidenced in microcosm just by the comments on this topic). I would rather have a low fare and decide whether I want to pay for extra amenities, rather than a high fare and subsidize people who demand things I don’t care much about.
DAC — Get a grip! You obviously do not understand the meaning of “hypocricy”! When an industry that’s been nickel and diming its customers to death whines about the government increasing fees, THAT’S hypocritical — and funny.
Pot…meet Kettle.
On May 22nd, 2009 at 9:53 am Jake said
Frank – If competition dictates the airfares, perhaps we should just let the unprofitable airlines fail. With reduced competition those remaining could then increase their fares to sustainable levels – problem solved!
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Wait until Southwest enters LGA, BOS and MKE. Fares wont be going UP, Southwest will DECREASE the “yield” in those markets to gain market share. They flood the market with ridiculously low fares to gain it.
Unprofitable airlines? Ha! There’s a graveyard FULL OF THEM. Over a hundred airlines have gone out of business since the 1980′s alone.
Anon1 said Please tell me the last time the industry as a whole was profitable post-regulation? Frank? Waiting…NEVER.
We bailed them out on 9/11, and only perpetuated a dying industry.
The airlines need to make a profit, but with concise, clear, and direct pricing,
NOT this nickle and dime BS! Frank you spend your time on this board defending unethical corporations that would not even be in buisness without taxpayer money-FACT. So please spare us the sob stories. Just because the employees are decent people doesn’t mean the corporate structure is decent.
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Profits in this industry are cyclical. How well run they are is a DIFFERENT issue. I dont defend unethical corporations, but, I do have a different perspective on here because of my experience in the industry as an employee. The board is littered with sob (negative) stories so YOU ALL can chime in and whine along with the article.
Wahhhhh, no legroom. Wahhhh, no food. Wahhhhh, baggage fees.
I simply have a different opinion and try to back it up with explanations.
I think what DAC is saying, is that the price of a ticket is already heavily taxed, and as the industry strugggles with it’s losses, now is a horrible time to add more taxes to it’s cost of doing business. After all, an airline IS A BUSINESS.
@DAC,,
Who sets the fares? Airlines or customer?
Who writes the fare rules?
Who decides where they fly?
ETC ETC, If you guessed Airlines and NOT Customers then you win a prize. Southwest doesn’t seems to have trouble making a profit most times.
The ATA and it’s member airlines have the dubious distinction of having lower customer satisfaction ratings then the IRS. That should tell you all you need to know!!!