3/15/2006

They're stealing our consumer surplus!

For some reason I was listening to NPR today and happened to tune in to a discussion about some new ideas that the airlines are devising to try to get back in the black. I found the program on the NPR website if anyone is interested.

As if Americans weren’t already price sensitive enough about airline flights, a few airlines have decided to charge a little more for some seats that they think we might pay a premium for. Specifically, they’re planning to charge more for aisle seats and exit row seats. In my opinion, the ideas will not get them very far. Firstly, the only successful airlines in the country right now are the ones that are cutting costs and lowering prices. I don’t see this idea creating a good image for struggling airlines. Second, although some people probably would be willing to pay a little extra for specific seats, I think there are a lot more who will choose to fly on another airline if all of the cheap seats are taken, unless there are no other options.

2 comments:

Ella said...

I also saw a story about this on the news the other day. I guess that this is the airlines latest idea at an attempt to turn a profit. The only way that this would really help the problem is if all of the flights were full, otherwise why would you want to pay more for an aisle or exit row seat when you can usually move into seats that are unoccupied once the plane takes off? The last couple of times that I have flown somewhere I have been able to have a whole row of seats to myself. Overall I think that most people will choose to fly on another airline than pay more for an aisle or exit seat.

Dr. Tufte said...

Heh, heh, heh ... you have no idea how far this is going.

Ryanair is already planning on offering its flights free of charge by 2010.

They plan on recouping that with fees for all the features of the flight for which demand is inelastic (like window seating).

This sounds crazy, but you need to consider the alternative. Every mode of human transportation that is based on volume has eventually suffered widespread bankruptcy. Face it: they need a new business model.