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July 13, 2005
Marketing price increases
Last year I explained why airlines instituted 'fuel surcharges' instead of simply announcing 'price increases'.One reason is that customers seem to accept price increases more readily when there's a story that accompanies the change. Another reason is that surcharges are often permitted in negotiated corporate travel contracts that have fixed prices.
The dance that accompanies surcharges leads to some absurd explanations.
Northwest has announced that it will no longer 'absorb' passenger facility fees (which they have to pay to airports that they carry passengers cross), and as a result will be adding those fees onto tickets.
Gosh, I never knew that they were kindly 'absorbing' a fee for me. Turns out I was getting something for nothing!
Airlines have recently instituted ticketing fees for using their call centers or buying at the airport. One common explanation is that there's a service which was previously being given away, now it will be purchased as though from an a la cart menu. Heh. I thought that it was just their cash register! Little did I know it was an extra optional service.
Northwest's decision to increase fares for flights connecting through Houston and Memphis -- which do not charge PFCs -- puts the lie to Northwest's claim that it is passing along a fee that it used to absorb.
Posted by gleff at July 13, 2005 2:26 PM
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