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|January 29- February 4, 2009
Back to Letters
Flying the monopolistic skies
by Jim Hightower
The geniuses who run our country’s airlines have come up with a nifty marketing tool to help boost their bottom lines. It’s called: “Stiff the Customer!”
Actually, this approach has been in development for the past few years, but now the industry’s executives have decided to embrace it as a “legitimate” business model. Under this concept, not only are passengers squeezed into their allotted spaces on the plane, but now they’re also literally squeezed to pay extra for basic services that the price of the ticket covered in the past.
Take baggage. Many flyers like to have their bags go with them on their flights. So, sensing a gotcha opportunity, airlines ganged up to start charging an extra 15 bucks to check a bag. You might recall that, at the time, they blamed the soaring price of fuel for this surcharge. But, wait — oil prices have dropped by nearly 400 percent since then. What gives?
You do, like it or lump it. Yes, say airline chiefs, fuel costs are down, but so is the economy, which mean fewer of you suckers are
flying. With demand down, we have to hold our prices up.
Wow, that turns “Capitalism 101” on its head, doesn’t it? When customer demand drops, market theory says that competitors will either lower prices or increase service to attract more customers. Problem is, airlines don’t really compete. They split up the national market into what amounts to regional monopolies, and they collude with each other to set prices and standards.
Like bankers, airlines execs have discovered that they can make a bundle by attaching a fee to this, to that, and to everything in between. The head of US Airways says, “I, for one at least, believe it’s the right model for the business.”
For the business, maybe, but not for the customers. They call it “à la carte pricing,” but it’s the same old monopolistic game of “Stiff the Customer.”
For more information on Jim Hightower's work — and to subscribe to his award-winning monthly newsletter, The Hightower Lowdown — visit www.jimhightower.com.
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