Posted: September 28, 2012
Peanuts for profit
Getting to San Diego is still $200, 26 years laterDavid Sneed
In 1987, I bought my first airline ticket. Essentially, I called United, and asked how much to San Diego. “Oh, $200? Great, I’ll take it.”
Eventually, the internet came into being (thank you, Al Gore), and it became easier to buy airfare. Now, instead of paying whatever they say because I’m too lazy to call another airline, I can have my computer find the lowest price.
Note to airlines: If you aren’t on the first page, I won’t be travelling with you.
I don’t know why I added that last part. The airlines knew this from day one, which is why some carriers won’t sell on Expedia. So the airlines learned they would have to appear on the first page of results and did what any respectable company would do: They lowered their fares. They lowered them so much that they started losing money.
After struggling for a decade, they all figured out the solution to the problem of how to charge $200 but still appear on page one.
You see, $200 is still the right price, but you don’t know that because they offer a $150 fare and charge you $50 for your bags. You think the trip is only worth a ‘hunnert and a half’ and they’re ripping you off with the bag fee. They aren’t.
That may sound unfair or bait-and-switchy, but it really isn’t. It is a survival adaptation. The cheetahs are faster so the gazelles got longer legs.
If I owned an airline, I’d offer to fly you to SoCal for $1, and then charge you $199 for your seat. And require you to have a seat. Is that wrong? I don’t think so. My price is the same as theirs.
What’s weird is that I bought a ticket in 1986 for $200 and today, 25 years later, it still costs $200. How can that be, and why are we complaining?
I can offer you the flight, including a meal, pillows, free bags and a seat for $300. But you’ll never see it because my trip shows up on page nine at Travelocity.com. Instead I offer you the basic flight for half that and make you pay for the peanuts separately.
The internet is to blame for this. But that same magic machine that allows you to find the lowest fare requires some adaptation by sellers. In this case, they are “killing you with the fees.” But not really. If you think about it, they’re just offering you a discount for not bringing a suitcase, or being thirsty, or wanting to straighten your legs a little bit.
I just read an article about how Americans have been “gouged” so far this year to the tune of $1.7 billion. Oddly, airlines have started breaking even again. When you consider that your great-grandparents paid thousands to spend a week crossing the country while, for the price of a night out, you can safely whiz across the sky in a metal tube, why are you up in arms that the folks who get you there are trying to eke out a small profit?
David Sneed is the owner of Alpine Fence Company,and the author of" Everyone Has A Boss– The Two Hour Guide to Being the Most Valuable Employee at Any Company." As a Marine, father, employee and boss, David has learned how to help others succeed. He teaches the benefits of a strong work ethic to entry and mid-level employees. Contact him at David@EveryoneHasABoss.com