An Airline Fee That Exists for No Apparent Reason(wsj.com)
wsj.com
An Airline Fee That Exists for No Apparent Reason
https://www.wsj.com/articles/the-airline-fee-that-exists-for-no-apparent-reason-1530104985
81 comments
My personal gripe is banks' "inactive account fee". Is my account being inactive costing them any money? Well, no, it's not costing them any more money. It might mean that they don't have opportunity to charge other fees, but what it really seems to be is "if you're not paying attention to this account, we'll start charging you this fee because you won't notice".
It costs money.
Your transactions are tip of the iceberg compared to the mass of regulatory requirements banks have to fulfill for each customer. You can learn about some of that by Googling down the “KYC” (“know your customer”) rabbit hole.
Banks make money on putting deposits to work and on transactions.
To cover costs of having to maintain regulatory compliance regarding account holders, there’s a minimum amount of deposits needed before interest off putting parked money to work pays enough, or minimum number of transactions before transaction fees pay enough.
So, you get minimum deposits requirements, or inactive account fees.
Your transactions are tip of the iceberg compared to the mass of regulatory requirements banks have to fulfill for each customer. You can learn about some of that by Googling down the “KYC” (“know your customer”) rabbit hole.
Banks make money on putting deposits to work and on transactions.
To cover costs of having to maintain regulatory compliance regarding account holders, there’s a minimum amount of deposits needed before interest off putting parked money to work pays enough, or minimum number of transactions before transaction fees pay enough.
So, you get minimum deposits requirements, or inactive account fees.
I think it’s the banks way of taking some of the money before it’s legally taken by the state. In many if not all states, if a bank account is inactive for 3-5 years, the state considers it “lost” and takes the money until it’s claimed in the future. So the bank will try to drain as much as possible for themselves before that happens.
I was at a bar on the Las Vegas strip not too long ago, and even they had some form of 'resort fee/tax'. I was really taken aback. I'm not sure the legal ramifications but I should have refused to pay.
Was a band playing? That might have been the live entertainment tax. As a Vegas resident I thank you for helping to pave my roads. /s
https://tax.nv.gov/FAQs/Live_Entertainment_Tax___FAQ%E2%80%9...
https://tax.nv.gov/FAQs/Live_Entertainment_Tax___FAQ%E2%80%9...
Decent roads, horrible schools: https://www.rgj.com/story/news/education/2018/01/17/nevadas-...
Have you been through Vegas recently? Even the roads are horrible, but I thought it was just because of the weather.
You mean our baseball stadium.
And definitely not our schools.
And definitely not our schools.
Most likely a "concession fee." Lively discussion here: https://vitalvegas.com/beware-the-deceptive-cnf-charge-at-be...
That discussion expectedly devolves quickly into whether or not it is okay to deduct the fee from the tip. I would normally be on the server's side, but in this case the server could have avoided the confusion by simply telling the patron about the fee from the beginning. Had he/she done that from the get-go, then deducting the fee from the tip would be ridiculous (in fact not paying it at all would be ridiculous, since the patron would have been aware of it from the beginning). But if the server doesn't do that, that I honestly have little sympathy if the tip were to take the hit.
That said of course the first step should be to raise hell to management right there on the floor so that all other patrons hear as well. And the maybe the 0th step should be to not support establishments such as these (though that won't save you the first time if you don't know about these shenanigans).
That said of course the first step should be to raise hell to management right there on the floor so that all other patrons hear as well. And the maybe the 0th step should be to not support establishments such as these (though that won't save you the first time if you don't know about these shenanigans).
Funny enough, I was at Beer Park. Needless to say I will not be going back.
On a somewhat similar note, hostels in Scandinavia (at least Norway and Sweden) generally always charge for pillowcase & sheet rental (a few euros), which are mandatory. They also don't allow any external sheets or sleeping bags for hygiene reasons.
I've never experienced that at any hotel in Norway or Sweden. That sounds more like a charge you would expect in a hostel.
> That sounds more like a charge you would expect in a hostel.
I've stayed in hostels in >25 countries and have never had to pay for bed sheets besides there
I've stayed in hostels in >25 countries and have never had to pay for bed sheets besides there
I have had to do it in Belgium as well, so I am not quite sure it’s entirely limited to Scandinavia. I have also stayed in hostels in several countries and only had to pay once though so can at least offer that it is pretty rare in non-Scandinavian countries.
You do in Youth Hostels in Belgium, certainly.
I remember drying after shower with my bedsheet in a hostel in Portugal where I would have had to pay for a towel, those were the times!
In "turnabout is fair play", there's a neat technique called "fuel dumping" that makes use of this by finding fares that, for various complicated reasons, don't have the surcharges added, occasionally allowing crazy cheap flights. It's quite complicated though and (surprise!) airlines hate it.
https://www.secretflying.com/posts/fuel-dumping-basics/
https://www.secretflying.com/posts/fuel-dumping-basics/
>https://www.secretflying.com/posts/fuel-dumping-basics/
>The extra flight added on to the itinerary that causes the fuel dump to occur is called the “strike”. This flight should be short and inexpensive, otherwise it defeats the purpose of this whole practice.
why would adding an extra flight to the itinerary remove/replace the fuel surcharge? surely this must be a bug in their booking system?
>The extra flight added on to the itinerary that causes the fuel dump to occur is called the “strike”. This flight should be short and inexpensive, otherwise it defeats the purpose of this whole practice.
why would adding an extra flight to the itinerary remove/replace the fuel surcharge? surely this must be a bug in their booking system?
Not really secret if it has a public website that is shared publicly.
Perhaps it's "secret" in the sense of tricks known to any expert in a subject.
Much like the secret to more-easily peeled hard-boiled eggs is to put the eggs in cold water before you boil it. Or like baking soda is the secret to shrimp with a firm texture.
Much like the secret to more-easily peeled hard-boiled eggs is to put the eggs in cold water before you boil it. Or like baking soda is the secret to shrimp with a firm texture.
I always thought the secret is to put them in cold water after you boiled them? That’s how I’ve been doing it since forever and it works well.
A lot of info I can find contradicts other info, so it's hard to be sure. I can't find good support for the method I gave, though. I was under the impression that chilling them afterward was mainly about stopping the process of cooking, though I can't say it doesn't also help with peeling.
You’re still probably doing at least a /soft/ “cold start” taking them right out of the fridge before boiling.
I steam my eggs. Fridge to over steaming water for 20 ish minutes. Then into ice water. Peels great.
I steam my eggs. Fridge to over steaming water for 20 ish minutes. Then into ice water. Peels great.
I would like to subscribe to your newsletter. These are both new to me.
The technique is public, but actually finding dumpable fares is left as an exercise to the reader.
In Canada the airlines have to advertise total price. They can show a breakdown of taxes and fees, but the main advertised price must be the total price the customer pays.
As the article states, the issues isn't that customers don't see the fares when searching for prices, but that loyalty programs and some corporate discounts exclude fees. So this practice gouges them.
A good policy probably, but getting "a breakdown of taxes and fees" is easy in US as well. That is assuming you accept the definition of a breakdown as:
Fees: X Taxes: Y
And that's it. So it doesn't seem that policy would help much regarding the point of this article.
Fees: X Taxes: Y
And that's it. So it doesn't seem that policy would help much regarding the point of this article.
^ Blind link goes to a non-paywalled version of the article.
Another workaround. i have a bookmarklet that does this for my current tab:
javascript:(function() {window.location='https://l.facebook.com/l.php?u=' + window.location.toString() + '%3Faction%3Dclick&h=ATMNXkm4NSmFwOsi-Haa_NbgSEZnRVHr0vNHn0MvV2qg4opxZrHpocUPwdIbENnkrOQTGl2R2Plu0P0127qT_jjdApVkgJUiofc48hvHRlNKuw';})()
Basically redirects through Facebook, and WSJ doesn't paywall you then.
javascript:(function() {window.location='https://l.facebook.com/l.php?u=' + window.location.toString() + '%3Faction%3Dclick&h=ATMNXkm4NSmFwOsi-Haa_NbgSEZnRVHr0vNHn0MvV2qg4opxZrHpocUPwdIbENnkrOQTGl2R2Plu0P0127qT_jjdApVkgJUiofc48hvHRlNKuw';})()
Basically redirects through Facebook, and WSJ doesn't paywall you then.
The surcharges often are used against miles-based travel. You book the ticket one miles, but still get hit by various taxes and surcharges. Often it's a large chunk of the total fare.
Qantas has a "fuel surcharge" for a long period during high oil prices. This surcharge was literally to bill you for a base cost of their service. Arguably pure marketing.
Qantas has a "fuel surcharge" for a long period during high oil prices. This surcharge was literally to bill you for a base cost of their service. Arguably pure marketing.
I wrote to the ACCC about it. I asked what figure per mile flown and per gallon price at hedge was used to calculate the fee. If the fee did not reflect actual mileage flown or exposed cost, I argued it was misleading to call it a fuel surcharge and thus an illegal impost to get round pricing limits. No reply, but a barrackroom lawyer rarely deserves one.
Unusually for WSJ, I find the title of the article fairly misleading. It seems to imply that there is an extra charge being levied, whereas it's actually talking about a complicated price structure designed to disadvantage frequent fliers and corporate customers.
Still shady, but not obviously implied by the title.
Still shady, but not obviously implied by the title.
I seem to recall that when the government repealed some telecom tax, Verizon added a surcharge of an equal amount, and pocketed more money without changing the total bill for anyone.
Slightly off-topic: My "favorite" fee I've encountered is Spirit Airlines' "Unintended Consequences Fee": https://www.cnn.com/2012/02/01/travel/spirit-fee/index.html
> And it doesn’t impact how many frequent-flier miles you collect for a flight on an airline that pays out miles by price instead of distance.
Not true exactly, at least on American. I fly them almost exclusively and I just went to check this out. To move up to the next tier of status in their frequent flier program, you need to spend a certain amount of "Elite Qualifying Dollars" (or EQD) every year. The EQD are based only on the fare price, exclusive of taxes and fees.
So, this would allow them to control how many people are moving up to the different status levels, by adjusting the fees vs. fares for each ticket.
Not true exactly, at least on American. I fly them almost exclusively and I just went to check this out. To move up to the next tier of status in their frequent flier program, you need to spend a certain amount of "Elite Qualifying Dollars" (or EQD) every year. The EQD are based only on the fare price, exclusive of taxes and fees.
So, this would allow them to control how many people are moving up to the different status levels, by adjusting the fees vs. fares for each ticket.
Whether or not you've hit your EQD threshold affects whether you achieve a status level. It doesn't directly affect your mileage earning rate (your status level can affect that, but isn't relevant to what the article is stating).
So the article is correct: these fees do not change the mileage you earn from buying the ticket and taking the flight.
So the article is correct: these fees do not change the mileage you earn from buying the ticket and taking the flight.
Right, it doesn't change the mileage you receive, but you need both miles (or segments) and EQD to reach the next status level.
Higher status has a multiplier on what you earn.
https://www.united.com/ual/en/us/fly/mileageplus/premier/bon...
https://www.united.com/ual/en/us/fly/mileageplus/premier/bon...
For those unfamiliar with the terminology, there are two types of miles you earn with the big three US carriers.
All miles you earn can be redeemed for free tickets. But only one type -- elite-qualifying miles ("EQM") -- also advance you toward the next level of status in the frequent-flyer program, and status is what gets you most of the nice perks. The other type -- redeemable miles ("RDM") -- are only useful to redeem for tickets, and do not count towards status.
When airlines offer "bonus miles", with a few exceptions they are RDM, not EQM. RDM are also a heavily deflationary currency, because airlines issue them by the bucketload, and then adjust their redemption charts regularly to account for how many they've given out.
(the biggest exception is booking into premium fare classes like first class or business class, which typically does apply a multiplier to the earned EQM)
Achieving status typically requires:
* A certain number of EQM in a year, or a certain number of segments flown in a year
* And a certain minimum amount of actual money spent (elite-qualifying dollars, or "EQD"), as a measure to prevent people racking up huge amounts of mileage on bargain-basement tickets, and then trying to claim status with all its perks
There are typically four published levels of status; American calls them "Gold", "Platinum", "Platinum Pro" and "Executive Platinum". Delta has Silver, Gold, Platinum and Diamond. United has Silver, Gold, Platinum and 1K. Perks start out pretty basic at the lowest levels, but get pretty serious (and pretty nice) at the top tier.
There are also unpublished levels above that, typically by invitation only, for people perceived as ultra-high-value customers. American's version is called Concierge Key, Delta's is called Delta 360, United's is Global Services.
All miles you earn can be redeemed for free tickets. But only one type -- elite-qualifying miles ("EQM") -- also advance you toward the next level of status in the frequent-flyer program, and status is what gets you most of the nice perks. The other type -- redeemable miles ("RDM") -- are only useful to redeem for tickets, and do not count towards status.
When airlines offer "bonus miles", with a few exceptions they are RDM, not EQM. RDM are also a heavily deflationary currency, because airlines issue them by the bucketload, and then adjust their redemption charts regularly to account for how many they've given out.
(the biggest exception is booking into premium fare classes like first class or business class, which typically does apply a multiplier to the earned EQM)
Achieving status typically requires:
* A certain number of EQM in a year, or a certain number of segments flown in a year
* And a certain minimum amount of actual money spent (elite-qualifying dollars, or "EQD"), as a measure to prevent people racking up huge amounts of mileage on bargain-basement tickets, and then trying to claim status with all its perks
There are typically four published levels of status; American calls them "Gold", "Platinum", "Platinum Pro" and "Executive Platinum". Delta has Silver, Gold, Platinum and Diamond. United has Silver, Gold, Platinum and 1K. Perks start out pretty basic at the lowest levels, but get pretty serious (and pretty nice) at the top tier.
There are also unpublished levels above that, typically by invitation only, for people perceived as ultra-high-value customers. American's version is called Concierge Key, Delta's is called Delta 360, United's is Global Services.
The psychological scheming behind free to play games have nothing on mileage programs
That's not true--this article is about airline fees, not government fees, and AA counts airline fees when they calculate EQD's. From AA.com:
"EQDs are awarded based on ticket price (includes base fare plus carrier-imposed fees, but excludes government-imposed taxes and fees)"
"EQDs are awarded based on ticket price (includes base fare plus carrier-imposed fees, but excludes government-imposed taxes and fees)"
When I look at the receipt from my ticket I see:
FARE-USD $ 440. 93
TAXES AND CARRIER-IMPOSED FEES $ 61.67
TICKET TOTAL $ 502. 60
> Those carriers give out miles based on total fare.
Sort of. They give out miles based on this, but often not the miles needed to accrue status (which often makes mileage accrual substantially more lucrative, as well unlocking free/reduced upgrade access). On United, for example, you accrue MileagePlus miles based on total price paid, but accrue "Premier Qualifying Miles" and "Premier Qualifying Dollars" based on the "fare", which is always far lower.
Sort of. They give out miles based on this, but often not the miles needed to accrue status (which often makes mileage accrual substantially more lucrative, as well unlocking free/reduced upgrade access). On United, for example, you accrue MileagePlus miles based on total price paid, but accrue "Premier Qualifying Miles" and "Premier Qualifying Dollars" based on the "fare", which is always far lower.
No, PQD includes carrier surcharges. Here’s United:
> You earn PQD for the base fare and carrier-imposed surcharges on eligible flights.
Same for American, and probably other carriers too.
> You earn PQD for the base fare and carrier-imposed surcharges on eligible flights.
Same for American, and probably other carriers too.
When I worked for a travel company I saw a lot of fares that had lots of taxes and fees on them. Some flights brought fewer dollars to the airline than everyone else. You pay for both airports, the cities/states/provinces/countries they are in and places you go thru airspace to and anyone else who can put in a claim. The most I ever saw was around 12 on a single segment. The final cost of an airline ticket supports a village.
But that's how everything works. When I buy a gallon of milk at the grocery store, the store gets a cut, the delivery truck driver gets a cut, the gas station he uses gets a tiny cut, the farmer gets a cut, the bottler gets some, etc. Despite all that, the price I see is a single number.
The weird thing with airline tickets is that the airlines break the price out into two pieces and call one the fare and the other a processing fee, as if that distinction makes any difference to anybody but them.
The weird thing with airline tickets is that the airlines break the price out into two pieces and call one the fare and the other a processing fee, as if that distinction makes any difference to anybody but them.
It isn't just airlines. Other industries have discovered this dark pattern (presumably there is a class in "Dr Evil MBA" where they teach it).
E.g look at your phone bill.
E.g look at your phone bill.
I have a fantasy of getting one of these companies as a client and padding my bill using fees like theirs: “federally mandated taxes” (my income taxes), “infrastructure fee” (my computer etc), “e&o insurance” (my errors and omissions insurance), “PP charge” (pure profit fee), etc.
I recently priced up tickets from San Franisco to Sydney, and it was more than double the cost of Sydney to San Francisco. In fact, I priced up dates that included my original itinerary, and it was cheaper to buy two tickets originating in Australia.
As far as I know, It's hard to arbitrage this because the 21st-century tightening of airline "security" means you'll be rejected from a later leg of your flight if you weren't on an earlier leg. Have you tried actually booking the two trips out of Australia and only taking the last half (Sf -> Sydney) of the first one?
IIRC airlines were already prohibiting that before 9/11. Security is just a convenient excuse.
Similarly, once upon a time you could arrive at the airport 5 minutes before the flight, frantically check-in at the counter[1], and race to your gate while the check-in counter phoned the gate to ask them to hold the door (at the pilots discretion). That kind of stuff causes delays and the airlines were already putting policies in place to stop that before 9/11. If you arrive late today they'll simply tell you that you missed the 30 minute window imposed by the TSA to ensure proper inspection procedures, but in the absence of the TSA rules the same policy would almost certainly have existed anyhow. Market competition forced airlines to more efficiently manage gate resources, and random passengers boarding at the last minute can be extremely costly.
[1] I forgot to add: check-in baggage might either be sent through the system (urgently) or you might check it in at the gate. These days I think you can still arrive inside the 30 minute window if you don't have any check-in baggage, but don't expect any courtesies.
Similarly, once upon a time you could arrive at the airport 5 minutes before the flight, frantically check-in at the counter[1], and race to your gate while the check-in counter phoned the gate to ask them to hold the door (at the pilots discretion). That kind of stuff causes delays and the airlines were already putting policies in place to stop that before 9/11. If you arrive late today they'll simply tell you that you missed the 30 minute window imposed by the TSA to ensure proper inspection procedures, but in the absence of the TSA rules the same policy would almost certainly have existed anyhow. Market competition forced airlines to more efficiently manage gate resources, and random passengers boarding at the last minute can be extremely costly.
[1] I forgot to add: check-in baggage might either be sent through the system (urgently) or you might check it in at the gate. These days I think you can still arrive inside the 30 minute window if you don't have any check-in baggage, but don't expect any courtesies.
There were, in fact, entire airports designed around the "pull up, run in, board plane" routine. Kansas City International entered service right around the time that hijacking commercial flights became a popular publicity stunt. The consequent installation of security checkpoints really harmed the airport's utilitarian vision, and TSA's post 9-11 sterile area rules made travel through KCI a complete farce.
Nowadays, KCI has got to be one of the most hated airports in the country. I've met several people who've come away with a true and real disgust for Kansas City after being "trapped" in a five-gate sterile span with 200 people, a juice cart, and a bathroom. Exiting that small enclosure necessitates another pass through security.
It's a sad story, and may be a good case study for why one shouldn't try too hard to optimize that next project.
Nowadays, KCI has got to be one of the most hated airports in the country. I've met several people who've come away with a true and real disgust for Kansas City after being "trapped" in a five-gate sterile span with 200 people, a juice cart, and a bathroom. Exiting that small enclosure necessitates another pass through security.
It's a sad story, and may be a good case study for why one shouldn't try too hard to optimize that next project.
In the old old days there were some flights you could board and then pay the fare on the plane, in cash.
The original Eastern shuttle service on the east coast did that in the 1960s, for example.
The original Eastern shuttle service on the east coast did that in the 1960s, for example.
And in those same days you didn’t even need a passport. It was just like buying a bus ticket.
Also, smoking was allowed. Now seems so bizzare.
Also, smoking was allowed. Now seems so bizzare.
That must have been so miserable for the tiny fraction of people who didn't smoke.
On the other hand, online check-in makes it so you can arrive to the airport ~30 minutes before an international flight if you don't carry any luggage, which is extremely convenient.
It's impossible to do, I was just making sure it wasn't a quirk for the dates I was looking at.
This isn't related to the carrier-imposed surcharges, however. Airfare is priced according to a system of filed fares with specific rules, for specific city pairs, that require booking into specific "inventory."
Internationally, round-trips and different fares than one-ways. And SFO-SYD is a different fare altogether from SYD-SFO.
A fare might say:
Internationally, round-trips and different fares than one-ways. And SFO-SYD is a different fare altogether from SYD-SFO.
A fare might say:
- Originates in SFO, destination SYD
- Books into economy class
- Requires S-code inventory
- Requires a round-trip
- Can be combined on a half-round-trip basis with any other fare USA-Australia fare (e.g. you could combine two fares SFO-SYD and NYC-MEL to get a SFO-SYD/NYC-MEL round trip)
- Can use any flights that have S-code inventory
- Except no stopovers
- And only 1 transfers in Area 1 (USA)
- Can be reissued for 400 USD
Pasting blockquote, sigh.
- Originates in SFO, destination SYD - Books into economy class - Requires S-code inventory - Requires a round-trip - Can be combined on a half-round-trip basis with any other fare USA-Australia fare (e.g. you could combine two fares SFO-SYD and NYC-MEL to get a SFO-SYD/NYC-MEL round trip) - Can use any flights that have S-code inventory - Except no stopovers - And only 1 transfers in Area 1 (USA) - Can be reissued for 400 USD
- Originates in SFO, destination SYD - Books into economy class - Requires S-code inventory - Requires a round-trip - Can be combined on a half-round-trip basis with any other fare USA-Australia fare (e.g. you could combine two fares SFO-SYD and NYC-MEL to get a SFO-SYD/NYC-MEL round trip) - Can use any flights that have S-code inventory - Except no stopovers - And only 1 transfers in Area 1 (USA) - Can be reissued for 400 USD
How is this different to the first example in the article?
> They aren’t tied to distance traveled—fees are often the same for flights from Europe to New York and Los Angeles. They vary wildly by direction of travel. Business-class tickets on British Airways between New York and London have a $1,006 carrier-imposed charge if the round-trip begins in New York, but only $381 if the round trip originates in London.
> They aren’t tied to distance traveled—fees are often the same for flights from Europe to New York and Los Angeles. They vary wildly by direction of travel. Business-class tickets on British Airways between New York and London have a $1,006 carrier-imposed charge if the round-trip begins in New York, but only $381 if the round trip originates in London.
The article was discussing extra fees tacked on to FQTV tickets
Airlines charge a maximum of what people will pay, or try to, and still fill the seats.
The best example of this is BA pricing for business flights departing going through LHR. E.g. FRA-LHR-DFW is very competitively priced (to undercut LH) - on average 2800E return, however the exact same LHR-DFW return flight is nearly twice the price!
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I'm surprised the online reservation sites and the host cities haven't fought back against this practice. Booking a $75 room with a $30 resort fee robs the booking site of nearly a third of its commission, and the city of the same proportion of the hotel taxes. (the sales tax charged on the resort fee is not the same as the hotel occupancy taxes charged on the room rate.)