Joe Biden harped on junk fees during the State of the Union. While I do not think it is the problem of our time, I take things in the reference class of resort fees, or fees to have adjacent seats on an airplane, and other such unbundling (and bundling) surprisingly seriously. I am putting up my thoughts here so I have a reference to fall back upon.
A new one is high end restaurants adding a "3% fee for the healthcare of the staff" or something that they say they're happy to waive. All you have to do is tell your lovely single mother professional waitress that you specifically want to waive the payment for her health-care
“I still think that this is probably a place worth an intervention. I think the costs in lived experiences of such failures are high, and the risk of intervention is relatively low”
Counter point: Medical fees are absolutely awash in these sorts of issues, yet how doctors and hospitals charge for these services are extremely tightly regulated. That suggests the risk of intervention is quite high, as it will likely make the situation worse. Customers do not capture regulatory organizations, sellers do.
This shares the same underlying principle that first discredited libertarianism in my mind. I think Scott Alexander, or perhaps it was another blogger, pointed out that sometimes a marginal decrease in overall freedom leads to a significant net increase of individual freedom. Examples include the prohibition on (flagrantly) false advertising, and the use of prisons to reduce public risk exposure. This is exactly the sort of thing governments are good for - reducing the redundant burden upon individuals to responsibly practice their own freedoms.
Matt made an additional good point, not mentioned in your analysis here, that as a matter of what regular business travelers actually experience, unbundling has resulted in a race to the bottom due to contingent facts about how expense policies work and how the people who run expense departments are incentivized to (dis)approve upgrade charges. If the basic ticket price entitled you to be lashed to a frame on the exterior of the aircraft, that's what your company would reimburse you for.
(Then 2020 happened and business travel seems to have mostly stopped -- no more days of traveling to have a meeting that could have been an email! -- but I guess that is a different issue.)
I agree with most of what you've written. I do think that choice is good, but that's a separate matter. On bundling and hidden prices, well-crafted legislation could definitely bring an improvement. However, I am wary, as the same people that designed the current system will have a seat at the table when drafting the new regulations.
That said, there are things that that we can do to improve our experiences at the individual level. The main thing is to stop shopping purely on price. If you're taking a vacation and you don't want to start it unnecessarily stressed, avoid the low-cost carriers. Get PreCheck or Global Entry. Book a higher ticket category that allows you to pick your seats and bring more luggage. Pay the annual fee on a credit card that gives you lounge access and priority boarding. In a nutshell, accept that you get what you pay for.
The big lie of the internet is that we can all be super savvy shoppers who know all the tricks to getting that great deal. That's where the flim flam begins. For instance, I follow Conde Nast Traveler on Instagram. I expected their feed to be pretty pictures of interesting places, but it seems to mostly be nonsense tips on how to airline upgrades by dressing fancy and bringing chocolates to the flight attendants. The airlines have some of the smartest engineers in the world building their pricing models. You're not going to beat them with a sport coat. The sooner we internalize this, the better off we'll be.
Is there an example of similar regulations in the USA that is clearly net good? This strikes me as classic "something must be done, and this is something".
I cannot understand how a airline can claim they care about safety if they even flirt with the idea that a 5-year-old could be required (or even allowed) to sit on their own.
The extra fees for sitting together on planes I find very strange. This does not appear to be a thing on flights I have taken in the UK / EU, which normally let you pick your seat at check in with more desirable seats commanding a premium.
Australian consumer law has long held that the advertised price must have the full price that you'll end up paying including taxes and fees in a font at least as large as any other price advertised. Doesn't help with things like baggage inclusions, but frauds like "resort fees" are just non existent here.
I can't support the Amazon meme. Amazon's handling of shipping fees has been a slow-moving catastrophe, but the catastrophe has finally arrived.
The original system was that you paid separately for goods and for shipping. This meant you ordered whatever level of shipping you wanted.
Then they introduced Amazon Prime, where you paid a subscription fee and all of your orders received two-day shipping.
Then they stopped providing different levels of shipping. Even for non-Prime accounts. It's all best-effort. If you want two-day shipping, Amazon will no longer provide that.
$10.00 + $2.39 shipping meant you could substitute more expensive shipping if you needed it.
$12.39 + free shipping meant you could go screw yourself if you needed faster shipping, or even deterministic shipping.
Legislation of this type require the government to have a deep working knowledge of any industry it tries to regulate. You would essentially be inviting the government into micro manage every industry. This would quickly be followed by civil lawsuits by customers who believed "that should have been included".
The problem with option #3 (Require aggregation sites ... based on true cost), is now you have an adversarial relationship. Delta is strongly incentivized to keep Kayak in the dark and Kayak has no recourse if Delta succeeds. You have a psuedo-government / regulatory function handled by a private actor; the actor needs to possess real teeth.
An example would be a government mandate forcing Delta, et al to publish enough pricing data somewhere Kayak can reliably infer the truth. Rules in this realm can be vague enough to not create new problems like impeding the privacy of Delta's customers or allowing creative front-running of data, but any attempts to mislead now constitute lying to the Government instead of lying to Kayak.
Well first the meme's first panel should read $9.99 (+ $2.40 shipping). And second why not let the market take care of these market type of things? And finally I think we all have to stop taking price as the over ridding point of importance. To do so gives us the current race to the bottom. Way back in the past we use to fly on British Airlines, somewhat because they had the best food and service. Why can't an airline bill itself as family friendly and keep families seated together? Be willing as consumers to pay more for better quality, better service, locally made. Those are all long term investments, we need more long term thinking. Or Moloch shall rule us.
Mandating bundling of flight fares is a terrible idea. This terrible logic turns up in a lot of places where people think the dollar cost is the problem, but the real problem is availability. Families are not worse off having to pay to sit together, they are BETTER off. It is not a major problem for me to pay a little bit more to pick adjacent seats for my family. Typically the cost for seat choice in regular coach is very cheap, even $30 per seat for a cross-country flight.
What is a major problem for a family trying to fly together is not being able to find adjacent seats available at all. With seat choice costing money, people who care about their seat have many empty seats to pick, because a lot of passengers will be randomly assigned at the last minute. This is a terrible area for government to legislate. The people have spoken with regard to flight fares. A small minority may bitch and moan, but what actually happens is people flood to the cheap crap service because what they want is cheap service. If you want the fancy service, you can still get it. People just think they can give it for free and garbage politicians encourage that belief for votes.
I mean seriously, how dumb is this argument? It's not fair for people to pay $30 on top of their $200 fare to pick their seat. So we'll mandate a $230 fare with free seats. The best you can twist that is to say well we're probably only mandating $220 seats, so see it's a $10 benefit for this group over here that we think might vote for us.
None of this is hidden. I have no idea how someone can buy a flight ticket and be unaware of what is not bundled. Spirit literally has giant yellow popups that tell you at each stage.
Resort fees I can find no justification for. In theory they might be a way to differentiate their "resort" services, but hotels use crap like free phone calls to justify them, as if anyone has used a hotel phone to make a call in the last 15 years. I think the hysteria over them is certainly not justified though. I can't think of anywhere I've made a reservation where it wasn't disclosed at the time of booking. A surprise when you show up at the hotel may be fraud, a surprise when you click through a list of options is an annoyance. It's the kind of thing the government should probably stay out of, and people should fix it by patronizing sites that are better at disclosing them. Marriott lets you choose if you want the all inclusive price, or just the base price (I do find the base price search useful, though it's a niche use, and only because resort fees are a thing).
While it may not be "the problem of out time", it is certainly one of the more irritating.
A new one is high end restaurants adding a "3% fee for the healthcare of the staff" or something that they say they're happy to waive. All you have to do is tell your lovely single mother professional waitress that you specifically want to waive the payment for her health-care
“I still think that this is probably a place worth an intervention. I think the costs in lived experiences of such failures are high, and the risk of intervention is relatively low”
Counter point: Medical fees are absolutely awash in these sorts of issues, yet how doctors and hospitals charge for these services are extremely tightly regulated. That suggests the risk of intervention is quite high, as it will likely make the situation worse. Customers do not capture regulatory organizations, sellers do.
This shares the same underlying principle that first discredited libertarianism in my mind. I think Scott Alexander, or perhaps it was another blogger, pointed out that sometimes a marginal decrease in overall freedom leads to a significant net increase of individual freedom. Examples include the prohibition on (flagrantly) false advertising, and the use of prisons to reduce public risk exposure. This is exactly the sort of thing governments are good for - reducing the redundant burden upon individuals to responsibly practice their own freedoms.
Edit: removed a real reach of an analogy
Matt made an additional good point, not mentioned in your analysis here, that as a matter of what regular business travelers actually experience, unbundling has resulted in a race to the bottom due to contingent facts about how expense policies work and how the people who run expense departments are incentivized to (dis)approve upgrade charges. If the basic ticket price entitled you to be lashed to a frame on the exterior of the aircraft, that's what your company would reimburse you for.
(Then 2020 happened and business travel seems to have mostly stopped -- no more days of traveling to have a meeting that could have been an email! -- but I guess that is a different issue.)
I agree with most of what you've written. I do think that choice is good, but that's a separate matter. On bundling and hidden prices, well-crafted legislation could definitely bring an improvement. However, I am wary, as the same people that designed the current system will have a seat at the table when drafting the new regulations.
That said, there are things that that we can do to improve our experiences at the individual level. The main thing is to stop shopping purely on price. If you're taking a vacation and you don't want to start it unnecessarily stressed, avoid the low-cost carriers. Get PreCheck or Global Entry. Book a higher ticket category that allows you to pick your seats and bring more luggage. Pay the annual fee on a credit card that gives you lounge access and priority boarding. In a nutshell, accept that you get what you pay for.
The big lie of the internet is that we can all be super savvy shoppers who know all the tricks to getting that great deal. That's where the flim flam begins. For instance, I follow Conde Nast Traveler on Instagram. I expected their feed to be pretty pictures of interesting places, but it seems to mostly be nonsense tips on how to airline upgrades by dressing fancy and bringing chocolates to the flight attendants. The airlines have some of the smartest engineers in the world building their pricing models. You're not going to beat them with a sport coat. The sooner we internalize this, the better off we'll be.
Is there an example of similar regulations in the USA that is clearly net good? This strikes me as classic "something must be done, and this is something".
I cannot understand how a airline can claim they care about safety if they even flirt with the idea that a 5-year-old could be required (or even allowed) to sit on their own.
The extra fees for sitting together on planes I find very strange. This does not appear to be a thing on flights I have taken in the UK / EU, which normally let you pick your seat at check in with more desirable seats commanding a premium.
Australian consumer law has long held that the advertised price must have the full price that you'll end up paying including taxes and fees in a font at least as large as any other price advertised. Doesn't help with things like baggage inclusions, but frauds like "resort fees" are just non existent here.
I can't support the Amazon meme. Amazon's handling of shipping fees has been a slow-moving catastrophe, but the catastrophe has finally arrived.
The original system was that you paid separately for goods and for shipping. This meant you ordered whatever level of shipping you wanted.
Then they introduced Amazon Prime, where you paid a subscription fee and all of your orders received two-day shipping.
Then they stopped providing different levels of shipping. Even for non-Prime accounts. It's all best-effort. If you want two-day shipping, Amazon will no longer provide that.
$10.00 + $2.39 shipping meant you could substitute more expensive shipping if you needed it.
$12.39 + free shipping meant you could go screw yourself if you needed faster shipping, or even deterministic shipping.
Legislation of this type require the government to have a deep working knowledge of any industry it tries to regulate. You would essentially be inviting the government into micro manage every industry. This would quickly be followed by civil lawsuits by customers who believed "that should have been included".
The problem with option #3 (Require aggregation sites ... based on true cost), is now you have an adversarial relationship. Delta is strongly incentivized to keep Kayak in the dark and Kayak has no recourse if Delta succeeds. You have a psuedo-government / regulatory function handled by a private actor; the actor needs to possess real teeth.
An example would be a government mandate forcing Delta, et al to publish enough pricing data somewhere Kayak can reliably infer the truth. Rules in this realm can be vague enough to not create new problems like impeding the privacy of Delta's customers or allowing creative front-running of data, but any attempts to mislead now constitute lying to the Government instead of lying to Kayak.
Well first the meme's first panel should read $9.99 (+ $2.40 shipping). And second why not let the market take care of these market type of things? And finally I think we all have to stop taking price as the over ridding point of importance. To do so gives us the current race to the bottom. Way back in the past we use to fly on British Airlines, somewhat because they had the best food and service. Why can't an airline bill itself as family friendly and keep families seated together? Be willing as consumers to pay more for better quality, better service, locally made. Those are all long term investments, we need more long term thinking. Or Moloch shall rule us.
Mandating bundling of flight fares is a terrible idea. This terrible logic turns up in a lot of places where people think the dollar cost is the problem, but the real problem is availability. Families are not worse off having to pay to sit together, they are BETTER off. It is not a major problem for me to pay a little bit more to pick adjacent seats for my family. Typically the cost for seat choice in regular coach is very cheap, even $30 per seat for a cross-country flight.
What is a major problem for a family trying to fly together is not being able to find adjacent seats available at all. With seat choice costing money, people who care about their seat have many empty seats to pick, because a lot of passengers will be randomly assigned at the last minute. This is a terrible area for government to legislate. The people have spoken with regard to flight fares. A small minority may bitch and moan, but what actually happens is people flood to the cheap crap service because what they want is cheap service. If you want the fancy service, you can still get it. People just think they can give it for free and garbage politicians encourage that belief for votes.
I mean seriously, how dumb is this argument? It's not fair for people to pay $30 on top of their $200 fare to pick their seat. So we'll mandate a $230 fare with free seats. The best you can twist that is to say well we're probably only mandating $220 seats, so see it's a $10 benefit for this group over here that we think might vote for us.
None of this is hidden. I have no idea how someone can buy a flight ticket and be unaware of what is not bundled. Spirit literally has giant yellow popups that tell you at each stage.
Resort fees I can find no justification for. In theory they might be a way to differentiate their "resort" services, but hotels use crap like free phone calls to justify them, as if anyone has used a hotel phone to make a call in the last 15 years. I think the hysteria over them is certainly not justified though. I can't think of anywhere I've made a reservation where it wasn't disclosed at the time of booking. A surprise when you show up at the hotel may be fraud, a surprise when you click through a list of options is an annoyance. It's the kind of thing the government should probably stay out of, and people should fix it by patronizing sites that are better at disclosing them. Marriott lets you choose if you want the all inclusive price, or just the base price (I do find the base price search useful, though it's a niche use, and only because resort fees are a thing).