We have two airline industries in America. There are larger carriers, led by the Big Three oligopoly of American Airlines, Delta Air Lines, and United Airlines. And then we have smaller low-fare carriers, like Allegiant Air, Frontier Airlines, and Spirit Airlines.
The Big Three want to charge you the highest fares, so they’d love to see “budget airlines” wither and die.
In an extraordinary podcast with The Wall Street Journal two weeks ago, United Airlines CEO Scott Kirby said this when asked about the budget airline model: “It’s dead. Like, it’s a crappy model. Sorry. Like, the model was, ‘Screw the customer.’ I mean, it was. Like, trick people, get them to buy, get them to come, and then charge them a whole bunch of fees they aren’t expecting… you know, disclosures buried in legalese.”
Wow! Is Kirby aware of all the ways his own airline charges customers “a bunch of fees”?
Kirby’s comments set a new low bar for corporate psychological projection.
The Big Three are doing exactly what they attack other airlines for.
Have you experienced any of these? Then you’ll know what I’m talking about.
FEES: The low-fare airlines (formerly known as Ultra Low Cost Carriers) started “fare unbundling” nationwide when Spirit introduced checked bag fees in March 2007. Notice that Kirby didn’t criticize fees directly—how could he since United also charges them? (After Southwest ended free checked bags last month, all U.S. airlines now charge for checked bags.)
No, he criticized fee transparency, “tricking” customers for charges “they aren’t expecting.”
If Kirby is claiming United is transparent about fees, here’s a simple exercise to illustrate how wrong he is: Visit the websites of the three largest low-fare carriers. You’ll see they all offer clear and apparent links to decipher pricing and fees right on their homepages: How to Allegiant, Frontier’s Bundle and Save, and Spirit 101.
Now try to figure out bag fees from United’s homepage. You’ll be sent to Help Center, then Baggage, and finally Baggage Fee Calculator. Calculator? Yes, first you must input origin airport, destination airport, date of travel, cabin class, and frequent flyer status. Then you can view United’s bag charges.
So who’s tricking whom?
Let’s not forget United is among the large airlines suing the Department of Transportation after it called for transparency of fees.
Think about that! While Kirby mocks other airlines for not being transparent, his own airline is suing the U.S. government to kill rules requiring airlines to be transparent!
The big airlines’ own lawsuit said informing customers of total cost before booking “would greatly confuse consumers who would be inundated with information.” Puh-leeze!
LEGALESE: Speaking of jumping through hoops, I’ve testified time and again before Congress about U.S. airline Contracts of Carriage. Those are the one-sided agreements that dictate your rights and compensation every time you book a flight.
Kirby accused low-fare airlines of “disclosures buried in legalese.” Visit their websites, find the contracts, and then hit print. You’ll find Allegiant’s runs 25 pages, Frontier’s runs 27 pages, and Spirit’s runs 63 pages.
And the Big Three? United’s is only 30 pages. But American’s international contract runs 294 pages while its domestic contract is a series of ever-expanding links totaling dozens of pages. Delta’s domestic contract runs 101 pages and international runs 132 pages.
If anyone is guilty of “disclosures buried in legalese,” it’s the biggest airlines, not the low-fares.
TRICKING CUSTOMERS: Kirby failed to note the myriad ways large airlines like his have long deceived consumers.
Like introducing stripped-down Basic Economy (BE) classes to ensure the low-fare airlines’ standard lowest prices wouldn’t always appear at the top of the search results of third-party travel sites.
Back in 2019, NerdWallet summed it up: “Airlines don’t actually want you to book [BE].” Those Basic Economy fares, which are rarely booked without adding extra fees, are mostly there to crowd out the competition.
The Big Three seem to know highly restricted Basic Economy tickets are unrealistic. They use them to seduce shoppers into their online “showrooms,” only to upsell. Last year American was accused of “bait and switch” by hiding BE restrictions.
Forget talk of inflight TVs; the Big Three have been degrading the quality of economy class for two decades, with tighter seats and fees for meals, entertainment, etc. That’s the real trickery.
Why attack low-fare airlines?
Big airline execs love touting “competition,” but the truth is they hate it.
What’s gone tremendously unreported is that 20 years ago, the Big Three virtually stopped competing against each other on price and clearly came to a tacit understanding they’ll no longer employ competitive fare sales against each other.
This isn’t opinion. It’s fact, confirmed by the DOT’s own quarterly airfare reports.
Click on these reports and you’ll see the lowest fares are still on low-fare airline routes. The highest prices are on routes served by any combination of only the Big Three.
Thanks to consolidation and bankruptcies, we have fewer cheap fares than ever. Since 2007, only two new scheduled passenger airlines launched, Avelo and Breeze.
This is worth shouting: The only fare competition in America comes from the smaller airlines, not the Big Three!
Which airlines are actually screwing customers?
Look at how bad behavior by the Big Three has been making news recently.
• Last week Jason Cochran wrote on Frommer’s about American, Delta, and United all deceptively charging “solo” travelers higher fares by using opaque and unfair pricing mechanisms.
• The Big Three are board members of Airlines Reporting Corp., the distribution company that was exposed in May for selling private customer information to Immigration and Customs Enforcement (ICE), and this past week to Customs and Border Protection, too.
• The Newark Airport debacle highlights how hub operations—like United’s—affect everyone else by crowding out the competition. The American Economic Liberties Project (AELP), for which I am a Senior Fellow, filed comments with the FAA urging the agency not to penalize smaller low-fare airlines when implementing takeoff and landing slot restrictions at Newark so that United’s lobbying efforts don’t ensure it dominates.
• American, Delta, or United monopolize 70% or more of flights at nine hubs nationwide. In Charlotte, American controls a staggering 88% of flights.
That’s not competition.
Can low-fare airlines survive?
For their part, low-fare airlines continue competing, and some are upscaling their products.
And the low-fare airlines just announced a new trade organization, the Association of Value Airlines, which hopefully will help them refute false claims like Kirby’s.
Remember: You benefit from low-fare airlines even without flying them, because they force the larger carriers to compete on pricing.
In fact, low-fare airlines are the only barrier preventing the higher monopoly prices the Big Three airlines are trying to impose unopposed.
William J. McGee is the Senior Fellow for Aviation & Travel at American Economic Liberties Project. An FAA-licensed aircraft dispatcher, he spent seven years in airline flight operations management and was Editor-in-Chief of Consumer Reports Travel Letter. He is the author of Attention All Passengers and teaches at Vaughn College of Aeronautics. There is more at www.economicliberties.us/william-mcgee/.