Calculated misery

The New Yorker:

If fees are great for airlines, what about for us? Does it make any difference if an airline collects its cash in fees as opposed to through ticket sales? The airlines, and some economists, argue that the rise of the fee model is good for travellers. You only pay for what you want, and you can therefore save money if you, for instance, don’t mind sitting in middle seats in the back, waiting in line to board, or bringing your own food. That’s why American Airlines calls its fees program “Your Choice” and suggests that it makes the “travel experience even more convenient, cost-effective, flexible and personalized.”

But the fee model comes with systematic costs that are not immediately obvious. Here’s the thing: in order for fees to work, there needs be something worth paying to avoid. That necessitates, at some level, a strategy that can be described as “calculated misery.” Basic service, without fees, must be sufficiently degraded in order to make people want to pay to escape it. And that’s where the suffering begins.

The necessity of degrading basic service provides a partial explanation for the fact that, in the past decade, the major airlines have done what they can to make flying basic economy, particularly on longer flights, an intolerable experience.

An interesting observation – that when menu pricing is introduced there is collateral pressure to downgrade the “free” services in order to encourage people to trade up.  The author, Tim Wu, coined the phrase net neutrality.  As Quartz notes:

One reason open internet activists and, to some extent, US internet regulators, are uncomfortable with the idea is that they fear that everyone who doesn’t pay will be treated unfairly. As the US Federal Communications Commission put it in a 2011 document (pdf): 

[I]f broadband providers can profitably charge edge providers for prioritized access to end users, they will have an incentive to degrade or decline to increase the quality of the service they provide to non-prioritized traffic. … Even more damaging, broadband providers might withhold or decline to expand capacity in order to ‘‘squeeze’’ non-prioritized traffic, a strategy that would increase the likelihood of network congestion and confront edge providers with a choice between accepting low-quality transmission or paying fees for prioritized access to end users.