Aug. 8, 2008 at 8:00 AM ET
Feeling fleeced by hidden fees, surcharges, fine print and other “Gotchas”? That's because you are getting fleeced. Sneaky pricing has become the American way of doing business in the past decade. But don't look now -- things are going to get much worse before they get better. Tough times and shrinking profits will spur on cash grabs the likes of which we've never seen. Like a wounded animal, I expect many a desperate corporate boardroom to authorize unconscionably tricky tactics, aiming to stave off a bad report to shareholders for one more quarter by sucking more quarters out of your wallet.
In this spirit, today we open up a new institution to memorialize all this chicanery: The Gotcha Hall of Shame. The first inductee is so deserving that it actually inspired creation of the award: JetBlue Airlines and its $7 pillow.
I know, I know, it's not just a pillow, it's a blanket, too. And both, apparently, have super-powers that block micro-toxins, whatever those are. But if the blanket works so well, why hasn't my doctor given me one?
Even with reduced visibility and a low cloud ceiling, we can all see through JetBlue's pillow ploy. On a plane, you're a captive consumer. There is no shopping around for good pillow prices. You're sleepy, and you will you fork over $7 for a chance to take a nap.
Of course, you could bring your pillow on board, but that would take up your precious carry-on baggage allotment, which could push you to check more baggage. And JetBlue now charges extra for that, too.
You should know that JetBlue had stiff competition for the inaugural Gotcha award -- from within its own industry. US Airways, [changed from US Air] which is said to be considering its own pay-to-sleep fee, gets honorable mention for deciding to charge passengers $2 each time they ask for water. Curiously, coffee is only $1 per cup. C’mon US Air! That’s going to hurt pillow sales.
As for circumnavigating the water fee, don’t bother. The Transportation Security Administration is in on this, too. Bring water to the airport and you'll lose that at the security checkpoints.
Meanwhile, it feels like all the airlines have involved been in a perverse kind of auction to see who can squeeze consumers the most for checked bags ($15 for a second bag. Do I hear $25? Ok, $25 to Delta Airlines. Do I hear $50? OK, $50 to Delta Airlines!)
The death of pricing
What's going on here? Analysts are politely calling this a move to a la carte pricing. I have another name for it (I'll bet you have a few too). I call it the death of pricing.
These "after charges" make it nearly impossible for consumers to buy airline tickets intelligently. The normal method of searching for flights and sorting by price has been murdered by $10 meals and $50 baggage fees. A $245 flight can be cheaper -- much cheaper -- than a $189 flight. A Delta $100 baggage fee (remember, checked bag fees are one way) can turn a good deal into a bad deal very quickly.
Now, the critical question: How are consumers supposed to do the math when shopping for airline tickets? Can you predict how many bags you'll pack when you’re buying a ticket?
This isn't just annoying. It's an assault on capitalism. Companies with the best prices and the best products are supposed to win in our Darwinian economic system. Instead, sneaky charges and tack-on fees prop up poorly performing companies. Instead of rewarding the best performers, we are rewarding the members of the Gotcha Hall of Shame.
Already last year, flying became a textbook example of what economist Caroline Baum calls inflation by degradation. When people pay the same for a product, but get less from it, that's a form of inflation, Baum says. For example, when people pay to get from New York to Chicago in two hours, but the actual travel time is four hours, they've been hit with a hidden form of inflation.
Last year, airline schedules turned into fiction novels, with some planes on some routes arriving on time as infrequently as 10 percent of the time. Yet prices didn't fall, they rose. And now, they are rising again, through the layering of fees so fantastic you'd think Franz Kafka owned an airline.
Come to think of it, even Kafka wouldn't make one of his characters pay for a pillow. No one would buy it.
Congrats, JetBlue Airlines, for earning the first spot in the Gotcha Hall of Shame.
Red Tape readers, feel free to file nominations for the next inductee below.
(While I'm at it, here's a pretty good reference on baggage fees)