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I was responding to both. I simply do not agree with the idea that, if they were required to bundle these services together at some set level of service, that t

I was responding to both. I simply do not agree with the idea that, if they were required to bundle these services together at some set level of service, that this would somehow make airlines unable to increase the prices. What I suggest is happening here is that the airlines would have increased their bundled prices, but aware of how price-sensitive flyers are, and how many of them are willing to forgo extra services, they've decided to unbundle instead. I mean, what's stopping them from just raising prices for bundled services? Nothing, besides competition. The fact that these services can be paid for separately is not some way for them to "get you" somehow, it's just unbundling. Yes, there's theoretically economies of scale for some things. But there's also a lot of potential advantages to pricing specific services - especially for things like luggage, where capacity per passenger often has hard limits. If there really are economies of scale, I suspect the airlines themselves will find them more effectively than blanket regulations requiring a particular service level. How is the iPhone an example?

dagenleg 10y ago
The reply by "whiddershins" is spot on, but I will elaborate a bit. The first point is that you are very quick to label all paid services as "luxury". Sure, champagne is a luxury, but what the companies are doing is taking what used to be a "normal" service, stripping it of anything they can think of and declaring it the new "normal" and all those stripped thing a "luxury". I don't think being able to sit without discomfort or choose a seat is really a "luxury". Regarding the example he gave - I am not sure how the IPhone applies, but I think another example would be the healthcare. When everyone pays for his own healthcare through a system of private insurers you get the horror that is American healthcare. When people just pay taxes, which collectively pay for medical expenses you get Western European system.
- notheguyouthink 10y ago
  I mean, it's all luxury as far as i'm concerned - and in the right of the provider to decide on packages. If they want to offer terrible seating for not-cheaper prices, let them - the market (consumers) should be able to decide not to use them. This is a very different argument to me than healthcare though. In my world view, healthcare and education have widespread, socially beneficial properties. I pay my local taxes to fund a highschool that i don't have kids in, because i don't want morons in the work force next year. Likewise, i want to pay more taxes for healthy educated people in the work force, because i feel it benefits me. This is very different than how much an airline is charging for their service. An airline is no different than a hotdog vendor to me, and they should be able to charge whatever they want for their services. Granted, i will admit that there is a bit of a slippery slope - a good example being Comcast. I loathe Comcast's business practices because we (many of us) feel trapped by them, as we only have one choice, due to the difficult nature of laying pipes. Same goes for airlines i imagine. If all airlines started to gouge us, many people can't simply drive instead - so clearly some regulation is needed in the case of airlines that the hotdog vendor doesn't have to worry about.
- snrplfth 10y ago
  I am not labelling all paid services as luxuries. But some are, and different people will consider different things luxuries. I mean, what is discomfort? (Should seats be leather, say? Should they recline? How far?) How much is choosing a seat worth? Some people really like an aisle, some like a window, some don't care. When you decide that a particular service is required to be included, you're saying that people that don't want it will have to pay for it anyways. I don't see why that is the default argument that doesn't have to be defended, while not having to pay for something you don't want is the idea that has a high burden of argument. The heart of the argument made in the article is that somehow, by unbundling services that were bundled, airlines are somehow able to raise prices above what they were otherwise able to do. I don't think that's true at all. I mean, I sure like a pop and a box of chocolate-covered raisins when I go to the movies. Therefore I demand that all movie tickets include food. I like to watch streaming videos on my phone. Therefore I demand that all phone plans include unlimited data. I like big comfortable seats and laptop plugs when I travel on the inter-city train. Therefore I demand that municipal buses include these things. You see where this goes? And US healthcare is totally not the same. Firstly, the majority of US healthcare expenditures are tax-funded, about 65%, mostly through Medicare, Medicaid, tax subsidies and other programs. Secondly, it is effectively cartelized by the government, through incentives that make it extremely tax-advantageous to get healthcare through employers, to limits on the training and numbers of doctors that drive up prices, to now, a system of exchanges that require that people purchase insurance from approved insurers at government-set prices. It is so, so incredibly far from "everyone pays for his own healthcare through a system of private insurers".
- linkregister 10y ago
  Your healthcare analogy isn't good. The American health care system is dysfunctional for a variety of reasons; privatization is one aspect. There are efficiency gains to centralization under a public system, but it's not a sufficient condition. There are plenty of countries that operate on a more private (less regulated) platform that have excellent health care opportunities, e.g. Thailand. Likewise, there are plenty of countries that operate on a publicly-funded model that have inferior healthcare, e.g. Russian Federation.
arcticfox 10y ago
Right, the argument in the article is based on one anrcdotal instance of an airline not lowering prices when they introduced Basic Economy to a market. The interpretatoon of the evidence is intellectually lazy; who's to say the two alternatives were not (1) raising prices for everyone or (2) introducing Basic Economy to maintain the current price. And yes, original commenter, I'm American and I'd prefer an unbundled pricing model because I don't use or need most of the things that get bundled into the price. The idea that an airline can simply include many more services while maintaining roughly the same prices seems very false: there would never have been budget airlines in the first place if it worked.
unprepare 10y ago
>How is the iPhone an example? Are you saying you can get the same prices for components as Apple does, regardless of quantity? Or are you willing to admit that Apple, given its demand for greater quantities of components, is able to obtain better pricing for the components than an average Joe? And would you further entertain the idea of an airline buying, say, peanuts, is in a similar position to pay less than the average consumer, given they are purchasing in much greater quantities?

dagenleg 10y ago

The reply by "whiddershins" is spot on, but I will elaborate a bit. The first point is that you are very quick to label all paid services as "luxury". Sure, champagne is a luxury, but what the companies are doing is taking what used to be a "normal" service, stripping it of anything they can think of and declaring it the new "normal" and all those stripped thing a "luxury". I don't think being able to sit without discomfort or choose a seat is really a "luxury". Regarding the example he gave - I am not sure how the IPhone applies, but I think another example would be the healthcare. When everyone pays for his own healthcare through a system of private insurers you get the horror that is American healthcare. When people just pay taxes, which collectively pay for medical expenses you get Western European system.

notheguyouthink 10y ago
I mean, it's all luxury as far as i'm concerned - and in the right of the provider to decide on packages. If they want to offer terrible seating for not-cheaper prices, let them - the market (consumers) should be able to decide not to use them. This is a very different argument to me than healthcare though. In my world view, healthcare and education have widespread, socially beneficial properties. I pay my local taxes to fund a highschool that i don't have kids in, because i don't want morons in the work force next year. Likewise, i want to pay more taxes for healthy educated people in the work force, because i feel it benefits me. This is very different than how much an airline is charging for their service. An airline is no different than a hotdog vendor to me, and they should be able to charge whatever they want for their services. Granted, i will admit that there is a bit of a slippery slope - a good example being Comcast. I loathe Comcast's business practices because we (many of us) feel trapped by them, as we only have one choice, due to the difficult nature of laying pipes. Same goes for airlines i imagine. If all airlines started to gouge us, many people can't simply drive instead - so clearly some regulation is needed in the case of airlines that the hotdog vendor doesn't have to worry about.
snrplfth 10y ago
I am not labelling all paid services as luxuries. But some are, and different people will consider different things luxuries. I mean, what is discomfort? (Should seats be leather, say? Should they recline? How far?) How much is choosing a seat worth? Some people really like an aisle, some like a window, some don't care. When you decide that a particular service is required to be included, you're saying that people that don't want it will have to pay for it anyways. I don't see why that is the default argument that doesn't have to be defended, while not having to pay for something you don't want is the idea that has a high burden of argument. The heart of the argument made in the article is that somehow, by unbundling services that were bundled, airlines are somehow able to raise prices above what they were otherwise able to do. I don't think that's true at all. I mean, I sure like a pop and a box of chocolate-covered raisins when I go to the movies. Therefore I demand that all movie tickets include food. I like to watch streaming videos on my phone. Therefore I demand that all phone plans include unlimited data. I like big comfortable seats and laptop plugs when I travel on the inter-city train. Therefore I demand that municipal buses include these things. You see where this goes? And US healthcare is totally not the same. Firstly, the majority of US healthcare expenditures are tax-funded, about 65%, mostly through Medicare, Medicaid, tax subsidies and other programs. Secondly, it is effectively cartelized by the government, through incentives that make it extremely tax-advantageous to get healthcare through employers, to limits on the training and numbers of doctors that drive up prices, to now, a system of exchanges that require that people purchase insurance from approved insurers at government-set prices. It is so, so incredibly far from "everyone pays for his own healthcare through a system of private insurers".
linkregister 10y ago
Your healthcare analogy isn't good. The American health care system is dysfunctional for a variety of reasons; privatization is one aspect. There are efficiency gains to centralization under a public system, but it's not a sufficient condition. There are plenty of countries that operate on a more private (less regulated) platform that have excellent health care opportunities, e.g. Thailand. Likewise, there are plenty of countries that operate on a publicly-funded model that have inferior healthcare, e.g. Russian Federation.

arcticfox 10y ago

Right, the argument in the article is based on one anrcdotal instance of an airline not lowering prices when they introduced Basic Economy to a market. The interpretatoon of the evidence is intellectually lazy; who's to say the two alternatives were not (1) raising prices for everyone or (2) introducing Basic Economy to maintain the current price. And yes, original commenter, I'm American and I'd prefer an unbundled pricing model because I don't use or need most of the things that get bundled into the price. The idea that an airline can simply include many more services while maintaining roughly the same prices seems very false: there would never have been budget airlines in the first place if it worked.

unprepare 10y ago

>How is the iPhone an example? Are you saying you can get the same prices for components as Apple does, regardless of quantity? Or are you willing to admit that Apple, given its demand for greater quantities of components, is able to obtain better pricing for the components than an average Joe? And would you further entertain the idea of an airline buying, say, peanuts, is in a similar position to pay less than the average consumer, given they are purchasing in much greater quantities?