Missouri Senator Josh Hawley is flying high from a recent brouhaha with airline executives.
During a December hearing, he called attention to the bounties airlines pay to their staff to catch oversized bags at the gate, calling for a ban on such incentives as well as on the practices of upselling and dynamic pricing. These bans will constitute his proposed End Airline Extortion Act (EAEA).
The EAEA has not been introduced in Congress yet, and it should not be. Hawley’s overreaching ban on staff incentives is not based on economic reasoning and is an unnecessary knee-jerk reaction that may look good to voters—but that does not make it good policy. His bans will buy a quieter, hassle-free experience at airport gates at a greater expense to low-income passengers.
To Hawley’s point, encouraging staff to catch and fee oversized baggage may lead to some dishonest workers fining honest travelers. However, a sweeping ban is not the answer. Without corporate pressure, staff members may leave too many oversized bags on, and travelers will find overhead bin space disappears once they board the aircraft. This leads to a worse experience for all.
What Hawley’s approach forgets is that consumers still hold the power in the airline industry. When an airline develops a bad reputation with its customers (say, through dishonest fees), they lose would-be flyers to other airlines. This was the case with Spirit Airlines. But when they tried to merge with JetBlue for a second chance, the DOJ blocked them in the name of anti-trust, harming both budget airlines. The decision further insulated powerful, more expensive incumbents from competition, and forced Spirit Airlines into bankruptcy.
Consumers pushed Spirit to improve; the government struck it down.
Hawley also sets his sights on banning dynamic pricing. His biggest concern is that airlines might charge different prices to different people based on personal information. When looking at the data, research found no evidence that airlines use personal information when setting ticket prices.
Instead, evidence suggests airlines are more sensitive to how different consumers make different purchases based on price changes. For example, one paper found evidence suggesting that ticket prices vary regionally, offering lower prices to lower-income areas to attract more flyers. Another study found that time of day impacts cost as prices appear higher during working hours when businesses book work-related trips and lower in the evenings when families book personal trips. In each case, dynamic pricing does not keep people off flights but makes them available to all. Such pricing is mutually beneficial as it helps airlines sell more tickets and consumers to travel more.
Finally, a ban on advertising and upselling amenities is short-sighted since separating amenities from the ticket price allows consumers to choose only the services they need or want. Those who value extra legroom or onboard Wi-Fi can decide if the upcharge is worth it. Restricting advertising for deals or upgrades limits awareness, reduces consumer choice, and harms an important revenue driver for the airline industry. Without separating amenities from the ticket price, consumers would have to pay higher prices for all amenities – even though many would likely opt out of certain services if given a cheaper option. This unjustly constrains consumers and the higher price tag blocks more low-income flyers from traveling.
Though it may lead to a quieter airport experience, Senator Hawley’s potential End Airline Extortion Act reduces consumer choice, degrades amenity access, and hurts budget airlines’ bottom line. Banning dynamic pricing and upselling can ironically limit who can afford to fly and the choices they get to make. Banning Senator Hawley from the cockpit keeps consumers in control.
Nate Karren is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit us at www.TheAmericanConsumer.Org or follow us on X @ConsumerPal