Professor Driesen Writes “Airlines’ Bait-and-Switch Scheduling”
The following article from University Professor David Driesen was originally posted on CPRBlog, a publication of the Center for Progressive Reform
Airlines’ Bait-and-Switch Scheduling
During the last few years, airlines have increased their reliance on "bait-and-switch" scheduling. They induce travelers to choose their airline based on advertised routes and schedules. They know that especially good routes are valuable and generally charge more for a good route than a bad one. Long after travelers have taken the bait, often paying more than the lowest available price to avoid delay-prone airports, long layovers, and multiple stops, the airlines simply switch around the schedule. While many of these changes can be minor, changing departure and arrival times by 10 or 20 minutes, increasingly airlines feel no compunction at all about completely tearing up the deal they made, adding stops, drastically increasing layover times, and routing the hapless traveler through a different city than she would have selected when she had a choice. They often make these changes just a few weeks in advance, when alternative flights are either not available at all or fiendishly expensive. These last-minute changes can destroy customers' travel plans, causing travelers to miss scheduled meetings, forcing expenditures for extra nights in hotels, and fouling up rental car arrangements.
Used car dealers used to do this sort of thing all of the time. They would advertise a desirable make or model (the bait) and then tell the customer who arrived to buy the advertised car that it was no longer available, offering a less desirable model or a higher priced one instead (the switch). Most states have laws that forbid such bait-and-switch tactics.
The airlines claim that they practice bait-and-switch scheduling (my term, not theirs) to adjust to "market conditions." This seems like a fancy way of saying that if they can make more money by breaking their promises to customers, they will. A few years ago, they were citing now-completed mergers as a justification for reneging on their deals.
The airlines do not compensate customers for the inconvenience and added expense involved in adjusting to major schedule changes. By contrast, if a customer inconveniences the airline by making a schedule change, even months ahead of time, the airlines generally charge several hundred dollars in change fees plus the added cost associated with the new route. The airlines have no sense of fairness at all.
The airlines clearly plan in advance to take advantage of passengers with undesirable schedule changes. Although the airlines prominently advertise their routes and schedules on their own websites and those of third-party online travel providers, they bury a disclaimer in the fine print, stating that the schedule and route are not part of the contract with the customer. Of course, nobody reads these provisions.
No court should honor such contracts, as they are unconscionable and invalid contracts of adhesion at common law (basically involuntary contracts), but the airlines' defenses are just plausible enough to make passengers hesitate to assert contract claims in court. This sort of thing may explain why Bernie Sanders' claim that the game is rigged resonates with so many voters.
It's time to reregulate the airlines to protect consumers from basic unfairness or to break up the four largest airlines. The Federal Aviation Administration (FAA) used to regulate airlines, as the economies of scale involved in running airlines made it hard to get a competitive airline industry. Absent robust competition, any airline can get away with this sort of abuse because there is little risk of a rival airline stealing an abusive airline's customers.
Congress deregulated airlines in the 1970s on the theory, which proved correct for a time, that competition within the industry could keep prices low. But in recent years, the competitive market for airlines has largely disappeared, with four major airlines dominating the industry. In this situation, an airline inventing a new way to profit from abusing customers can more or less count on the other airlines emulating its abusive but profitable practices, instead of competing by offering a fair deal. Basic fairness to customers has vanished from the airline industry owing to the decline in regulation and the creation of a basically uncompetitive market.
The last remnants of government regulation do not adequately protect passengers from this mistreatment. The airlines generally waive change fees if they make a major schedule change and they must, by law, refund passengers' airfares if the passenger cancels the trip altogether. But few passengers have the flexibility to simply cancel a planned trip. Important business meetings, family events, and already paid-for lodging arrangements for vacations often make cancellation impracticable, even for the furious wronged customer. And waiving a change fee does no good if the airline cancelling the flight does not have a good option available at the last minute.
We need adequate government. In this case, an adequate government would either vigorously regulate the airlines or break them up to restore sufficient competition.