Spirit’s “DOT Unintended Consequences Fee”: Inspiring More Unintended Consequences Than Envisioned?


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Spirit Airlines has begun charging what they call a “Department of Transportation Unintended Consequences Fee” in response to recent regulation. As CNN reports, “Spirit Airlines says a new federal regulation aimed at protecting consumers is forcing it to charge passengers an additional $2 for a ticket…. The new DOT regulation allows passengers to change flights within 24 hours of booking without paying a penalty. The airline says the regulation forces them to hold the seat for someone who may or may not want to fly. As a consequence, someone who really does want to fly wouldn’t be able to buy that seat because the airline is holding it for someone who might or might not end up taking it.”

This consequence of governmental regulation has echoes of the consequences of the Durbin Amendment that led to cutting debit interchange fees. Banks began bringing in other fees as part of the Law of Unintended (But Predictable) Consequences. Take away a source of revenue, even one intended in part to cover the cost of doing business, and other sources of revenue will be investigated and implemented. Yes, Spirit’s move is also in the, um, spirit of protesting regulations, but the principle still applies. And another Unintended Consequence, I fear, is that eliminating the airline’s ability to charge change fees might lead to more frequent and more cavalier schedule changes, and more inventory lost.

But there’s a third potential Unintended Consequence. This one is inspired by Spirit’s fee itself, and it’s more than a matter of passengers puzzling over a $2 fee for an option they may never use (and would receive anyway because of the regulation). Fees are aggregated from each member of the customer pool of customers, and they ostensibly “pay” for flight-changing passengers leaving a bit of empty inventory behind.But here’s the rub. Who is paying a disproportionate and likely significant share of this revenue-recovery move? Of course, the customers who fly most – in other words, the best customers. Yes, the frequent-flyers change flights, too, but they’re still paying disproportionately to cover the cost of the “privilege.”

And that’s my two cents – times 100. So now I can change subjects without incurring addtional expense.

Bill Brohaugh
As managing editor, Bill Brohaugh is responsible for the day-to-day management and editorial for the COLLOQUY magazine and colloquy.com, the most comprehensive loyalty marketing web site in the world. In addition to writing many of the feature articles, Bill develops the editorial calendar, hires and manages outside writers and researchers and oversees print and online production. He also contributes to COLLOQUY's weekly email Market Alert and the COLLOQUYTalk series of white papers.


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