Sunday, April 18, 2010

Now is the time for all good men to rise up and demand they get to pay for their carry-on luggage. (Publicus Proventus)

What's a Publicus Proventus? Click here.

Senator Charles Schumer wants you to be able to not think, and you probably support him in that.

Chuck Schumer isn't acting alone; he's got five other Democratic senators backing his bill to impose a new tax on airline luggage charges; Schumer is just the most prominent of the Overhead Bin Six (as only I am calling them.)

Having just barely passed what just barely passes for health care reform, and with actual problems still actually bothering our country, the Overhead Bin Six are mustering up support for S. 3195, a bill that is being promoted as forbidding the charging of fees for carry-on luggage.

I say being promoted as that because the bill doesn't actually do that; instead, it says that if passed, the Secretary of Transportation is to then make rules that would prohibit air carriers from "from charging any fees for carry-on baggage that falls within the restrictions imposed by the air carrier with respect to the weight, size, or number of bags."

In other words, the airlines will still be able to charge you for carry-ons -- just not those carry-ons that match or are less than the airline's posted weight restrictions and the like for carry-ons. More simply put, if United says you can carry on a 10-pound, purse-sized bag, and yours is 11-pounds or larger than a purse, you can be charged for that, even after S.3195.

S.3195 would not require that airlines allow carry-ons, at all, and doesn't, as currently written, place a lower limit on the carry-on sizes airlines can post as their required carry-ons. That's part one of what makes it a bad law: Not just that it's being promoted disingenuously, but that it doesn't even do the thing it promises to do.

Why pass a law if it's not going to do what it's supposed to do? Why pass bad laws?

One reason why people pass bad laws is because of the need to do something. Whenever there's a problem that rises to the level of national attention, there is sure to be a law passed addressing that problem, usually hastily and usually in such a fashion as to make no difference, in the long run.

(We can expect, in a matter of days, the proposal of at least one law banning volcanic explosions along the Atlantic.)

Knee-jerk laws that get passed all the time. Like Laci & Conner's Law. A federal law that was passed in the wake of the Laci Peterson murder, Laci & Conner's Law, otherwise known as the "Unborn Victims of Violence Act 2004," was a federal law that made an unborn child a victim if the unborn child was implicated in some 60 different federal crimes.

That is, Laci & Conner's Law made some crimes a little more criminal - -it added a second victim to the victims of the 60 crimes that already existed. So if, for example, you robbed a woman at gunpoint and that was somehow a federal crime, Laci & Conner's Law made it a little worse to do that if the woman was also pregnant.

Laci & Conner's Law was one well-known knee-jerk reaction law that really did nothing. S.3195 is another, and like most bad laws, it not only doesn't do anything (at best) but it makes things a little worse (at worst.)

S. 3195 makes things a little worse, both in how it's being promoted, and in what it will do to society (at least a little) if it passes.

First, how it's being promoted -- as a bill to end carry-on fees -- is, as I said, disingenuous. If S.3195 gets enough publicity, and passes, and people still have to pay carry-on fees this summer, that's going to undermine their trust in government just a little more, and I'm not sure that government can take that hit, given that 98.9% of the US thinks "health care reform" is a code phrase for "they gave the IRS permission to poison our well water."

The promotion of S.3195 as a carry-on-fee-ender also hides the real debate, which is this: what taxes should airlines pay? Airlines are taxed, as you probably don't know, on ticket revenue. Seven-and-a-half cents of every dollar you spend on the ticket for an airline goes to taxes. But zero percent of what you pay in fees -- for carry-ons, check-ins, food, and aisle seats -- goes to taxes.

All you people who are opposed to government taxes -- you're in favor of carry-on fees, right? Because that's where the fees come from: airlines figured out they could pay fewer taxes by lowering their ticket prices -- and then charge you the same amount of money by calling some of the price of flying luggage fees.

Previously, if Spirit charged you $200 to fly, but let you check your luggage for free, you paid $200 to Spirit, which turned around and paid $15 to the government.

Now, if Spirit charges you $150 to fly, but makes you pay $50 to check your luggage, you pay $200 to Spirit -- your flight is the same cost-- but Spirit only hands $11.25 to the government. Spirit just increased their profits by $3.75 per $200 flight, without doing anything differently.

So you anti-tax, anti-government, pro-small business people, you're okay with that, right?

Schumer's disingenous S.3195 doesn't address that problem at all: It doesn't engage the public, or the government, in a debate about how much taxes should be imposed on airlines, and what types of airline services should be taxed (why are luggage charges not taxed? When I go to a movie theater, I pay a tax on the ticket and the popcorn, don't I?) and it doesn't inform the public about what's really at stake. s.3195 won't do anything about the airlines' difficulties in competing with each other, won't do anything about the price wars, and won't improve the government's bottom line (although at least it likely won't wreck the airlines' bottom lines, either, as they'll simply adjust their carry-on regulations to allow for profit-making.)

S.3195 won't do any of those thing -- so what will it do, this bad law that doesn't deserve to be discussed, let alone passed?

It'll make you stupider.

Is that a word? I can never remember if it's stupid, stupider, stupidest, or stupid, more stupid, most stupid. Looking at it here on my computer screen, I'm inclined to the latter set, so let me say that again:

It'll make you more stupid.

Schumer doesn't advertise the bill that way, but that's what he's aiming at: relieving you from thinking, while not relieving you from paying any money.

What Schumer's bill would do is bundle up costs and hide them, which is almost the exact opposite of what a lot of other government bills want to do, and which is almost the exact opposite direction society was heading in.

Or, at least, the direction I thought society was heading in: I thought society was heading towards more transparency in prices, towards more freedom to choose what services we wanted to pay for, towards a greater latitude in determining just which portions of what thing we wanted to buy.

Am I saying Schumer's bill is anti-freedom?

Yes. That's exactly what I'm saying. And if you're against carry-on luggage charges, you're anti-freedom. You're unAmerican if you don't think airlines should be able to charge you for your luggage, for your dinner, for everything they can think of to charge you -- even your oxygen, if it comes to that.

Also, if you think you're not already paying for those things, then you're dumb.

For some time now, in America (and maybe in other so-called countries) a debate has been sort-of brewing about bundling vs. unbundling -- about buying the whole cow, or just the milk you need. It's been sort-of brewing because it's not high enough on anyone's radar, or discussed in just the right way, to claim that the bundling debate is raging.

But it almost is. America is almost to the point where we can talk about bundling vs. unbundling, about knowing what we really pay for things, about the actual value of the actual things we're buying.

One of the first instances of the bundling debate, and one that from time to time rears up, still, is found in cable TV (and, now, satellite TV, and, soon, satellite radio, I'm sure.)

When you subscribe to cable TV, or satellite TV, or satellite radio, you get in all cases a basic package -- some 50 or 75 or 100 or so channels that come with every subscription to that service. We have DirecTV, and we get our local channels, a bunch of ESPNs, some MTVs and VH1s, about 100 channels that show Law & Order reruns all the time, and from that bunch I watch only a handful: mostly CNN and Headline News, Comedy Central, and ABC, with occasional forays onto ESPN during football season. There are probably about 150 channels I've never watched.

Whenever people think about that, they tend to ask this question: Why should I have to pay for all those channels I never watch? Why can't I just pay for the channels I do watch? That's a fairly-frequently debated topic among legislators and commentators who pay attention to things; called a cafeteria plan, there is every so often a proposal, somewhere, to require cable TV providers (and, probably, satellite TV providers and someday satellite radio providers) to let you pick and choose your channels, and pay only for those channels you want to get. The cafeteria plan supporters claim that things should be set up to only let them pay for the things they want. They're pro-freedom, in one sense: the freedom to not pay for those things you don't want.

Cafeteria plans are related to the iPhone problem -- not that anyone (but me) made that connection when Apple denied you the right to choose your wireless phone provider. When iPhones came out, Apple had (and still has, I think) an exclusive contract with AT&T -- a not-very-popular cell phone provider. That got some people, people who were used to being able to choose their cell phone provider, upset -- so upset that some hacked their phones to let them be used on a different provider.

Apple shouldn't have cared too much about that -- they had the money for the iPhone, right? So aside from honoring their contract with AT&T, Apple shouldn't have been bent out of shape over a couple of 21st-Century David Lightmans soldering their iPhones into another network. But Apple was -- and they fixed it those people who'd "unlocked" their phones. (Look at the word: unlocked is the word we chose to describe people who hacked the code on their Apple-created phone to use it with an unauthorized network. Unlocked. Not hacked or pirated: unlocked. Because Apple was keeping us from the goodies.)

Apple disabled any iPhones that had been hacked into other networks -- showing where Apple stands on the bundling debate: Apple firmly believes that you should be forced to buy the whole package -- so firmly that they wrecked the phones of anyone who dared disagree.

It was a curious stance for Apple, given that Apple was responsible for creating one of the biggest cafeteria plans in the entire world : Apple unbundled the music business -- freeing consumers like me and you from the tyranny not only of the record labels and radio, but from the despotic grip of retailers and even getting us out from under the iron-heeled boots of albums.

Apple's iTunes is one of the greatest unbundlings ever: by making a wildly-successful online store that sold music (and now movies and TV shows) primarily by the single, Apple began the unraveling of the music business (and, for good measure, the TV-and-movie business, too.)

iTunes was created to provide something to sell to iPod users, because Apple understood that people like me were not going to buy a digital music player when we weren't really sure what digital music was, but its effects have gone far beyond that to change the way people think about music, from the way they buy it to the way they listen to it to the way it gets made -- and that, in turn, has gotten people thinking about the way they buy everything, it seems.

Since iTunes came out and unbundled music, sales of singles have steadily increased, while sales of albums (both digitally and hard-copied CDs) have trended downward. People buy only the tracks they like off the album -- ignoring the filler tracks that have been pasted onto the album to bulk it out.

iTunes did more than resurrect the single and spare music lovers the doldrums of those five tracks per album that Radiohead clearly was just phoning in. It also rejuvenated the indie music business and made it more possible for bands to break directly in -- because it made iTunes made digital music popular and digital music meant fewer costs of delivery, so bands could set up their own websites and popularize their own music and make money and get famous (and make money) more easily. Without the need to support shipping 100,000 CDs around, bands could lower overhead and escape from major labels, letting fans share their music digitally. (Arctic Monkeys are a famous example of a band that grew through the Internet.) As of now, you can get your record onto iTunes for about $35. Anyone with a guitar and a song in their heart can have their songs available for purchase by the masses.

So is bundling a good or bad thing? That depends on who you're talking to -- and on how much Chuck Schumer needs to get on the news by glomming onto today's hot topic. Bundling cable services is unpopular -- cable customers complain about the high cost of bundling, and about the high cost of cable in general, and blame bundling for that. But it's not clear that unbundling, that a cafeteria plan, would save any money and we might be worse off for it.

Opponents of the cafeteria plan say that forcing cable companies (and DirecTV and the like) to let you pick-and-choose your channels say that it'll result in the demise of channels that can't muster enough viewers to survive on their own in an unbundled world. Less-popular channels rely on subsidies, as it were, from the ESPNs and MTVs of the world, and if we unbundle them, those channels may go the way of many magazines -- magazines dropped like flies in the past few years.

Is that a good, or a bad thing? Nobody's talking about it in that way -- nobody's saying it's good, or bad to have magazines folding. Should we, as cable subscribers, have to support channels we don't like? If so, then why aren't magazines bundled, as well? I subscribe to Entertainment Weekly, which is published by Time, Inc. Time lets me choose to only subscribe to EW, and doesn't force me to also buy People, Essence, and Sports Illustrated. If you're in favor of bundling cable channels, then presumably you'd be okay with Time refusing to sell you EW unless you also subscribe -- for a hefty, higher, fee-- to all its other magazines, right?

But if you're in favor of unbundling them, of letting people pick and choose channels the way they choose magazines and books, then aren't you saying that it's okay for those low-interest channels to die?

(I fall into the latter camp: I say let 'em die, because if there are good TV shows on them, the shows will be picked up by other channels. And if there's no good shows on them, then why do they exist? And I say that knowing full well that most of the TV and movies I like are wildly unpopular with the public: my shows are always getting cancelled.)

That's a debate that should be had -- and you'd need information to properly choose, wouldn't you? Because unbundling things, allowing us to pick and choose the services we want -- whether by market force or government fiat -- is only effective if we have the information that we need to make a smart choice, and so far, for cable TV, we don't know what the choice is.

There's no guarantee, remember, that unbundling your cable TV would result in lower prices for you. First off, you may decide to get so many channels that you end up paying the same, or more, than you do now. Think about it: You'd get the channels you watch all the time, but what about those channels you only watch sometimes? What about channels on which you only like one show? If you like The Daily Show, would you subscribe to Comedy Central just for that show, if that's the only show you watch on there? (Or would you demand to unbundle your channel, buying only those shows you want on a pay-as-you go plan?)

An additional point: you don't know how much those channels would charge you, do you? Everyone's thinking, I suppose, that if their cable bill is $100 per month, and they have 100 channels, that all the channels would be $1 each. But a certain amount of that $100 is your cable company's profit, so your prices wouldn't drop automatically. And the channels themselves could up their price: right now, you get ESPN added into your cable for the cost of basic cable; ESPN is a basic-cable channel everywhere I've ever lived.

But if you unbundled cable, wouldn't ESPN be free to jack up their prices, knowing full well that they'd have sports lovers by the horns? So if you like the popular channels, you might end up paying more for them than you do now.

If you think I'm so wrong, why don't you go see a first-run movie on a Friday night? It's more expensive to see a movie the day it opens, on a Friday, than it is to see that exact same movie the next day at 1 p.m., when the daytime ticket prices will be lower, and it's even cheaper to wait a few weeks and see it at a discount theater. Wait long enough, and you'll see the movie for free. People charge more for the popular stuff at the popular times. (Restaurants do this, too: a restaurant near me lets kids eat free on Tuesdays, in effect charging me less if I come on a Tuesday night, which I assume is an unpopular night to go out to eat.) So why would we assume that ESPN, or MTV, or Comedy Central, wouldn't charge more for their channel if they could. Remember earlier this year when ABC and Cablevision got into a fight about fees and ABC pulled itself off of Cablevision just before the Oscars aired... on ABC? What if you didn't have Cablevision to fight for you and instead had to deal with ABC about fee increases?

You'd be in the same position that the government put you in with airlines, that's where you'd be, which is how I've worked my way back to Chuck Schumer and S.3195 and how he wants to keep you ignorant and deny you your freedom of choice.

Back in 1978, the airline industry was deregulated via the cleverly-named "Airline Deregulation Act." The Act got the government out of the airline industry, allowing the market to operate relatively unfettered. Phased in over 4 years, or less, the Act worked phenomenally well, depending on who you ask. When the government studied the effects of the Act, back in 1996, it found that the average price of flights -- remember, averages are a horrible way to measure anything, but they're all I've got here -- dropped by 9% over that time. In 1996, it was cheaper to fly than in 1978 -- as much as 30% cheaper, in some cases.

Great! We win! We average consumers won, right?

Or did we?

Dropping fares -- decreasing fare prices -- means lower profits for the airlines. And lower profits means more troubles for airlines, especially when (as happened in the 00's) fuel prices begin to rise superfast. Profits become razor-thin, and airlines become desperate.

Desperate enough to charge you for your carry-on.

Imagine, for a second, if your income had not risen for 18 years, and in fact had dropped 30% in that time, while your costs kept up with the price of everything else. You might grin and bear it for a while, especially if there are lots of other people ready to step in and do your job for you. But if then your costs skyrocket, if your costs shoot through the roof and you're going to lose your shirt, you've got to do something, and what are you going to do, change jobs? No way -- so you look at your company manual, and note that it says that you'll be paid a salary to do your work... but it doesn't say that you can't demand additional compensation for other stuff you do around the office. So now, when Ted from Accounting comes by and asks you to run some numbers, you say "Sure, Ted, but that'll be $20."

That's what the airlines are doing.

And it's not a bad thing, not if you ask me.

Because the airlines are unbundling -- they're breaking apart their services and letting you pick and choose what you want to pay for. And they're giving you the information you need to really make a choice, to affect what you want. They're letting you decide whether you want to buy the whole album, or just get that one really catchy single.

We took a trip to Florida two years ago. To take the trip, I booked in advance a flight-and-hotel deal, four tickets to Florida with a hotel and a rental car all lumped in together. I looked at the price of the package deal and thought "That seems good" and clicked on it and bought it.

I never went and checked out what the price of each individual component was. I never scouted around for competing airlines and competing dates to see how much four tickets would cost. I didn't call Hertz to ask how much a minivan for a week was. I didn't compare other hotels in the area (let alone house rentals and other options.) I just saw, clicked, and bought.

(In part, I did that because I'm willing to pay what I call The Complication Tax, but that's for another day and another Publicus Proventus.)

When it came time to take the trip, out of curiousity, I did go add up some of the figures I was able to get, and realized I'd overpaid. The cost of a hotel room and a minivan and flights for four was less expensive than the package I'd bought. I hadn' t caught on because the information wasn't readily available to me, and there was no breakdown in the vacation package I bought: It didn't say "X dollars for this including A dollars for the hotel and B dollars for the car and C dollars for the flights." If it had, I could have considered some of those figures: Does that seem right for a car? Could I find a hotel cheaper somewhere else?

I didn't have the information, so I just paid my bundled price and spent more than I would have otherwise.

Here's another example: Everytime I go to a fast-food place, or the movies, I see their "value meals" or "combo offers" or whatever package they have that promises to save me money. McDonald's has my favorite "Value Meal," the Number Two: 2 cheeseburgers, fries, and a soda. And whenever I see that -- or any value deal at a restaurant-- I take a moment to scan the menu and mentally add up the price of the items separately to see if it's worth it. If it's $2.99 for the meal, and $0.99 for each cheeseburger, plus $0.99 for the soda, then it makes sense to get the meal, because I'm getting the fries for free (even though I don't really care for the fries.) But if it was $3.99 for that meal, I might not buy it -- because then I'm getting a minimal discount, if any. I might opt to skip the not-so-popular-with-me fries, getting just the burgers and soda and saving a buck.

That's what airlines are doing nowadays: they're supplying the information you need to make a smart choice, not only about which airline to fly, but also about what services you want on that airline. When you look at ticket prices nowadays, you're (mostly) seeing the bottom-line, absolute-best-offer ticket price, from airline to airline: the price you see is (mostly) the absolute bare minimum cost of flying, with no extras, no meals, checked-luggage, extra-leg-room-seating, or other options thrown in.

That makes it easy to choose among airlines: I can compare airlines and know that this one has the lower price, and not worry about whether the lower price is because this one doesn't serve dinner and that one does. And I may not want to pay for dinner -- and I may not want to pay for your dinner. If the airline serves dinners to all its passengers, and the cost of that dinner is built into the ticket instead of billed separately (note that I don't say dinner is free because it's not free,it's built into the ticket price), if that's true, then I'm paying for a dinner I don't want -- just because you want it.

I'm buying People magazine with my EW simply because you want People with your EW.

Cafeteria pricing, unbundled airline services let me pay for what I want, and let you pay for what you want. Want a flight with a meal and to check three bags? Go ahead -- but don't make me pay the same price as you when I'm not going to eat on the plane and I'm only checking one bag.

I always bring a carry-on with me onto the plane -- usually with my laptop, 1-2 books, a change of clothes, some snacks, and my iPod, plus some DVDs. If you don't carry anything on, or if you only bring your book with you, why should you pay the same price as me?

About a week ago, I saw an article that I didn't read all the way through but I liked the concept of: It asked whether it was cheaper, these days, to ship your luggage to your destination than to fly it with you on the plane, given luggage fees. (This is that article.) In some cases, it is cheaper to ship your luggage and have it meet you there when you arrive -- and that's information you may want when you shop for an airline too. Should you pay the luggage fee, or ship your bags?

The deregulation of the airlines led directly to this point, where airlines are harder and harder pressed to make money while still providing what we're hearing is a vital service in the economy these days. The airlines' choice, opting to break apart the cost of flying and charge you for the stuff you actually use, or want, is an indirect, but beneficial, consequence of that deregulation: it promotes transparency and makes you think. With the pricing the way it is, you'll think about how many suitcases you actually need, about whether it's worth it to eat on the airplane or in the airport before you leave, and about how to get you, and your luggage, where you're going in the first place.

This cafeteria plan pricing in airlines promotes competition, too -- among airlines, sure, by seeing who can lower ticket prices (while still getting you to pay), but also among other travel alternaties. Amtrak, last I heard, doesn't charge you for luggage and has plenty of leg room. Hertz will come to your house and pick you up, and won't care how many suitcases you throw into the minivan. FedEx will fly your luggage separately from you -- and deliver it to your hotel, so you don't have to lug it through the terminal yourself.

And you have all this freedom, and information. You know how much you're actually paying for the things you actually want...

... at least until the Overhead Bin Six get their way. If S.3195 passes, you won't have to think any more -- you'll be able to just pay the full price, without ever considering whether you want the french fries or whether it's worth it. You won't know how much of your ticket price is flight, and how much is luggage, and how much is leg room -- and you won't have the choice to not get those things.

S.3195 won't stop the airlines from charging you for carry-on luggage, not the way it's written. But if it did, that'd be worse, because if it actually worked (it won't), then S.3195 will take away your information, and your right to choose what services you want. S.3195, if it works (it won't, trust me), would make you buy People everytime you bought the SI Swimsuit issue. It'll make you always use AT&T for your iPhone. You'll have to buy the whole crummy Radiohead album, each and every time, if S.3195 passes, and if it worked the way Chuck Schumer pretends it will.

It's a strange world where being in favor of paying to carry my laptop onto the plan makes me a true patriot, but that's the world we live in now. If you're a free-market, competitive, freedom-loving, small-business loving American, then you're supporting the airlines' ability to charge you for the services they use-- and you're supporting your, and my, and even Chuck Schumer's, right to know what we're being charged and what our options are.

If you're not any of those things, then all I can say is that I hope you enjoy overpaying for your flights from here on out, and, also, I'm not going to share my armrest with you.

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