« back to blog listings
Pay-as-you-weigh pricing of an air ticket
As prices play both allocative and distributive roles in market systems, pricing a good or service correctly in a market is possibly a powerful tool to achieve greater efficiency, fairness and environmental sustainability. This is also true in pricing an air ticket. Under current fare policy, an airline charges the same fare to all passengers for a flight from an origin to a destination, everything else being equal except passengers’ weight. For example, a 120kg person pays the same fare as a 40kg person for a flight ceteris paribus. We call this fare an average fare. The situation can be even worse for the 40kg person if s/he carries a checked-in baggage weighing, for example, 30kg because s/he has to pay extra charge for 10kg, implying that airlines charge more for 78kg than for 148kg for a flight (assuming 20kg and 8kg as the maximum weight limits for the checked-in baggage and carry-on baggage, respectively). The reason it works that way is that the 40kg person pays for the extra weight of the 120kg one, while the airline is indifferent about the distribution of costs among the passengers.
According to a recent article published in The Economist, a reduction of 1kg weight of a plane will result in a fuel savings worth US$3,000 a year and a reduction of CO2 emissions by the same token. Air Canada's regional carrier has removed life vest from all its planes in order to save weight and fuel that makes each flight about 25kg lighter. Most low-cost carriers charge checked-in baggage. Some airlines, most notably Southwest Airlines, require a passenger who cannot fit in one seat to book a second. These examples point out the critical importance of weight in a flight and how airlines are desperate to reduce weight.
Most airlines worldwide have been only marginally profitable in recent decades despite continued and rapid growth in demand for air travel. It is frequently claimed that high fuel price is the main reason. As a solution to combat high fuel prices and to improve the financial condition of airlines, some observers suggest a fare according to passengers’ total weight including their body weight. According to them, it is surprising that airlines do not charge passengers a fare based on their weight, or a surcharge or fee for excess weight, stating that weight and fuel burn are directly related. In a Bloomberg article, Janofsky reported Air Transport Association spokesperson David Castelveter as saying that he indirectly accepted the possibility of airlines charging passengers based on their body weight. When fuel prices peaked in July 2008, some airlines also admitted that nothing was beyond their imagination with regard to charging passengers and saving fuel, most likely hinting at a weight-based fare. This raises the following questions: Should passengers be charged based on their body weight, like freight is? Would it be fairer than the status quo? Would it be logical? Would it be technically and economically feasible to implement the model? One of the earliest mentions of an airline weighing passengers dates back to 1985, when Lufthansa asked its passengers to be weighed in order to obtain up-to-date information on passengers’ weights but not to charge them accordingly. To my knowledge, no airline has, however, initiated a plan to charge passengers according to their body weight so far.
Under the above setting, I can outline the pay-as-you-weigh (PAYW) pricing concept of a fare, which postulates a fare based on a passenger's weight. The nature of this pricing model is potentially contentious because it may be viewed as discriminatory against heavier people, and some might argue that implementing the model incurs huge transactions costs. The work therefore raises several questions and issues that require rigorous investigations on theoretical and practical grounds. The purpose of this piece is to elaborate the concept with examples and more detailed discussion.
Specifically, there are two objectives. The first is to examine the theory underlying the concept in more detail. The second is to identify some issues and areas that deserve further discussions and investigations. I expect that this study will help initiate discussion of the issue in academia and further research as a consequence. The weight-based fare can give passengers an incentive to lose weight so that they can pay a reduced fare. The exploratory analysis in this piece indicates that the PAYW model can be technically and economically feasible to implement, and its proper implementation may provide significant benefits to passengers, airlines and society at large, not just economic transfers. At the same time, a fare policy that charges heavier passengers higher fares but does not give any discount to lighter ones can benefit only the airlines, and harms the passenger and society at large. This study thus contributes to theory and practice of pricing an air ticket.
Weight and space in transportation
All passengers are not alike in terms of their weight and the space they take in a plane, while weight and space are the major concerns on board an aircraft. The average fare policy of airlines prevailing currently therefore has some inherent problems. First, the average fare does not truly reflect the actual cost of flying a passenger because the fare does not take weight and space into account while weight and space are the two major binding constraints in a plane. Weight because the heavier the load, the more powerful an engine is needed and the more fuel is required. Space because the heavier a person, the more space has to be allocated to that person. Therefore the average fare is not just because the cost is not fairly distributed among passengers. As a result, the low and average weight passengers have to pay for the heavier passengers for their excess weight.
In return, lighter passengers are squeezed by heavier passengers because the latter take some space from their seats. Besides, the average fare does not take into account wear and tear of seats and other damage because overly heavy passengers produce more wear and tear. But they do not pay more for it compared to average weight or lighter passengers. Moreover, the current fare system does not give any incentive to typically heavier passengers to lose their body weight. Rather heavier people have an incentive to travel by air so more of them can choose to fly. For an airline, it is more beneficial to fly lighter people because an aircraft can accommodate more people and burn less fuel while also reducing wear and tear of seats, which indicates that adverse selection problem occurs in the air travel industry under the average fare policy.
Specifically, a passenger gets a fixed amount of weight for the baggage and an unlimited amount of weight for oneself under the status quo. Airlines charge heavily for checked-in baggage exceeding the limit permitted. Many passengers ask why airlines only charge for overweight baggage but not for overweight passengers if weight is the key concern for an airplane operation.
It is intuitive and reasonable to think that a 40kg person costs an airline much less than a 120kg person does. It seems (and some may think) that the 40kg person costs three-times less than the 120kg person for a flight. Setting fares according to a passenger's weight therefore seems to be more logical and fairer than the status quo in this sense. Certainly heavier people are responsible for their own weight, and there is no intuitive reason why a lighter person should pay for the excess weight of a heavier person on a flight.
Pricing policy in the airline industry
Most airlines worldwide adopt dynamic pricing policy to charge passengers for their travel with an aim of maximising profits. In this fare policy, an airline discriminates fares adopting a combination of methods, analyses and techniques in order to maximise the sale of seats at the highest possible fare, but at the same time minimising the number of empty seats flown (dynamic pricing adjusts fares based on the option value of the future sales that varies with time and the number of seats available). This fare policy discriminates fare according to time of booking, characteristics of journey and so on, but it does not consider fare discrimination according to personal characteristics, mainly passengers’ weight and size.
According to economic theory, the variation in prices can be either attributed to differences in cost (that is, cost-based or supply side) or differences in preferences or willingness to pay (that is, marked-based or demand side). Dynamic pricing is mainly a response to differences in demand conditions given supply. Nevertheless, Duganis in 'Flying Off Course. Airline Economics and Marketing' points out that a market-based pricing policy does not disregard costs, but the aim is to ensure revenues in total costs rather than attempting to guarantee that every individual passenger covers their own particular costs. Yield management or dynamic pricing has emerged as a part of mainstream business theory and practice worldwide quite recently. Surprisingly, the issue of variation in prices due to differences in costs (or supply side) has not attracted the attention of any researchers so far to the best of my knowledge. As pointed out above, as cost of flying a passenger for a given flight varies according to passenger's weight, there is a difference in the cost or supply side.
Variation in prices due to differences in cost
Cost is the major determinant in supplying a product or service in general, and in transporting goods or people in particular. Weight and space are the major two key limitations in transporting goods and people by any means of transportation. Weight and space are even more critical binding constraints in air transportation because an aircraft has a strictly limited capacity with respect to space and weight. It is the weight of people (and the aircraft) that costs to move. Weight matters because the heavier the load, the more powerful an engine is needed to carry it, thus requiring more fuel. Space is important because the heavier a person, the more space that person takes up. Currently transportation services are priced according to weight or volume or length or piece. Therefore charging for air travel must be based on weight and space taken by a passenger, ceteris paribus.
Charging according to weight is a standard principle in transporting goods by any transport modes such as rail, road, human or pack animals, air and water. All passengers are not the same with respect to weight and size, and overly heavy people cause more wear and tear to the airlines seats. Tall and broad-shouldered people generally use extra width (space) too. The more weight in am aircraft, the more fuel it costs to fly; as a result it is justifiable to say that a passenger should contribute to the cost of flying the aircraft. The average fare that the passengers pay currently does not reflect the costs of these two major constraints. If high fuel costs are going to result in higher fares, then going after the excess weight makes sense to offset the increase. Weight being a binding constraint has a shadow price in a constrained maximisation of profit of an airline.
Given the standard supply and demand model of microeconomics, it is appropriate to briefly discuss the factors that influence supply and demand for air travel services at this point. Demand for air travel with an airline depends on its fare, fares of competing airlines, fares in other modes of transport, people's income, population size and preferences. Similarly, supply of air travel services of an airline depends on its fare, costs associated with providing the air travel service, which are again a function of fuel prices, labour rates, technology, the number of airlines, and so forth. An airline cannot provide a travel service if it is not able to make profits by providing the service. A fare therefore needs to cover both the fixed and operational costs associated with provision of air travel service, including normal profits. The decomposition of costs associated with air travel service is also helpful in identifying the costs that vary according to the number or weight of passengers. Some of the costs vary with the number of passengers, while some of the costs vary with passengers’ weight and the weight of an aircraft (and hence passenger's weight indirectly).
Many costs associated with sales, ticketing, promotion and handling of passengers are related to the number of passengers, rather than weight of an aircraft or a passenger. This is true with flight crew salaries and other related expenses, costs of reservation, ticketing and handling of both passengers and their baggage at the airport. It is also frequently true for airport charges for passengers when paid by airlines. Airlines fuel and oil costs, accounting for 18% of total costs on average, both directly and indirectly depend on weight of an aircraft (and hence passengers’ weight). Similarly, flight equipment insurance and rental of flight equipment indirectly depend on passengers’ weight. This is also true with maintenance and overhaul costs. Fixed costs associated with costs of aircraft purchase or lease as the single most important component indirectly depend on passengers’ weight. The non-operating costs with share over 50% of the airlines total cost accounting for the largest share of the airlines total costs associated with provision of air travel service.
Figure 1 (left) illustrates the shares of different cost components in total costs for the major US airlines. The non-operating costs average at 59% and accounts for the largest share of the airlines total costs associated with provision of air travel service. Fuel cost comprises the second-highest cost component that accounts for 18% of all the costs on average. Crew costs account for 8% of total costs. We can thus point out that costs that directly or indirectly vary with passengers’ weight have a significant share in total cost of providing air travel service.
Figure 2: Supply curves under current and the PAYW pricing regimes
The PAYW pricing model and economic surplus
As lighter passengers pay a lower fare according to the PAYW pricing model, the model rewards passengers when they weigh less and/or take less space making fare more accurately reflect the cost of each individual passenger. It also rewards passengers if they were able to reduce their weight. The PAYW pricing model thus gives passengers a new opportunity to save money by providing an incentive to lose weight. As a result, a typical passenger is expected to lose weight and/or airlines are also expected to attract lighter passengers in response to this incentive because it is cheaper (more expensive) for lighter (heavier) passengers to fly. The reduced weight of passengers leads to reduced weight for an aircraft, and consequently an increased number of passengers that an aircraft can accommodate. An aircraft can thus accommodate more passengers, leading to a shift in supply curve rightward, which in turn results in low fares and an increased number of passengers, ceteris paribus. This leads to increased consumer and producer surpluses. Therefore both passengers and airlines are expected to benefit from PAYW air ticket pricing. If a passenger loses weight and therefore reduces their fare, the savings that result are net benefits to the passenger and the society at large, not just economic transfers. However, a fare policy that charges heavier passengers more but does not give any discount to lighter ones can benefit only the airlines and harms passengers and society at large because the producers’ surplus may increase but consumers’ surplus will decrease and as a result total economic surplus will reduce under such a charging policy.
Arguments for and against
Charging passengers according to their body weight is a new concept in the passenger travel industry. This also seems strange when one hears it for the first time. Moreover, it may be viewed as discriminatory against heavier people, and some might argue that implementing the model incurs huge transaction costs. This is therefore potentially a contentious issue. The scheme is expected to have both strengths and weaknesses.
The PAYW model leads to increased actuarial accuracy because heavier passengers pay more whereas lighter passengers pay less. The PAYW model makes fares more accurately reflect the unit costs (possibly marginal costs with respect to an increase in aircraft weight) of operating an aircraft, which is fairer and economically more efficient than the status quo where the same fare is charged for each passenger irrespective to their weight. If the PAYW model leads toward pricing according to marginal costs, it tends to result in an optimal fare.
Besides, the weight-based policy may lead to lower fares, especially in developing countries. Lower-income people from developing countries could afford to travel by air because fares for the people who weigh less than average tend to diminish. But at the same time, fares for heavier passengers (those who continue to maintain high weight) would increase if the weight-based fare policy were universally implemented. Airlines might lose many paying customers and revenue would decline if only lighter people were flying. Moreover, it is difficult to predict the effect of this pricing model on the affordability of air tickets without any specific analysis and not taking into account other factors that may also influence the fare.
Further, lighter passengers pay for the excess weight of heavier passengers under current fare policy. But under the PAYW model, passengers will pay according to the costs the passengers impose to airlines as heavier passengers pay more whereas lighter passengers pay less. The PAYW model thus distributes costs of provision of air travel service more equitably among passengers. This is fairer than the status quo.
Last but not least, the PAYW model gives a passenger an incentive to lose weight because passengers pay less for their travel if they weigh less. As a result, average passengers are expected to reduce their weight and/or airlines are also expected to attract lighter passengers in response to this incentive. The reduced weight of passengers leads to reduced weight of an aircraft, and consequently an increase in the number of passengers that an aircraft can accommodate. An aircraft can thus accommodate more passengers, leading to a shift in the supply curve rightward, which in turn results in lower fares and increased number of passengers, ceteris paribus. This leads to increased consumer and producer surpluses, implying that both passengers and airlines are expected to benefit from the PAYW model. If people actually were able to lose weight, they could improve their health and consequently reduce health expenses.
The PAYW model is also subject to some weaknesses. Current legal provisions in many countries may not allow airlines to charge passengers according to their body weight. It requires regulatory reforms, administrative procedures and new rate structures. Passengers bear these costs. Most PAYW options may increase transaction costs. Besides, it takes time to have general acceptance of the concept because it is entirely new. There will be complaints about treating passengers as goods, and discrimination against heavier people until passengers get used to the model and the rate structures. Further, some implementing options of the PAYW model can lead to unpredictable fares for passengers and revenues for airlines. Consequently, passengers and airlines would not know the total fares and revenues until the end of the journey under some PAYW options. Nevertheless, better actuarial accuracy, improved fare affordability, increased fairness and incentives to lose weight may significantly outweigh the weaknesses of the model.
There are many discussions in the media directly or indirectly about charging air travellers according to their body weight. There is a lot of information available on some websites (for example, www.consumertravel.com, www.smartertravel.com, www.bloomberg.com and so on), particularly about an extra charge for overweight baggage, complaints against overweight passengers who take some space from their fellow passengers in the cabin and so on. Some people criticise charging passengers according to their body weight while some praise the concept. Some of the most relevant comments are summarised below:
Discrimination against heavier people: As heavier people have to pay an additional charge for their excess weight under the PAYW model, many comments are related to discrimination against heavier people. They think that this type of pricing has never existed before and passengers will not accept the change. Some challenge that they would sue under the discrimination law if the weight-based fare were actually implemented. Several commenters warn that some heavier people may choose not to fly because they do not want to be judged and/or if it is not economic for them to fly on top of the discrimination. At the same time, some people think that charging according to weight is not discriminatory at all. They give an example of a postal service that charges more to ship heavy items because it costs more to ship such items. Similarly it costs more to fly heavy people and they must pay more. If we ponder for a moment, charging passengers for their air travel according to their body weight seems to be intuitive, logical and consistent with simple mathematics and economics. The purpose of the charging policy is not to point a finger at heavier people. Under the PAYW model too, heavier people may avoid the extra fare if the excess weight is owing to medical reasons and unavoidable.
Humanitarian concerns: Some people consider that charging air travellers according to their body weight is not appropriate because this policy treats human beings as goods. They think that charging based on personal characteristics is discriminatory. Their main argument against the concept is that human beings are different from goods. Nevertheless every business does this already. This is not different, but just a little hard to imagine because we are not used to weight-based fares yet. It is basically similar to shipping something where the price depends on volume and weight.
Increased transaction costs and practical problems of implementation: Many comments are related to increased transaction costs and practical problems associated with implementing the model. It increases administrative costs to an airline, which will be ultimately passed on to passengers. They also opine that it will be difficult to implement the model. They think that passenger's weight is less important because airlines are dominated by fixed costs, not incremental costs. They therefore ask whether it is really practical to spend time in checking and weighing passengers and performing transactions to extract premiums from a few people who are overweight. Their main point is that excess aircraft weight is caused by the aircraft being overweight, not the passengers, and the impact of each passenger's weight on fuel consumption is fairly negligible.
Entitlement to additional space under the PAYW model: Many people, especially larger and heavier ones, point out that overweight and large passengers are entitled to additional space such as wider seats and/or leg room if they pay according to their weight. This is truly a valid concern and an important suggestion. This issue can be easily addressed by making seats of different sizes, for example, three types of seats, namely smaller seats for children and smaller people with total weight up to say 75kg, large seats for heavier and larger people weighing more than say 125kg, and medium seats for typical passengers weighing 76-125kg. Airlines are expected to reconfigure the seating arrangement in aircraft to allot additional space for larger and heavier passengers in the long run. It is a waste of resources to give a bigger seat to a smaller person. If the numbers of airline passengers are roughly one-third in each group according to their body weight, airlines need to reconfigure two-thirds of the seats because it is not necessary to change the medium-sized seats. If an airline takes 4in width and 2in leg room from each current-sized seats, resulting in smaller seats and extra space to large seats, reconfiguration does not add to the airline's cost at all because there will be the same number of seats before and after reconfiguring the seating arrangements in the same space.
Brilliant idea: Some people think that weight-based fares are a brilliant idea because they consider the fare leads to efficient and fair pricing of an air ticket. They believe that airlines would also attract more light weight people and that this fare policy can also give a new incentive to a person to lose weight. They therefore highly recommend implementing weight-based fares as soon as possible.
There have been many serious comments (some of them are very harsh to heavier people and airlines) about charging overweight baggage but not charging overweight passengers, that is, indirectly criticising the average fare policy of airlines. They comment that weight of a passenger must be taken into account if an airline charges for overweight baggage. For example, they ask why a 60kg person has to pay for baggage that weighs, say, 30kg when a 100kg person with 20kg baggage does not have to pay. If weighing baggage is critical for an airline, it should concern passengers’ weight and their baggage. Therefore they suggest that a fare should be based on passengers’ body weight and their baggage amounting to, say 100kg. Any excess should be charged extra and refunds given to lighter loads – or even allow passengers to trade weight.
Some people are of the view that the PAYW model can also contribute to easing security checks at airports (and thus increasing air travel safety) because passengers try to pack everything in their carry-on baggage in order to avoid an extra charge on checked-in baggage, resulting in hassles at security under the current price regime. But this will depend on how the PAYW model is implemented. We will come back to this point.
As expected, lighter people typically prefer a fare based on passengers’ weight and their belongings. They opine that they should either get a discount on their fare or more weight for their baggage. They pay the airline as much as their fellow passengers who are overweight and always take half of their seat too, but they are costing the airline significantly less. They think that transporting three people weighing 40kg each costs the same amount of fuel as a heavy person weighing 120kg. They argue that an airline should charge on the overall weight of passengers plus the baggage they check-in and carry-on if it has to charge for overweight baggage.
Implementing the PAYW model
The model is feasible to implement and there are a number of options of implementing the model based on whether weight includes checked-in and carry-on baggage and a self-declaration of weight by a passenger or weighing-in a passenger at the airport before check-in. Each option requires a detailed investigation before it is implemented. It is possible that different airlines may choose different options or switch from one option to another. Although some think that the PAYW model is not feasible to implement and incurs huge transaction costs, implementing the model may not be so difficult and may not incur substantial transactions costs.
Fare according to actual weight: This option assumes that a fare for a flight depends entirely on weight, that is, how much passengers and their belongings weigh. For example, a ticket for a passenger weighing 100kg and wishing to take 30kg of baggage would cost 130-times the fare rate (per kg rate) for a flight. It is up to passengers how much they want to pay for their air travel. A person weighing 60kg pays a fare half of that a 120kg person according to this option! This requires fixing a rate for passenger kg. Every passenger can have different fares according to this option. It truly treats a passenger as freight because every passenger is charged based on their weight. This option accurately estimates fares according to weight. Passengers and human right activists may criticise this way of charging fares for treating a passenger as freight. They also claim that humans are equal and should not be treated as goods. In addition, fares are unpredictable for passengers while total revenues are unpredictable for airlines until the passengers are weighed leading to uncertainty of estimating fare and revenues. Implementing this option may also incur high transaction costs. More importantly, it may not be appropriate to base fare entirely on passengers’ weight.
‘Base fare’ minus (or plus) an extra charge: This option includes charging a fixed ‘base fare’ for average-weight passengers in order to cover fixed costs that do not necessarily depend on incremental weight of a passenger and then refunding or charging per passenger-kg for low or excess weight to cover more fuel burn, more wear and tear of seats and planes, and so on. This option requires fixing the base fare and rate for an extra charge. Every passenger can have different fares according to this option.
The same fare could be charged if a passenger has an average weight of ±25% (or a proportion agreed by stakeholders and experts) but an extra fare for excess weight above the upper limit and a reduced fare for passengers below the lower limit (that is, base fare±extra charge per passenger-kg for the fuel surcharge component for example). This option results in three types of fares: high fares, average fares and low fares. All passengers in the same group will have the same fares. If we assume 100kg as the average weight of a typical passenger including all their belongings, for example 72kg for body weight, 20kg for checked-in baggage and 8kg for carry-on baggage (including handbags or laptops or others), 100 kg±25% gives a range for a group of passengers that we can call average or normal weight passengers.
Dividing passengers into two groups: below and above the limit. This option therefore results in three groups based on their total weight, namely, children and smaller passengers with total weight less than or equal to 75kg; normal or average group of passengers with weight 76-125kg; and the large or heavier passengers with total weight above 125kg. Assume US$200 is an average fare according to the current charging policy of an airline for a flight from an origin O to destination D. It is the same fare for a group of passengers within the normal or average weight range. Fares for all passengers in the smaller or lighter group and the larger or heavier weight group are US$150 and $250, respectively. This option does not base fares exclusively on passenger weight. The total revenue of an airline from a particular flight is exactly the same if the numbers of passengers are equally distributed in the three groups.
Any of these options can be implemented either through self-declaration of weight by passengers or actually weighing passengers. In self-declaration, passengers can declare their weight at the time of booking/purchase of an air ticket and the fare will automatically be estimated according to weight. Every one in five passengers can be randomly selected to be weighed at the counter in order to avoid false declaration. If one is found cheating, they can be charged extra. This option is expected to incur the least transaction costs. Weighing-in all passengers at the counter accurately estimates fares according to weight and avoids false weight claims. This option, however, incurs huge transaction costs. Weighing passengers individually in an already huge check-in queue would require a passenger to arrive a couple of hours early to have time to get through weigh-in, security and passport control.
In each option stated above, weight may include weight of checked-in baggage and carry-on baggage. Or it may only include passenger's weight given the present system of maximum 20kg limit for checked-in baggage and maximum 8kg for one piece of carry-on baggage. Each option may have different implications.
In any option of the PAYW model discussed above, an airline can still practice the revenue management technique, which is claimed to be the most important innovation in air transportation management and generator of a huge amount of incremental revenue that has significantly helped the airline industry to survive since airline deregulation in 1979. An airline can even use the weight of passengers who have already booked their tickets on a flight for revenue management purposes. Information regarding passengers’ weights can also help to evaluate willingness to pay for a flight based on passenger weight. That's new and useful information that airlines do not have under the average fare regime.
However, it may not be appropriate to base a fare entirely on passenger weight (that is, the fare for a passenger weighing 120kg being twice that of a 60kg passenger). There are different types of costs that do not vary with passenger's weight (and hence the weight of an aircraft). For example, costs associated with the handling of passengers are the same for each passenger and do not depend on passengers’ weight. It is also expected that all stakeholders and experts might not agree to base a fare entirely on passenger weight. Then the first and second options discussed above may not be appropriate for implementing the PAYW model, leaving the third option as the most suitable for implementation.
The PAYW model changes the customer base from seat to passenger-kg. The model can have some possible implications such as improved security checks and air travel safety, switching benefits, and likely fare-prohibition for some heavier people to fly. However, such implications actually depend on how the model is implemented.
The effects on security checks and air travel security could perhaps be the most important for the PAYW model. Air travel security has become extremely vulnerable and serious, especially after the attacks of September 11, 2001. As a consequence security checks have become very thorough, complex and time consuming, resulting in more and more hassle. The hassle gets worse as passengers carry more stuff as carry-on baggage. Security officials have to check backpacks, purses, laptops and so on in order to make sure that any dangerous items are not hidden. This is not surprising when everyone is in a hurry, and everyone is carrying as much as they can with them to avoid extra charge for checked-in baggage. Presumably, passengers will go through security with only the items they really need under the PAYW model. This takes much less time than in the current average pricing model because passengers have no incentive to squeeze all they can into their carry-on baggage. Security officials will have fewer bags to scan, passengers will have to unpack fewer backpacks, they will wear only one layer of clothing, and there should be less stress going through security. It benefits security officials, airlines, as well as both heavy and lighter passengers. Ultimately, it contributes to improved air travel security because of transparency, hassle-free controls, and a reduced possibility of hiding dangerous items. Together with having considerably less pre- and-post-flight hassle, as well as expected improvements to air travel safety, we can also expect that some heavier-than-average people may also choose to fly with the airline that adopts the PAYW model.
The first airline that adopts the PAYW model can transfer weight (and hence fuel costs) to other airlines that continue with the average fare model. Lighter people may fly with the airline charging fare according to weight while heavier people may fly with the airlines that do not adopt the PAYW model because they do not have to pay additional charge for their extra weight. This may result in large cost savings for the first airline to opt for the PAYW model at least before other airlines do the same. The airline can pass some of those savings onto the passengers in the form of lower fares.
The increased fare owing to the PAYW model may prevent some heavier (but low income) people to fly because they are required to pay extra for their weight, which they cannot afford. This may imply that flights will either be less full or would be filled with lighter people with less baggage paying a reduced fare. This situation has a clear effect on an airline revenues if the airline loses many paying customers and if only people who weigh less are flying. As a consequence, it would be more difficult to prepare forecasts or trends. The change of customer base would also introduce an extra variable complicating stable and predictable revenues for airlines.
In any option of the PAYW model, airlines are expected to reconfigure seating arrangements in order to allocate space in an aircraft according to fare. Heavier and larger people will get larger seats and extra leg room so the comments against heavier passengers and airlines will become pointless under the weight-based model.
Fares based on the PAYW model can be just and efficient because passengers will pay according to their weight and the space they take in the cabin. Although every passenger will not benefit from the model, one does not pay for others’ excess weight, as in the average fare policy. Charging according to weight and space is a universally accepted principle not only in transportation but also in other services. As space and weight are far more important in air transportation than in other modes of transport, it is important to consider those aspects in pricing air tickets. The PAYW model also takes into account space, because a person's weight and size are highly positively correlated. With people's weight increasing worldwide, it can be easier for an airline to increase a fare for heavier passengers.
A fare determined according to the PAYW model is not a new fare. It is simply a different way of estimating the existing fare. It rewards passengers who weigh less than average and/or those who lose weight. To the degree that passengers lose weight and therefore reduce fares, the savings that result are net benefits to the passengers. As an aircraft of a given make and model can accommodate more light-weight passengers, it may also reward airlines. An airline can still practice the revenue management techniques in any option of the PAYW model.
This exploratory analysis indicates that the PAYW model of an air ticket can be technically and economically feasible to implement, and its proper implementation may provide significant benefits to airlines, passengers and society at large, not just economic transfers. However we must emphasise that the fare policy that charges heavier passengers more but does not give any discount to lighter passengers can benefit only the airlines and harm the passengers and the society at large. Many objections to the model are not necessarily accurate or can be addressed with appropriate policies. Most options of the model may impose neither large transactions costs nor humanitarian concerns or discrimination against heavy people. Nevertheless, there are many issues and areas that deserve rigorous discussions and investigations given the potential contentious nature of the pricing model.
3 April 2013
If obese passengers were made to pay a hefty supplement, maybe this would encourage healthy living.
If you would like to post a comment about this blog, please click here