Friday, February 3, 2012

Spirit Airlines “Unintended Consequences Fee": Pricing the Negative Externalities of Government Failure?

‘Spirit Airlines announced this week that it would add a $2 "unintended consequences fee" to all tickets due to new federal regulation aimed at protecting consumers.

The "Department of Transportation Unintended Consequences Fee" was added to each ticket effective immediately and is a direct response to new DOT rules put in place Jan. 26 to offer travelers better "passenger protections."

The most visible of the new rules was a law that required airlines to include mandatory government taxes and fees in all advertised fares. Other rules pertained to ticket cancellation policies and baggage fees. Spirit says it's the DOT regulation allowing passengers to change flights within 24 hours of booking without paying a penalty that's forced them to add the fee.

"Spirit believes that consumers have a right to know that this misguided regulation is expensive and is hitting consumers directly in their pocket books," the company stated on its website.

"People love the idea of not having to commit to a reservation, but this regulation, like most, imposes costs on consumers," CEO Ben Baldanza added in the airline's statement. "Wouldn't we all like to eat all we want and not get fat? Regulators like to try to sell the idea of this rule, but have ignored the cost impact to consumers. You simply can't eat all you want without consequences." ‘ - Internation Business Times, Mark Lohanso, 02/02/2012

Link to the entire article apprears below:

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