Framing effects and the airlines

The New York Times reports that as of Friday, Northwest Airlines will charge customers an extra ten dollars when they buy a ticket at a check-in counter and an extra five dollars when they buy a ticket over the phone. (If you buy the ticket from Northwest on the Web, you’ll pay the same price you do today.) The difference undoubtedly reflects the real difference in cost to Northwest of paying a human being to do ticketing, but if the Times’ headline — “Will This Idea Fly? Charge Some Travelers $10 for Showing Up” — is any indication, the strategy looks like a public-relations disaster in the making.

Asked about the idea, Northwest executives reasonably responded that JetBlue and Independence Air charge more for tickets not bought on the Web. But as the Times says:

That is not how JetBlue and Indepdence Air would put it. Rather, their Web sites offer discounts for travelers who buy tickets electronically . . . Tickets bought at the airport or from airline reservation lines are simply sold at the advertised fare with no extra charge or discount.

From a consumer’s perspective, of course, it should be six of one, half a dozen of the other — if you buy your tickets on the Web, you pay less. But if framing effects are as real as they seem to be, then selling price discrimination as a way of offering some consumers a bargain, rather than as a way of charging some consumers a premium, will keep customers happier. That’s why restaurants advertise early-bird specials and movie theaters say they offer discount matinees (rather than saying they charge more at night). Perhaps Northwest should have quietly raised its prices last week and then announced a discount for its Web customers this week.

Addendum: No wonder the airlines can’t make money – earlier Alex noted a similarly dumb idea from Delta.


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