Is American Airlines moving towards charging for all advance seat assignments?

by Janice Hough on September 29, 2011


American has come out with a “Preferred Seating” plan. It’s hardly “preferred” to consumers and it may herald the start of an even worse plan. Here’s why I think so.

My, the worm has turned. Years ago, American Airlines was a favorite of many travelers for their “More Room Throughout Coach” flights. The gimmick was simple. On routes catering to business travelers, the airline simply removed some rows of seats, so that everyone had more leg room.

Unfortunately, the strategy, while popular, did not generate enough extra revenue for management to keep it.

Even if passengers were drawn to the extra room, American judged it more profitable to put the rows of seats back. Some look at AA’s marketing of this “More Legroom in Coach” to be a textbook example of how not to bring in new customers. In any case, the final chapter of this initiative found passengers squeezed again by AA with no alternatives.

Competitor United Airlines, watching from the side, adopted a modified extra legroom plan with their “Economy Plus,” that has become one of their outstanding virtues even through bankruptcy and labor problems. But, American stuck to their regular less-pitch seating.

In the new seating scheme, American’s premium seats are simply about location, not legroom. Aisles and windows in the front have been reserved for elite passengers. (Exit rows, as with most airlines, only for the most elite passengers.) For as long as I can remember, this has meant a relatively few rows, say four to six, held back for those elites.

Now with the “Preferred Seating,” all front-of-the-plane aisle and window seats, except exit rows, will be available for anyone willing to pony up the extra charge for them. And the “preferred” section has been expanded to include up to half of the plane.

For example, on a Thursday flight I booked for a client over a month in advance from Chicago to Orange County, there were 36 rows in coach, and aisles and windows were blocked for elites and paying passengers back to row 28. Not surprisingly, the eight rows available in back had no aisles or windows remaining.

Maybe American only wants the illusion of aisle and window seat availability while denying it to all but the earliest booking passengers and those willing to pay a surcharge. Those of us who are suspicious of the airlines see a growning similarity to Americans’ “oneworld” partner, British Airways.

British Airways, for those who don’t fly them, basically abandoned the idea of free advance seat assignments about two years ago. BA still has exceptions for elite-level frequent fliers, full-fare travelers and for preferred clients and travel agencies. However, most travelers must wait until online check-in 24 hours in advance, or when they arrive at the airport, to choose their seats. Of course, non-elite passengers can pay a not insignificant surcharge, from $38 in coach to $90 in business class, for an advanced seat assignment.

Now, there was some initial outrage at this policy, which even means that passengers using discounted business class fares have to pay for advance seating, but travelers seem to have gotten used to it.

If it’s working for its partner, British Airways, why shouldn’t American Airlines be the first major U.S. carrier to follow suit? I wouldn’t bet against it.

[Editor's note: USAirways has been following a similar pattern. AirTran (soon to be gobbled up by Southwest that has no reserved seats) has been charging for any reserved seat for years.]

Do you readers think this is an inevitable wave of the future?

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  • Tony A.

    If passengers do not get Advanced Seat Reservations (ASR), it may just cause Check-In bottlenecks as a seat assignment is required before a boarding pass can be given. ASRs and online check in actually help an airline reduce the cost of Departure Control. If lines get longer in AA check in counters, I can see would be passengers simply avoid flying AA.

  • http://www.facebook.com/people/John-Baker/787503543 John Baker

    You have proven AA’s point. Here’s my version of the story… They have reserved a large portion of the aircraft for those that are their best customers or those that are willing to pay for a “better” seat. They still offer free seat assignments on a first come – first served basis in a less desirable part of the aircraft. While I realize that some of your clients may not agree, the middle seat is still a seat and still gets you to the same place. If they don’t like the middle and it’s that important to them, they can pay for the better seat.
     
    There’s nothing to see here. You already talked about how much you liked Economy Plus. This is the same thing without the added pitch. If you want a “better” seat or wait too long to get a window / aisle seat, you’ll have to pay.
     
    As Charlie noted, lots of airlines have done this for awhile (I would add Southwest to your list too with their “EarlyBird Check in option since this allows for “better” seat choice)

  • http://pulse.yahoo.com/_YJOFCUW4S62AICSGYG562VMHZY Marje

    Ho-hum…the cattle car is still the cattle car. 

  • Cliffordpwoodrick

    When I fly, which has decreased from 10 flights a year to 2, I fly Jet Blue, I am going to donate my American 162,000 miles to Make A Wish as I will not fly American again. Between the TSA and the sardine can seating. I have lost the desire to fly. I leave shortly for North Carolina by car. NO TSA or other problems.

    Have a wonderful day – Cliff

  • Naoyuki

    This fee-for-everything needs to stop.  And in my opinion, only way to stop it is to change the special tax code for airlines.  If the airlines are going to be taxed for the fees, they will stop doing this nonsense and just bundle the entire cost of the flight into one price.  The public needs to know that that the airlines are in fact “evading” tax (legally, at this time) by using this loophole.

  • Tony A.

    Isn’t the passenger who pays the tax?

  • Geosinner101

    Just another reason to drive when you can and save the hassle. The Airlines are becomming as hated as the politicians.

  • Geosinner101

    Just another reason to drive when you can and save the hassle. The Airlines are becomming as hated as the politicians.

  • Geosinner101

    Just another reason to drive when you can and save the hassle. The Airlines are becomming as hated as the politicians.

  • Geosinner101

    Just another reason to drive when you can and save the hassle. The Airlines are becomming as hated as the politicians.

  • Geosinner101

    Just another reason to drive when you can and save the hassle. The Airlines are becomming as hated as the politicians.

  • AirlineEmployee

    If most passengers on any given flight opted to NOT pay the fee, they would default to the better seating after the rear section seating fills up.   AA or any other airline is not going to deny boarding because there are no more “non-elite” seats left.  Hold out till the end, your chances will increase for the better seating.

  • Anonymous

    I don’t believe USAir holds all window/aisle seats – just the “choice” seating up front. Believe me, I’m assigning those back of the cabin widows and aisles almost everyday months ahead.

    I myself have been placed in Choce seats when I’ve been unable to get a seat assignment prior to the gate – happens sometimes. But most of the time I go on line as soon as I’ve purchased the US ticket and buy myself a choice seat. Depending upon the time of year, when I do it and how full the plane is, those seats have ranged from $10 – 36. To me the advantage is not the seat itself, it’s being guaranteed an early boarding “zone” (usually Zone 2) guaranteeing that my carry on will make it on-board.

  • http://www.tripso.com/author/leocha Charlie Leocha

    You’re correct. USAir is not holding all window/aisle seats. That was based on personal experience some time ago. I have changed the Editor’s note to reflect that they are similar to AA.

  • Mwvjsa

    So remind me what is in the price of the ticket?  Why don’t they just price the window and aisle seats at a higher rate or use a sliding scale as they do with inventory control, based upon the time of booking .. Honestly I’m getting tired of all the up charges – I understand unbundling and charging for use of services but as a ”big” consumer an airplane configuration is not my problem.  What happens when there is a delay or flight cancellation at the airport and I’ve already paid my “up charge” to sit on the aisle but the next available aircraft doesn’t have an aisle seat available – do I get a refund?

  • janice

    It’s a gray area on this refund business.I’ve had it happen to clients and have gotten the refunds, but it doesnt appear to be automatic.  I think if you don’t say anything you don’t get it.  And if YOU change your flight and pay the $150 change fee the seat fee doesn’t transfer over, you have to pay it again.

  • Ken

    Its a tax on the airline’s INCOME that’s being discussed.

  • Tony A.

    If we are discussing FEES then the issues is whether EXCISE TAX is charged or not since like it is charged on BASE FARES. Charline Leocha discussed that here…
    http://www.consumertraveler.com/today/schumer-has-it-wrong-exempting-baggage-charges-from-excise-tax-benefits-passengers/

    I don’t believe airlines are exempted from paying INCOME tax.

  • Charles Leocha

    Tony you are exactly correct. The passengers pay these security taxes directly. The are added to the price of the airline ticket which already includes the hidden 7.5 percent air transportation excise tax that the passenger, not the airlines, pay.

    The airlines that make money pay normal corporate income taxes. However, these taxes and fees do not enter the airlines balance sheets in any way other than as transfers to the government.

  • Bodega

    Charlie, how is this tax hidden.  This is exactly what we see when we price an itinerary.  This shows base fare and all the taxes, then the total cost of the ticket.  I see pretty clearly a US tax of 7.81.  Are you saying there is another tax or is it you just don’t understand?

    1 UA 468W   23OCT S SFOSAN SS1   828A  956A /DCUA /E .         WPNC«                                                           23OCT DEPARTURE DATE—–LAST DAY TO PURCHASE 30SEP/2359               BASE FARE                     TAXES             TOTAL     1-    USD104.19                     18.51XT       USD122.70ADT     XT      7.81US       3.70ZP       2.50AY       4.50XF                 104.19                     18.51            122.70TTL ADT-01  SA21KN                                                   SFO UA SAN104.19SA21KN USD104.19END ZPSFO XFSFO4.5             NONREF/0VALUAFTDPT/CHGFEE                                       VALIDATING CARRIER – UA         

  • Tony A.

    I’ll cut Charlie some slack for a little slip of the mind. Granted he is not a TA who can read the Fare Construction Box/Line. Yes, taxes are NOT hidden (at least not on a US issued airline ticket). Peace.

  • Charles Leocha

    Bodega, Tony,
    The excise tax is not seen by consumers. Yes, travel agents can see it. Yes, GDSs have a special module that assesses these taxes. Yes, the airlines need to know it so they can remit it to the IRS. But, consumers never see it in advertisements — it is embedded in the airfare. All ads that blast a cheap airfare, blast an airfare of the base fare including the 7.5% excise tax. Then, in smaller agate type, the security tax, segment fees and other fees might be listed, but not the 7.5% excise tax.

    Here is how DOT explains it: “The Department has prohibited sellers of air transportation from breaking out any other seller imposed fees, including fuel surcharges and service fees, and taxes imposed on an ad valorem basis.”

    If you go to an online travel agency or look at a ticket the 7.5% excise tax is never broken our for consumers. Hence, from the consumer’s point of view it is hidden.

  • Bodega

    No Charlie, you are wrong from all the sale domestic sale fares that I have seen advertised.  They show the base fare, which does not have taxes included.  Yes, they advertise the ‘fare’ in bold print which never includes taxes and then you have to get your glasses out to read the fine print.  It annoyes me but this isn’t new.  BTW, you need to understand the lexicon of this industry.  A fare is exclusive of taxes.  The total price includes all taxes.  This, again, isn’t new.

  • Bodega

     This shows the tax and fee breakdown in a different format than I have on my GDS, but at least it is there and this is from UA.  I just went over to WN and priced an itinerary and found the breakdown, too.  So Charlie, you need to provide an example to substantiate your claim.  Note that these are for domestic.

    TravelerFare(s)Additional taxes & fees*Fare subtotal(s)Adult 1 USD 112.00 USD 10.70 USD 122.70 Total price*: USD 122.70
    Any discounts will apply only to the base fare and not to any taxes, fees or surcharges that may be included in the fare shown above.Additional taxes, fees and surcharges:(Award travel may be exempt from select taxes, fees and surcharges.)Travel within the 50 United StatesFare includes 7.5% U.S. excise tax. For travel to or from Hawaii and Alaska, fare also includes U.S. government excise tax of 8.10 USD per direction for tickets purchased before January 1, 2011, or 8.20 USD per direction for tickets purchased on or after January 1, 2011.
    Fare does not include the following taxes, fees and surcharges:
    Airport passenger facility charges (PFCs) of up to 18.00 USD roundtrip
    U.S. Federal Segment Tax of 3.70 USD on each flight segment †
    September 11th Security Fee of 2.50 USD per enplanement at a U.S. airportInternational travel (including Puerto Rico and the U.S. Virgin Islands)Fare includes U.S. excise tax, and carrier-imposed fuel surcharges (YQ) of up to 300.00 USD per direction of travel may apply. For travel to some countries, additional airport, transportation, embarkation, security and passenger service taxes/surcharges may also apply depending on destination. Fare does not include the following taxes, fees and surcharges:
    Airport passenger facility charges (PFCs) of up to 19.50 USD roundtripSeptember 11th Security Fee of 2.50 USD per enplanement at a U.S. airportOther government taxes and fees (including U.S. government excise tax) of up to 140.00 USD based on destination; total may vary slightly based upon currency exchange rate at time of purchaseTaxes and fees are subject to change without notice and at the discretion of each country’s government

  • Tony A.

    The e-ticket itinerary receipt has the FARE CONSTRUCTION breakdown.
    For US domestic travel the 7.5% excise tax is clearly labelled as ZP.
    The total taxes & fees are under the TX/FEE or TAX column.
    Of course the passenger only sees the breakdown after they buy a ticket online.

    Charlie is talking about how OTAs advertise their ticket prices. It’s either all-in as they should or the total tax and fees is excluded and displayed separately. But it is a total tax and not broken down to its elements (like an eticket receipt).

    To me what is deceiving is how some airlines lump their fuel or insurance charges as at TAX/FEE.
    The YQ and YR charges (about $420 roundtrip to Europe) is often reported as a TAX/FEE.
    In reality they go to the airline and not to the government or airport. Of course they did this so their BASE fares look small.

    But if the DOT requires that airlines and agents all use TOTAL ALL-IN PRICES for tickets, then all this discussion is moot. Only the total charge counts. I guess they don’t think consumers care how the seller got to the total amount.

  • Charles Leocha

    Bodega,
    Use your own example above. It works perfectly.
    It clearly says that the “Fare includes 7.5% US excise tax.”
    Adult fare = $112; taxes = $10.70.
    Taxes = Segment tax of $3.70 + Security fee of $2.50 + PFC of $4.50.
    The 7.5% excise tax of $7.86 is embedded within the “fare” of $112.
    Consumers never see that excise tax, it is hidden within the airfare in advertisements, on their tickets and on ticket itineraries.

  • Tony A.

    Charlie, I have a different take on this topic. Since the DOT will require that airlines and agents advertise ONLY the total price, then consumers can’t easily see what the tax is. That said, the government can increase the tax and it will really be “INVISIBLE” until after one buys a ticket and examines the receipt. Unintended or not?

  • Bodega

    The total fare does, but not the base fare.  Again, you have to understand the lexicon of the travel industry.

  • Bodega

    My posts state domestic tickets, but I fully understand what you are saying about international tickets and why I didn’t get into those. 

    I don’t use OTA and will have to go check one out and see what they do for a domestic ticket.  However, for UA and WN when I checked their websites and priced an itinerary, the taxes and fees were clearly stated.

  • Tony A.

    Bodega, remember – Under DOT’s recently adopted consumer rule that enhances protections for
    air travelers, carriers and ticket agents will be required, among
    other things, to include all government taxes and fees in every
    advertised fare beginning January 24, 2012.

    So next year we need to use ONLY TOTAL PRICE when we advertise or quote.

  • Bodega

    I went to one OTA and see the breakdown only as base fare and total taxes for a total cost.  No breakdown in the total taxes like the GDS does provide.  Now a question to you is, does it really matter to the purchaser?  I know that I have never have anyone ask about it.  In fact, unless I send over a passenger receipt copy, which we are doing less and less, the client doesn’t see anything on their itinerary but base fare and a totat tax amount. 

    Now for a comparison, when you buy your shirt at Macy’s, you see a total tax amound but you don’t know the actual breakdown of that tax, which part goes to the city, part to the county and part to the state.  So your complaining isn’t exactly fair. 

  • Charles Leocha

    I am only referring to domestic tickets in these discussions. I haven’t mentioned international tickets—they have other embedded taxes.

    Just went to both United.com and to southwest.com and both do not break out the 7.5% excise tax.

  • Bodega

    Sorry to Janice for hijacking this thread!

    Charlie, why is this such an issue with your?  Do you require this of any other taxes your pay on purchases?  I used Macy’s as an example in my other post. 

    At least on the website you can figure it out.  They give your the base fare and the percentage for the tax.

  • Anonymous

    I disagree in part. The tax code could well be discussed. But I certainly do not want optional services that I often don’t need bundled into the cost of a flight, driving up my costs.

    When I go to a concert or sports event I expect to pay more if I get a more desirable seat. I can’t get a front row seat for the same price I can get a back row seat. It’s my choice which I want to pay for.I can’t imagine why the airlines wouldn’t have the right to do the same thing.

    A fee that is related to a cost the airlines have, or that offers extra value, is perfectly legitimate. A “fee” that is not avoidable like a “fuel surcharge” is a bait and switch ripoff. That’s where the tax issues really lie, in my opinion.

  • Naoyuki

    I think people are really confused about the discussion I started.  The reason airlines are all crazy about these fees is because the fees airlines collect are not accounted by the government as taxable income.

  • Tony A.

    Janice, would you (and Charlie) please write an article regarding ANCILLARY FEES and whether they are subject to excise tax or not, and whether the airlines can exclude them to ORDINARY INCOME and are exempt from paying taxes on them.

    Naoyuki – I am not confused. In fact I have read the IRS Excise Tax Audit Guide. Please read specifically the exemptions to the EXCISE TAX.
    http://www.irs.gov/businesses/small/article/0,,id=186838,00.html#Exemptions

    I think you are confused between an EXCISE TAX exemption and an INCOME TAX exemption.
    An EXCISE TAX exemption FAVORS PASSENGERS since they do not have to pay it.

    Naoyuki, please provide proof the airlines are exempt from paying income taxes on ancillary fees. In other words these fees will be excluded from REVENUES in the income statement of the airlines.

    In my opinion, you are just as confused as Sen. Chuck Schumer when he criticized the airlines for the same thing.

  • mcdullhk88

    Its better than everyone having equal access to seats. Anyone willing and able to pay more should get more, and this looks like dividing each service class into “several classes,” with more expensive ones allowing ASR.

  • LisaILJ

    I can say for myself, I will go out of my way to avoid American. I am flying them later today and will most likely get bumped because there are NO seats available. I refuse to spend more money on a seat that I should be guaranteed.

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