Why Charging Fat Passengers More Is Totally Defensible

When Samoa Air last week announced it was going to start charging people for airline tickets based on their weight -- a concept that Samoa Air CEO Chris Langton defended in news reports as "the fairest way of traveling with your family or yourself" -- it set off a flurry of comments, some supportive, some not.

Under Samoa Air's plan, customers are now required to estimate their weight when they book their flight online, and then to weigh in when they arrive at the airport. That number determines the price they will pay and also how much space they will get once they board the plane. "You travel happy, knowing full well that you are only paying for exactly what you weigh ... nothing more," the Samoa Air website says.

Established in 2012 as the national carrier of Samoa, the airline connects the Pacific Ocean islands domestically using small propeller planes that seat between three and 10 people. It recently began offering international flights on larger planes to American Samoa.

Estimates of price per pound vary with the length of the trip. According to The Wall Street Journal, customers flying to American Samoa will pay 92 U.S. cents a kilogram, or 42 cents a pound, for each flight. A kilogram equals 2.2 pounds. "It's a pay by weight system and it's here to stay," Langton told the Journal. As an example of the new policy, he estimated that a 160-kilogram person on Samoa Air will pay four times as much as a 40-kilogram person, but he or she would also get more space.

One reason for the new policy may be the fact that Samoa has the fourth highest obesity rate in the world. Estimates of the percentage of obese people in the population range from 55% to 60%.

The 'Private Lives' of Customers

Although Langton says that the new policy has received a favorable reaction from consumers, it raises some interesting questions, including: Is this discrimination or a smart business model? Are there better ways to achieve the same objective? And will other airlines adopt a similar approach?

Wharton marketing professor John Zhang, acknowledging that he is not a lawyer, suggests that charging passengers based on their weight does not fit the legal definition of discrimination based on race, age, sex, nationality, religion or handicap. Indeed, he says, "a small airliner like Samoa with propeller planes can make a legitimate business case to charge passengers based on their weight: A small plane can reach carrying capacity either because it is cubed out [i.e., running out of space] or grossed out [i.e., reaching its weight limit]. In the case of carrying passengers, both dimensions can be maxed out to the detriment of an airline's profitability."

Samoa Air's new policy does, however, suggest possible price discrimination given that different customers with different characteristics are charged different prices, Zhang says, although he does not believe that "price discrimination is the main motivation behind the new pricing policy -- for two reasons. First, there is no evidence that the travelers who weigh more tend to be less price-sensitive so that a firm could make more profits by charging them more. Second, there are many other ways to do price discrimination more effectively and efficiently if capacity is not an issue."

The fact of the matter is that "petite passengers have been subsidizing overweight passengers when the ticket price is weight blind," Zhang notes. "Such a practice becomes untenable or even unfair when 55% of a country's adult population is obese."

Wharton health care management professor Mark V. Pauly makes the point that "in small planes, total weight does matter, so rather than carry fewer passengers, it seems that paying for excess weight is tailoring price to cost; it costs the airline more to take a person who weighs twice as much and so displaces another regular-sized paying customer."

Although people will object, he says, "in an unregulated but competitive market, the general principle is that firms can set the terms of a transaction, and buyers are free to accept [those terms] or not. The key will be if there is competition among airlines or other methods of transportation [so that] people have an alternative. I'm not sure how it is different from charging you for another seat if your cello flies with you."

Samoa's model is "an example of businesses trying to maximize profits," Pauly adds. "When you sell services, the cost often depends on the 'private lives' of customers ... like whether they use their rental car for racing. So this may make sense.... Ethicists will doubtless be upset, but I do not think economists generally will."

The Perception of Fairness

Given the somewhat controversial nature of Samoa Air's move, are there other ways the airline could achieve its goal without focusing on a person's weight? As Wharton marketing professor Gal Zauberman notes, "consumers will likely react negatively to having to pay for something that they see as part of who they are."

From the perspective of a "behavioral researcher, what you have to think about is whether there is a better way to do the same thing but frame it differently," he says. "One option is instead of charging per pound, have a baseline price design for heavy people and then give discounts either in the form of a reduced fare or extras, such as free checked luggage, to those who weigh less."

If you do want to charge per pound, he adds, "another option might be that the price is for your total weight, not just how much you personally weigh. You will be allowed a max weight of yourself, your carry on and your checked luggage. If you are a heavy person with only a small carry on, you might pay less than the small guy with the large suitcase. This will make your weight less explicit while accomplishing the same objective."

Under the new policy, passengers with baggage that is over the weight limit pay at the same rate as their personal weight.

Wharton marketing professor Deborah Small agrees that there may be "more tactful ways" to accomplish the same goal. For example, Samoa Air could have child discounts (in fact, children under 12 are charged 75% of the adult rate) "or they could even have discounts for low-weight people. The point is that it's achieving the same objective but framing it in a way that is perceived as fairer and that doesn't penalize an already stigmatized group in society."

She also points out that the new policy "is a form of price discrimination which is common in many forms," including student discounts for tickets, early bird specials offered by restaurants on weeknights and dynamic pricing by airlines based on when consumers buy their tickets. "What's interesting to note about such discrimination is how it is perceived by customers."

Small recently taught a class in which students discussed the Coca-Cola Company's plans to use vending machines that would change the price of a can of soda depending on the weather. On warmer days, the price would go up, and on colder days, it would go down. "That makes perfect sense from an economic [standpoint]," Small says, "but customers were very upset that the company would take advantage of their thirst on hot days." The launch was called off.

Consumers have "a relationship with firms, and their expectations are much like their expectations in any interpersonal relationships," Small says. "When a firm acts in a way that violates the social rule of treating people fairly, consumers get offended." So it's fine for a restaurant to offer a discount to people on a relatively uncrowded Tuesday, but if the restaurant tried to add a surcharge to people eating there on a busy Saturday, that would be considered unfair.

"The fairness of these [deals] is not objective. It's subjective," she adds. "It's hard to say if something is truly fair. It's whether the customer perceives it to be fair. Often just the way you frame a pricing scheme affects the perception of fairness."

In a comment made to Reuters news agency last week, Samoa Air's Langton suggested that "the industry has this concept that all people throughout the world are the same size," adding that airplanes "always run on weight, irrespective of seats." He also noted that, in some cases -- including families with small children -- the new policy could make it cheaper to fly.

Mass Weigh-in

Is it likely other airlines will follow Samoa Air's strategy? Zauberman thinks not. "The key is that this is a small airline, and implementing this on a large scale, for airlines like the new United or Delta, will be much more complicated and unlikely to catch on any time soon." Zhang agrees, mainly because the modern jet passenger airplanes "are rarely cubed out or grossed out -- the load factor for passenger airlines is about 80% today -- and it is a lot easier to focus on inventing new fees."

The Journal article suggests that the major airlines would avoid this type of strategy because of concerns over price discrimination, but also points out that some carriers in the U.S., including Southwest Airlines, "require passengers who can't fit in a regular coach seat to buy an extra ticket when flights are full. They don't, however, charge passengers per kilo or pound." Other news reports suggest the nightmare that would ensue if, on large crowded flights, hundreds of passengers were required to weigh in at the airport.

Is Samoa Air's new policy one more example of a company inserting itself too far into people's health and habits? Companies, Zhang says, "are in the business of interfering with people's private lives."

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