Tuesday, April 18, 2017

“Calculated misery”: how airlines profit from your miserable flying experience

Alex Abad-santos · Friday, April 14, 2017, 10:35 am

They don’t need happy customers to make money.

The smartest move the commercial airline industry ever made was to convince consumers to pay extra for what used to be the minimum. It’s even got a name: “calculated misery.”

“Calculated misery” sounds like a movie featuring a slow-boil revenge plot — one that involves social media and tears of frustration. Instead, it’s the concept that there’s money to be made by making an experience so awful that a customer will want to avoid it.

And not only is it sinister, it’s profitable — at least when it comes to air travel.

It’s common to pay extra for higher-quality products or services. And it’s natural to want to pay the lowest possible price for whatever you want or need to buy. That’s why many Americans are always looking for the best deal, regardless of what they’re shopping for.

That mindset allows airlines to use “calculated misery” to make their baseline products and services so low-quality and unpleasant that lots of people will be willing to pay more to avoid them.

It’s easy to name other businesses that would shrivel up and die if they took the “calculated misery” approach.

You wouldn’t go back to a barber who purposely gave you a terrible haircut, or who gave you a terrible haircut and then charged you a fee to fix it. And you wouldn’t eat at a restaurant where your meal would cost more if you wanted a guarantee that you could sit next to your dining partner.

But the airline industry is a unique beast.

United Airlines’ ghastly plane dragging incident exposed just how warped the industry’s policies are. A man was bloodied and concussed simply because he didn’t want to leave a seat he had paid for and was assigned to, sparking an examination of how the commercial airline industry views its customers. And the idea of “calculated misery” explains how the airline industry is uniquely designed to make this awful way of turning a profit work.

“Calculated misery” and you: a match made in budget heaven

The person who coined the phrase “calculated misery” is a man named Tim Wu, a professor at Columbia Law school, an author, and a contributing writer at the New Yorker. His expertise covers topics like net neutrality theory and antitrust law — topics that aren’t far removed from his observations about the airline industry.

In 2014, Wu wrote an article for the New Yorker about the decline in quality of commercial airline service. In his eyes, there was an unspoken agreement among the country’s biggest airlines to make the flying experience terrible no matter what airline you fly. Wu wrote:

Here’s the thing: in order for fees to work, there needs be something worth paying to avoid. That necessitates, at some level, a strategy that can be described as “calculated misery.” Basic service, without fees, must be sufficiently degraded in order to make people want to pay to escape it. And that’s where the suffering begins.

Calculated misery is the reversal of how we usually think about upgrades. Think of going to a restaurant and ordering a burger: Cheese and bacon usually cost extra, and many people will gladly pony up because the gooey cheese and crackling, salty bacon enhance the experience.

With the airline industry, it’s the opposite: You’re upgrading to avoid hell.

It’s like if a burger joint charged you for a patty of plain ground beef and a bun, then gave you the chance to make your burger more palatable by paying a seasoning fee, a medium-rare fee, and separate surcharges for lettuce, tomato, and onion. Or, in airline speak, a seat selection fee, a checked baggage fee, a wifi fee, a preboarding fee, an extra legroom fee, and so on.

In the airline industry, many services and amenities that use to be standard now qualify as an “upgrade.” Meanwhile, the “standard” experience is frequently so miserable that many people will pay to make it better.

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