Pay Per-Use

The other day, I found an intriguing thought/concept posted on Jeremy Zawodny’s personal blog. He poses a question regarding airlines and the concept of charging people ticket prices based upon their weight. Of course the concept was not held in high regards by the majority of his responders but is the theory behind the question all that different from how we pay for most everything in our lives? As for weight based pricing for airline tickets, people are worried about being discriminated against. Tall people weigh more so they are “taxed” for being genetically different. Short people generally weigh less so they achieve the cost savings as compared to the larger people who fly. In the end, pricing based on weight of the individual would result in some version of a “fat tax.”

However, as I mentioned, would this be any different than what we see today in our lives? The answer is no for the most part, but there is an issue. While we do pay “per-use” fees on products such as water, electric, gas, food, and other various consumables, paying a fee based on your weight is not something that can always be changed. Yes, our country has the label as being overweight. Yes, the vast majority of those overweight can choose to alter their lifestyle and lose weight and thus receive a theoretical cheaper airline ticket. But, a genetic difference between people complicates the basic formula and creates a tax upon individuals who fall outside the normal data range.

Is that a fair solution to the energy crisis facing our airline industry? On first look, the suggestion appears rational. But wait, aren’t there other “taxes” on these people who fall outside of the genetic “norm?” Yes. People who are tall pay more for their clothing. Large people pay more for their clothing. People with large feet may pay more for their shoes. Large or tall people must pay more for personal transportation because a compact car is too small. Even in our current system, larger people are being forced to pay a “tax.” Is that fair? Larger people require more of everything involved in their lives. They require more water, more food, more material for clothing, etc. The “fat” or “large” tax is already in effect in our current system and nobody seems to have a major issue with it. Extra large and under is basically the same price, but anything over, expect to pay more.

Well isn’t that fair? People who are genetically different and “punishing” them by requiring them to pay more for their goods and services while everyone else receives a lower fee is generally thought of as not being fair. Our business methods have settled on this particular system though. With economies of scale at work for the majority of what we produce, businesses are ok with the tradeoffs in the XL and below classes. They win some, they lose some, but on average, they are coming out ahead by charging the same price. However, for the “special” market, they must charge more to compensate their costs. That’s both fair and rational in the sense of business. Taking this thought process to the airline industry I can see them at some point assuming such a price break could be fairly and rationally instituted. Charge everyone under X amount of weight the same price while charging people over the limit, more.

The airline industry would of course be slammed by bad media just as they were for requiring extra large people to purchase two seats. However, that has since passed and people have accepted the fact. I believe the airline has the right to begin charging people based on a weight class. Would it be a popular decision? No. Would it help the airlines cover their costs of transportation? Yes. Would society fall into disarray because people are being charged for their actual consumption? No. In a per-use charging method, there will always be subsets of society who are “unfairly” taxed because of some reason. However, a per-use charge is the most fair and rational method we can settle upon. I would rather pay for what I use than a flat rate which includes every cost associated with the product in small portions.

We pay for the total gallons of water, kilowatts of electric, gallons of heating oil, gallons of gas, quantity of food, and most everything in our life based upon how much we personally use. Yes, there are some flat rate costs in our lives and some of us are coming out ahead and some coming out behind. I don’t see any reason why the airline industry could not or should not assume a similar charging method. I’m not saying this because I’m someone who would benefit from the change, I am saying this from the standpoint that it makes sense to do so as a business and society already follows these guidelines in most everything we do. Why would we get so upset about an airline charging more for larger or taller people? Of course it takes more money to transport larger packages. The same rule applies to people.

What I see as the basic problem for the dissenters of such a change is that everyone (when money is involved) wants to be treated equal in all manners of life when in fact, we are all very different. We promote individuality on one hand and on the other, we want complete similarity. Our mindset is that we want to be an individual when it personally helps us the most and we want to be similar when being the same is the cheapest and most effective way to keep money in our pocket. Problem with that mentality is that we cannot have both at the same time. Either we are going to be individualistic or not.

I believe we should all only pay for what we use, on everything. There should be no flat rate on anything we purchase. True fairness is to pay per-use. Flat rates are a way for businesses to exploit their economies of scale and purchasing power to achieve their profit margins. Per-use fees on everything of course will never materialize because it would just be too hard for businesses to keep up with appropriate inventory and costs with each product line. We will continue to pay the same price for everything under X size and pay more for size X and up. I’m just using the clothing example here but it applies to many other products and services. Pay the basic amount until certain X level and then you must pay more.

What I boil it down to is the old standby, the 80/20 rule. 80% of the people will fall into the normal category and 20% will fall into the “taxed” category over time. It’s the simplest, most rational, and most fair way to charge without using the per-use methodology. As for my support and stance on Jeremy’s suggestion, I say sure, let the airlines charge more for larger people. Its part of life and larger people require more so being fair, they should pay more. Even if we moved to the fairest method of all, per-use, they would still be required to pay more. Currently, without charging for large people and charging a flat rate, we are effectively taxing the 80% for the 20%’s cost. Is that fair? No.