Why Do Airlines Charge For Standby?
Keith Humphreys has a theory:
In the past, someone whose first leg flight landed early and was thereby able to grab an earlier connecting flight was whisked aboard without question or charge.
No charge standbys reflected the longstanding airline industry principle that there is nothing worse than an empty seat on a plane as it takes off (Again I recommend to RBCers the book Hard Landing, which explains how dilligently all the airlines worked to avoid the curse of empty seats up in the air). An empty airline seat is an unusual commodity: Its value increases over time as departure approaches but the moment the plane takes off, it becomes valueless.
I was puzzled by this airline wanting to charge me to move to an earlier connection, given that moving me into an empty seat of a plane that is about to depart opens up my seat on a later flight, which gains the airline more time to sell it to another customer (or to allow a bumped passenger to have a seat thus avoiding the "we are in an oversold situation" auction). It seemed they were refusing to give away something that was about to become valueless for the chance of making money later. Rather than be irritated, I decided to do some reading to figure out why the airline had reversed the long standing, seemingly rational industry practice of granting free same day standbys.
What changed I think is the Internet, fare transparency, and the sophistication of travelers. When airline routes and fares were only available in encyclopedia-sized books, even experienced travel agents had a hard time figuring out the cheapest routings. The early days of the Internet made it simpler, but transparency was available mainly for people willing to invest an enormous amount of time. Today, both aggregator sites as well as those of individual airlines make very clear the fare rate differences at different times of a day. A fair number of travelers figured out that they could buy seats later in the day than they really wanted to travel -- which are usually cheaper -- and then show up earlier and get a free same day standby ticket. They had to gamble a bit that they would get their desired seat, but the price differences between morning and afternoon flights were often large enough to make it appealing.
The airlines started charging for same day standby tickets not to stop people like me who happen to show up early, but to force the gamblers to hedge their bets further by booking the flights they actually intend to take.
But how do you explain the fact that they used to simply put you on the next free flight if you missed your plane, but now charge you hundreds of dollars for the privilege?