Showing posts with label airline. Show all posts
Showing posts with label airline. Show all posts
Wednesday 11 May 2022
Wednesday 29 April 2020
Airlines and oil giants are on the brink. No government should offer them a lifeline
This crisis is a chance to rebuild our economy for the good of humanity. Let’s bail out the living world, not its destroyers writes George Monbiot in The Guardian
Governments like the UK’s should drop their road-building plans. Instead of expanding airports, they should publish plans for reducing landing slots. They should commit to an explicit policy of leaving fossil fuels in the ground.
During the pandemic, many of us have begun to discover how much of our travel is unnecessary. Governments can build on this to create plans for reducing the need to move, while investing in walking, cycling and – when physical distancing is less necessary – public transport. This means wider pavements, better cycle lanes, buses run for service not profit. They should invest heavily in green energy, and even more heavily in reducing energy demand – through, for example, home insulation and better heating and lighting. The pandemic exposes the need for better neighbourhood design, with less public space given to cars and more to people. It also shows how badly we need the kind of security that a lightly taxed, deregulated economy cannot deliver.
In other words, let’s have what many people were calling for long before this disaster hit: a green new deal. But please let’s stop describing it as a stimulus package. We have stimulated consumption too much over the past century, which is why we face environmental disaster. Let us call it a survival package, whose purpose is to provide incomes, distribute wealth and avoid catastrophe, without stoking perpetual economic growth. Bail out the people, not the corporations. Bail out the living world, not its destroyers. Let’s not waste our second chance.
‘Governments have the oil industry over a barrel – hundreds of millions of unsaleable barrels, to be more precise – just as they had the banks over a barrel in 2008.’ Photograph: BEAWIHARTA/REUTERS
Do Not Resuscitate. This tag should be attached to the oil, airline and car industries. Governments should provide financial support to company workers while refashioning the economy to provide new jobs in different sectors. They should prop up only those sectors that will help secure the survival of humanity and the rest of the living world.
They should either buy up the dirty industries and turn them towards clean technologies, or do what they often call for but never really want: let the market decide. In other words, allow these companies to fail.
This is our second great chance to do things differently. It could be our last. The first, in 2008, was spectacularly squandered. Vast amounts of public money were spent reassembling the filthy old economy, while ensuring that wealth remained in the hands of the rich. Today, many governments appear determined to repeat that catastrophic mistake.
The “free market” has always been a product of government policy. If antitrust laws are weak, a few behemoths survive while everyone else goes down. If dirty industries are tightly regulated, clean ones flourish. If not, the corner-cutters win. But the dependency of enterprises on public policy has seldom been greater in capitalist nations than it is today. Many major industries are now entirely beholden to the state for their survival. Governments have the oil industry over a barrel – hundreds of millions of unsaleable barrels, to be more precise – just as they had the banks over a barrel in 2008. Then, they failed to use their power to eradicate the sector’s socially destructive practices and rebuild it around human needs. They are making the same mistake today.
The Bank of England has decided to buy debt from oil companies such as BP, Shell and Total. The government has given easyJet a £600m loan even though, just a few weeks ago, the company frittered away £171m in dividends: profit is privatised, risk is socialised. In the US, the first bailout includes $60bn (£48bn) for airlines. Overall, the bailout involves sucking as much oil as possible into strategic petroleum reserves and sweeping away pollution laws, while freezing out renewable energy. Several European countries are seeking to rescue their airlines and car manufacturers.
Don’t believe them when they tell you they do this on our behalf. A recent survey by Ipsos of 14 countries suggests that, on average, 65% of people want climate change to be prioritised in the economic recovery. Everywhere, electorates must struggle to persuade governments to act in the interests of the people, rather than the corporations and billionaires who fund and lobby them. The perennial democratic challenge is to break the bonds between politicians and the economic sectors they should be regulating, or, in this case, closing down.
Even when legislators seek to represent these concerns, their efforts are often feeble and naive. The recent letter to the government from a cross-party group of MPs calling for airlines to receive a bailout only if they “do more to tackle the climate crisis” could have been written in 1990. Air travel is inherently polluting. There are no realistic measures that could, even in the medium term, make a significant difference. We now know that the carbon offsetting schemes the MPs call for is useless: every economic sector needs to maximise cuts in greenhouse gases, so shifting the responsibility from one sector to another solves nothing. The only meaningful reform is fewer flights. Anything that impedes the contraction of the aviation industry impedes the reduction of its impacts.
The current crisis gives us a glimpse of how much we need to do to pull out of our disastrous trajectory. Despite the vast changes we have made in our lives, global carbon dioxide emissions are likely to reduce by only about 5.5% this year. A UN report shows that to stand a reasonable chance of avoiding 1.5C or more of global heating, we need to cut emissions by 7.6% per year for the next decade. In other words, the lockdown exposes the limits of individual action. Travelling less helps, but not enough. To make the necessary cuts we need structural change. This means an entirely new industrial policy, created and guided by government.
Do Not Resuscitate. This tag should be attached to the oil, airline and car industries. Governments should provide financial support to company workers while refashioning the economy to provide new jobs in different sectors. They should prop up only those sectors that will help secure the survival of humanity and the rest of the living world.
They should either buy up the dirty industries and turn them towards clean technologies, or do what they often call for but never really want: let the market decide. In other words, allow these companies to fail.
This is our second great chance to do things differently. It could be our last. The first, in 2008, was spectacularly squandered. Vast amounts of public money were spent reassembling the filthy old economy, while ensuring that wealth remained in the hands of the rich. Today, many governments appear determined to repeat that catastrophic mistake.
The “free market” has always been a product of government policy. If antitrust laws are weak, a few behemoths survive while everyone else goes down. If dirty industries are tightly regulated, clean ones flourish. If not, the corner-cutters win. But the dependency of enterprises on public policy has seldom been greater in capitalist nations than it is today. Many major industries are now entirely beholden to the state for their survival. Governments have the oil industry over a barrel – hundreds of millions of unsaleable barrels, to be more precise – just as they had the banks over a barrel in 2008. Then, they failed to use their power to eradicate the sector’s socially destructive practices and rebuild it around human needs. They are making the same mistake today.
The Bank of England has decided to buy debt from oil companies such as BP, Shell and Total. The government has given easyJet a £600m loan even though, just a few weeks ago, the company frittered away £171m in dividends: profit is privatised, risk is socialised. In the US, the first bailout includes $60bn (£48bn) for airlines. Overall, the bailout involves sucking as much oil as possible into strategic petroleum reserves and sweeping away pollution laws, while freezing out renewable energy. Several European countries are seeking to rescue their airlines and car manufacturers.
Don’t believe them when they tell you they do this on our behalf. A recent survey by Ipsos of 14 countries suggests that, on average, 65% of people want climate change to be prioritised in the economic recovery. Everywhere, electorates must struggle to persuade governments to act in the interests of the people, rather than the corporations and billionaires who fund and lobby them. The perennial democratic challenge is to break the bonds between politicians and the economic sectors they should be regulating, or, in this case, closing down.
Even when legislators seek to represent these concerns, their efforts are often feeble and naive. The recent letter to the government from a cross-party group of MPs calling for airlines to receive a bailout only if they “do more to tackle the climate crisis” could have been written in 1990. Air travel is inherently polluting. There are no realistic measures that could, even in the medium term, make a significant difference. We now know that the carbon offsetting schemes the MPs call for is useless: every economic sector needs to maximise cuts in greenhouse gases, so shifting the responsibility from one sector to another solves nothing. The only meaningful reform is fewer flights. Anything that impedes the contraction of the aviation industry impedes the reduction of its impacts.
The current crisis gives us a glimpse of how much we need to do to pull out of our disastrous trajectory. Despite the vast changes we have made in our lives, global carbon dioxide emissions are likely to reduce by only about 5.5% this year. A UN report shows that to stand a reasonable chance of avoiding 1.5C or more of global heating, we need to cut emissions by 7.6% per year for the next decade. In other words, the lockdown exposes the limits of individual action. Travelling less helps, but not enough. To make the necessary cuts we need structural change. This means an entirely new industrial policy, created and guided by government.
Governments like the UK’s should drop their road-building plans. Instead of expanding airports, they should publish plans for reducing landing slots. They should commit to an explicit policy of leaving fossil fuels in the ground.
During the pandemic, many of us have begun to discover how much of our travel is unnecessary. Governments can build on this to create plans for reducing the need to move, while investing in walking, cycling and – when physical distancing is less necessary – public transport. This means wider pavements, better cycle lanes, buses run for service not profit. They should invest heavily in green energy, and even more heavily in reducing energy demand – through, for example, home insulation and better heating and lighting. The pandemic exposes the need for better neighbourhood design, with less public space given to cars and more to people. It also shows how badly we need the kind of security that a lightly taxed, deregulated economy cannot deliver.
In other words, let’s have what many people were calling for long before this disaster hit: a green new deal. But please let’s stop describing it as a stimulus package. We have stimulated consumption too much over the past century, which is why we face environmental disaster. Let us call it a survival package, whose purpose is to provide incomes, distribute wealth and avoid catastrophe, without stoking perpetual economic growth. Bail out the people, not the corporations. Bail out the living world, not its destroyers. Let’s not waste our second chance.
Saturday 28 March 2020
How to get refunds for school fees, season tickets and much more
Lindsay Cook and Lucy Warwick-Ching in The FT
Coronavirus disruption has changed our day-to-day lives beyond all recognition. Millions of households face difficult choices about their personal finances as they seek to rebalance their budgets and manage the cash flow crunch.
Many will seek refunds on services they have committed to pay for, ranging from education to commuting costs and membership of gyms and clubs, which cannot be provided during the shutdown. Others are seeking refunds or insurance payouts on holidays and flights they had booked.
In such unprecedented times, it pays to know your consumer rights, but these must be weighed against warnings from smaller businesses that failure to pay for services could result in their financial collapse.
Private school fees
The final bell rang on Friday March 20, when the government announced it was closing schools to tackle the coronavirus pandemic. Experts say it is unlikely pupils will return before the end of the summer term and parents with children at fee-paying schools are asking whether they still have to pay.
Some 615,000 children attend independent schools in the UK, with annual fees as high as £45,000 for boarding schools and £25,000 a year for some London day schools.
Under normal circumstances, the next payment date would be for the summer term due at the end of the Easter holidays in April. So will they be expected to pay?
“This is a hugely difficult time for everyone,” says Julie Robinson, chief executive of the Independent Schools Council. “Schools are under immense pressures and this is one of the issues that will be dealt with at school level, depending on their individual policies and contracts with parents.
“We hope parents will bear with schools who need time to clarify government support measures and take stock of their situation and ongoing operations. They are focused on the welfare of their school communities and ensuring continuation of teaching and learning.
“Independent schools are fortunate to have access to effective online learning resources, enabling them to continue education remotely using technological solutions.”
Parents facing financial difficulties should contact their school as soon as possible, says Neil Roskilly, chief executive of the Independent Schools Association. All independent schools offer financial help to families, and while it is usually offered when a child enters a school, it can be extended to those families whose financial circumstances change.
Most private schools have funds available for this situation and can also defer fees if there is the prospect of future employment. This should be over a costed and reasonable timescale, usually is up to 12 months. Schools rarely charge interest.
To help bridge the gap between parental incomes and fees, more than £1bn a year is now provided in fee assistance to over 175,000 students, with about half allocated through means-testing.
“Schools are trying their best to maintain a ‘continuity of education’ via online technology and most parents we have spoken to understand that, and are choosing not to withhold fees,” says Mr Roskilly. “But in some cases, where schools have money in reserves, they are considering returning some of those fees to parents.”
Ellie Spencer, associate solicitor in the commercial dispute resolution team at law firm Goodman Derrick, says: “Parents are paying for a service and they might be able to argue that the school is not providing that service. Even if the school is providing online teaching, this is not the whole service, so parents might be entitled to a discount.”
Private nurseries
Parents of children at private nurseries in the UK can pay about £1,000 a month for 50 hours a week for a child under two, but in London, the average Ofsted-rated facility charges between £70 and £85 a day.
Parents typically pay monthly for nurseries so most are receiving bills for April now when children are already at home.
Nurseries are reacting to the closures in different ways. While some are charging full fees, others are offering discounts for all and some cutting costs specifically for families who have suffered a severe loss of income.
Nurseries have contracts with parents that are entered into when the child starts and the terms and conditions tend to require parents to give a month’s notice. They also usually require parents to continue paying fees during an emergency closure, but previously these have tended to be for a few days because of problems with the building.
Purnima Tanuku, chief executive of National Day Nurseries Association, says: “Whether parents continue to pay fees when a closure is outside of a nursery’s control will depend on the agreements between individual nurseries and their parents. We’re pushing the government hard to offer sufficient financial support so nursery businesses can remain sustainable.”
One parent with two children under five at nursery contacted FT Money to say: “I've just received my monthly £2,000 bill with no offer of a discount. It seems that parents — many of whom can now not go to work — are expected to keep the nurseries going without receiving a service.”
Lawyers say parents should negotiate. Edward Macey-Dare, a litigation and employment partner at Lee Bolton Monier-Williams, says: “Remember, nurseries are going to be under severe pressure as a result of the coronavirus situation and, if they play hardball, they are likely to face numerous parents giving notice to withdraw their children. It seems to me, therefore, that parents have the upper hand in this situation when it comes to negotiating a reduction in fees or more favourable payment terms.”
But others warn that without the financial support, private nurseries could collapse. “Some childminders and nurseries have asked parents to continue to pay their fees to retain their children’s places, even if they are not permitted to offer them childcare services,” says Lynne Rowland, a tax partner at Moore Kingston Smith.
“This is perhaps understandable in the absence of clarity over how the special financial measures apply. But the government should consider offering families full tax relief for these costs, which for many families are as essential as their mortgage or rent payments.”
The government has said that funding for early years entitlements covering up to 30 hours of childcare will continue during any periods of nursery closures. Some nurseries are encouraging key workers to continue sending their children into nursery so they can continue to access this government funding.
Rail season tickets
For many commuters the cost of their annual season ticket is their second biggest monthly bill after their mortgage. To get the best deal, many pay upfront for the year, possibly with an interest-free loan from their employers.
Train companies say annual season tickets will be refunded pro-rata, but to get any money back commuters must have 12 weeks remaining on them. This is because they effectively get 12 weeks of free travel on an annual season ticket. Monthly season tickets need at least six days remaining and weekly ones at least two days. The £10 administrative fee will be waived. S
Someone who bought an annual season ticket for £4,980 at the beginning of the year should be able to get a refund for six months’ travel or £2,490. Refunds should be paid within 28 days. Full refunds can also be claimed for advance and off-peak tickets booked but not used — apply via train company websites.
Transport for London is slightly more generous. It requires six weeks to remain on annual season tickets, seven days on a monthly ticket and three days on a seven-day ticket, and does not charge an administrative fee. Apply for a refund via its website.
Many commuters pay to guarantee a place in their station car park by buying an annual season ticket. A typical permit costs over £1,000. Apply online for refunds to the company that runs the car park.
Sports subscriptions
With no live football likely until June at the earliest and many other major sporting events cancelled or postponed, subscribers to Sky Sports can pause their sports subscription online and it will automatically resume when live football and other major sporting events return.
A message on Sky’s website reads: “While we expect that many of the recently postponed sports events will eventually go ahead, if you wish to pause your sports subscription in the meantime you will not be charged a fee to do so or be held to any notice period.”
BT Sport says that customers on its new “flexible TV” package can pause their subscription and make other changes by logging on to bt.com/tv.
BT says: “For now, we have been busy working on a revised schedule for BT Sport which will include variations of popular shows such as Premier League Tonight, live WWE, Rugby Tonight, BT Sport Films and ESPN Films, recent boxing events and classic football, rugby and other sport fixtures from across the years.
“We understand that this is a difficult time for customers and if they wish to discuss their BT Sport contract or other options, would ask they give us a call.”
When it comes to live sporting events, season ticket holders should check the terms and conditions of their clubs. Tickets for postponed games are usually valid when the game is finally played.
For example, Arsenal’s terms and conditions read: “The club reserves the right to reschedule any match or, if necessary, play the match out of view of the public, without notice and without any liability whatsoever.”
Manchester United’s say: “Where any match is cancelled, abandoned or postponed the club shall have no liability whatsoever to ticket holders,” although ticket holders would be entitled to attend rearranged matches.
Live events
People who had secured Glastonbury tickets have been told that their £50 deposits will be rolled over to next year, after this year’s festival was cancelled.
People with tickets for shows and gigs that have been postponed may find they can only get refunds if they cannot attend the new date. For example, tickets for Trevor Noah at the O2 centre at the beginning of April can be used at the rescheduled shows in September.
Gym membership
Gym members who may have found it difficult to end membership contracts in the past could find that their fees stop automatically.
Virgin Active is automatically freezing all memberships at its clubs with no fees to pay until they reopen. It is crediting members with any fees that have already been paid for April and will also credit for March 21 to 31. Its social channels @VirginActiveUK remain open with advice on workouts to do at home.
Gymbox says that for as long as its clubs are closed there will be a freeze on monthly memberships. No payments will be taken for April and any future months it is closed, and fees for time lost in March will also be credited.
Competition in the gym market means many clubs charge on a month-to-month basis, but fixed memberships could prove trickier to cancel — check the terms of your contract to see if a percentage of your fees could be refunded.
University costs
The Student Loans Company says that university students will still receive their loans for living costs at the beginning of the summer term as scheduled, and their tuition fees will be paid directly — regardless of whether their university or provider has made alternative arrangements for teaching.
Universities UK says that while it understands that missed teaching time was “unsettling” for students, universities moving teaching online “does not amount to a closure”. However, many students will have left their campus and student accommodation and returned home to their parents.
This week, Unite, the UK’s largest student accommodation provider, said it would allow students to leave their tenancies early. They will not have to pay their rent for the final term if they tell Unite that they have left or are leaving by 5pm on April 10.
Unite charges an average weekly rent for en suite accommodation of £138 outside London and £221 in the capital.
Unite says: “We are also very conscious that some students may need to extend their stay with us, for example, international students who may not be able to return home due to travel restrictions or those estranged from family without the traditional support network in place. For these students, we will do everything we can to support them beyond their tenancy period at no extra charge.”
University-owned halls of residence may be more willing to issue a partial refund if students have moved out, but private student landlords are less likely to offer any leniency. Many parents will be obliged to keep paying if they offered to act as rental guarantors.
Flights and holidays
If your flight or package holiday was scheduled before April 16 and is cancelled, you do not have to accept a voucher or credit note or be forced to rebook. You are legally entitled to a refund.
The advice not to travel abroad from the Foreign and Commonwealth Office (FCO) also means you should be able to claim from your travel insurer for consequential losses, such as booked hotel rooms or car hire.
When flights and holidays are cancelled, airlines and travel agents are obliged to issue refunds or allow you to rebook for a future date. Under the Package Holiday and Linked Travel Regulations 2018, holidaymakers are also due a full refund.
However, consumer group Which? has found that many companies are ignoring this requirement and are only offering consumers credit vouchers or the chance to reschedule.
Martyn James of Resolver, a free online complaints company, says: “If the hotel, holiday pr flight has been cancelled then you should get a refund as it’s not you, it’s them.”
If firms insist on providing vouchers instead of refunding, he says: “Ask the firm to send you the terms and conditions where it says they can do this. If you don’t think it’s fair, make a complaint.”
British Airways says it will rebook or refund for tickets under its “Manage My Booking” facility. Ryanair has removed its flight change fees on all bookings next month.
Airlines are experiencing an extremely high volume of calls. BA, easyJet, Ryanair and Virgin Atlantic are asking that only passengers who were due to travel in the next 72 hours call or message, so they can help those needing urgent rebooking.
Most travel insurers will ask you to seek a refund from the travel firm first, but if your policy covers you for cancellation, then you can make a claim.
Airbnb says that reservations for stays and experiences made on or before March 14 with a check-in date between then and April 14 will be eligible for a full refund. If a hotel has closed, you are also due a full refund.
If airlines or holiday companies will not pay for cancelled flights or holidays, those who paid by credit card should be able to get compensation under Section 75 of the Consumer Credit Act. But if the hotel is still able to offer the accommodation you are unlikely to get a refund because the provider has not broken their agreement with you.
For bookings after April 16, the situation is less clear. Holidaymakers will have to wait to find out if their flights are affected and what the FCO advice is on travel at that time.
Coronavirus disruption has changed our day-to-day lives beyond all recognition. Millions of households face difficult choices about their personal finances as they seek to rebalance their budgets and manage the cash flow crunch.
Many will seek refunds on services they have committed to pay for, ranging from education to commuting costs and membership of gyms and clubs, which cannot be provided during the shutdown. Others are seeking refunds or insurance payouts on holidays and flights they had booked.
In such unprecedented times, it pays to know your consumer rights, but these must be weighed against warnings from smaller businesses that failure to pay for services could result in their financial collapse.
Private school fees
The final bell rang on Friday March 20, when the government announced it was closing schools to tackle the coronavirus pandemic. Experts say it is unlikely pupils will return before the end of the summer term and parents with children at fee-paying schools are asking whether they still have to pay.
Some 615,000 children attend independent schools in the UK, with annual fees as high as £45,000 for boarding schools and £25,000 a year for some London day schools.
Under normal circumstances, the next payment date would be for the summer term due at the end of the Easter holidays in April. So will they be expected to pay?
“This is a hugely difficult time for everyone,” says Julie Robinson, chief executive of the Independent Schools Council. “Schools are under immense pressures and this is one of the issues that will be dealt with at school level, depending on their individual policies and contracts with parents.
“We hope parents will bear with schools who need time to clarify government support measures and take stock of their situation and ongoing operations. They are focused on the welfare of their school communities and ensuring continuation of teaching and learning.
“Independent schools are fortunate to have access to effective online learning resources, enabling them to continue education remotely using technological solutions.”
Parents facing financial difficulties should contact their school as soon as possible, says Neil Roskilly, chief executive of the Independent Schools Association. All independent schools offer financial help to families, and while it is usually offered when a child enters a school, it can be extended to those families whose financial circumstances change.
Most private schools have funds available for this situation and can also defer fees if there is the prospect of future employment. This should be over a costed and reasonable timescale, usually is up to 12 months. Schools rarely charge interest.
To help bridge the gap between parental incomes and fees, more than £1bn a year is now provided in fee assistance to over 175,000 students, with about half allocated through means-testing.
“Schools are trying their best to maintain a ‘continuity of education’ via online technology and most parents we have spoken to understand that, and are choosing not to withhold fees,” says Mr Roskilly. “But in some cases, where schools have money in reserves, they are considering returning some of those fees to parents.”
Ellie Spencer, associate solicitor in the commercial dispute resolution team at law firm Goodman Derrick, says: “Parents are paying for a service and they might be able to argue that the school is not providing that service. Even if the school is providing online teaching, this is not the whole service, so parents might be entitled to a discount.”
Private nurseries
Parents of children at private nurseries in the UK can pay about £1,000 a month for 50 hours a week for a child under two, but in London, the average Ofsted-rated facility charges between £70 and £85 a day.
Parents typically pay monthly for nurseries so most are receiving bills for April now when children are already at home.
Nurseries are reacting to the closures in different ways. While some are charging full fees, others are offering discounts for all and some cutting costs specifically for families who have suffered a severe loss of income.
Nurseries have contracts with parents that are entered into when the child starts and the terms and conditions tend to require parents to give a month’s notice. They also usually require parents to continue paying fees during an emergency closure, but previously these have tended to be for a few days because of problems with the building.
Purnima Tanuku, chief executive of National Day Nurseries Association, says: “Whether parents continue to pay fees when a closure is outside of a nursery’s control will depend on the agreements between individual nurseries and their parents. We’re pushing the government hard to offer sufficient financial support so nursery businesses can remain sustainable.”
One parent with two children under five at nursery contacted FT Money to say: “I've just received my monthly £2,000 bill with no offer of a discount. It seems that parents — many of whom can now not go to work — are expected to keep the nurseries going without receiving a service.”
Lawyers say parents should negotiate. Edward Macey-Dare, a litigation and employment partner at Lee Bolton Monier-Williams, says: “Remember, nurseries are going to be under severe pressure as a result of the coronavirus situation and, if they play hardball, they are likely to face numerous parents giving notice to withdraw their children. It seems to me, therefore, that parents have the upper hand in this situation when it comes to negotiating a reduction in fees or more favourable payment terms.”
But others warn that without the financial support, private nurseries could collapse. “Some childminders and nurseries have asked parents to continue to pay their fees to retain their children’s places, even if they are not permitted to offer them childcare services,” says Lynne Rowland, a tax partner at Moore Kingston Smith.
“This is perhaps understandable in the absence of clarity over how the special financial measures apply. But the government should consider offering families full tax relief for these costs, which for many families are as essential as their mortgage or rent payments.”
The government has said that funding for early years entitlements covering up to 30 hours of childcare will continue during any periods of nursery closures. Some nurseries are encouraging key workers to continue sending their children into nursery so they can continue to access this government funding.
Rail season tickets
For many commuters the cost of their annual season ticket is their second biggest monthly bill after their mortgage. To get the best deal, many pay upfront for the year, possibly with an interest-free loan from their employers.
Train companies say annual season tickets will be refunded pro-rata, but to get any money back commuters must have 12 weeks remaining on them. This is because they effectively get 12 weeks of free travel on an annual season ticket. Monthly season tickets need at least six days remaining and weekly ones at least two days. The £10 administrative fee will be waived. S
Someone who bought an annual season ticket for £4,980 at the beginning of the year should be able to get a refund for six months’ travel or £2,490. Refunds should be paid within 28 days. Full refunds can also be claimed for advance and off-peak tickets booked but not used — apply via train company websites.
Transport for London is slightly more generous. It requires six weeks to remain on annual season tickets, seven days on a monthly ticket and three days on a seven-day ticket, and does not charge an administrative fee. Apply for a refund via its website.
Many commuters pay to guarantee a place in their station car park by buying an annual season ticket. A typical permit costs over £1,000. Apply online for refunds to the company that runs the car park.
Sports subscriptions
With no live football likely until June at the earliest and many other major sporting events cancelled or postponed, subscribers to Sky Sports can pause their sports subscription online and it will automatically resume when live football and other major sporting events return.
A message on Sky’s website reads: “While we expect that many of the recently postponed sports events will eventually go ahead, if you wish to pause your sports subscription in the meantime you will not be charged a fee to do so or be held to any notice period.”
BT Sport says that customers on its new “flexible TV” package can pause their subscription and make other changes by logging on to bt.com/tv.
BT says: “For now, we have been busy working on a revised schedule for BT Sport which will include variations of popular shows such as Premier League Tonight, live WWE, Rugby Tonight, BT Sport Films and ESPN Films, recent boxing events and classic football, rugby and other sport fixtures from across the years.
“We understand that this is a difficult time for customers and if they wish to discuss their BT Sport contract or other options, would ask they give us a call.”
When it comes to live sporting events, season ticket holders should check the terms and conditions of their clubs. Tickets for postponed games are usually valid when the game is finally played.
For example, Arsenal’s terms and conditions read: “The club reserves the right to reschedule any match or, if necessary, play the match out of view of the public, without notice and without any liability whatsoever.”
Manchester United’s say: “Where any match is cancelled, abandoned or postponed the club shall have no liability whatsoever to ticket holders,” although ticket holders would be entitled to attend rearranged matches.
Live events
People who had secured Glastonbury tickets have been told that their £50 deposits will be rolled over to next year, after this year’s festival was cancelled.
People with tickets for shows and gigs that have been postponed may find they can only get refunds if they cannot attend the new date. For example, tickets for Trevor Noah at the O2 centre at the beginning of April can be used at the rescheduled shows in September.
Gym membership
Gym members who may have found it difficult to end membership contracts in the past could find that their fees stop automatically.
Virgin Active is automatically freezing all memberships at its clubs with no fees to pay until they reopen. It is crediting members with any fees that have already been paid for April and will also credit for March 21 to 31. Its social channels @VirginActiveUK remain open with advice on workouts to do at home.
Gymbox says that for as long as its clubs are closed there will be a freeze on monthly memberships. No payments will be taken for April and any future months it is closed, and fees for time lost in March will also be credited.
Competition in the gym market means many clubs charge on a month-to-month basis, but fixed memberships could prove trickier to cancel — check the terms of your contract to see if a percentage of your fees could be refunded.
University costs
The Student Loans Company says that university students will still receive their loans for living costs at the beginning of the summer term as scheduled, and their tuition fees will be paid directly — regardless of whether their university or provider has made alternative arrangements for teaching.
Universities UK says that while it understands that missed teaching time was “unsettling” for students, universities moving teaching online “does not amount to a closure”. However, many students will have left their campus and student accommodation and returned home to their parents.
This week, Unite, the UK’s largest student accommodation provider, said it would allow students to leave their tenancies early. They will not have to pay their rent for the final term if they tell Unite that they have left or are leaving by 5pm on April 10.
Unite charges an average weekly rent for en suite accommodation of £138 outside London and £221 in the capital.
Unite says: “We are also very conscious that some students may need to extend their stay with us, for example, international students who may not be able to return home due to travel restrictions or those estranged from family without the traditional support network in place. For these students, we will do everything we can to support them beyond their tenancy period at no extra charge.”
University-owned halls of residence may be more willing to issue a partial refund if students have moved out, but private student landlords are less likely to offer any leniency. Many parents will be obliged to keep paying if they offered to act as rental guarantors.
Flights and holidays
If your flight or package holiday was scheduled before April 16 and is cancelled, you do not have to accept a voucher or credit note or be forced to rebook. You are legally entitled to a refund.
The advice not to travel abroad from the Foreign and Commonwealth Office (FCO) also means you should be able to claim from your travel insurer for consequential losses, such as booked hotel rooms or car hire.
When flights and holidays are cancelled, airlines and travel agents are obliged to issue refunds or allow you to rebook for a future date. Under the Package Holiday and Linked Travel Regulations 2018, holidaymakers are also due a full refund.
However, consumer group Which? has found that many companies are ignoring this requirement and are only offering consumers credit vouchers or the chance to reschedule.
Martyn James of Resolver, a free online complaints company, says: “If the hotel, holiday pr flight has been cancelled then you should get a refund as it’s not you, it’s them.”
If firms insist on providing vouchers instead of refunding, he says: “Ask the firm to send you the terms and conditions where it says they can do this. If you don’t think it’s fair, make a complaint.”
British Airways says it will rebook or refund for tickets under its “Manage My Booking” facility. Ryanair has removed its flight change fees on all bookings next month.
Airlines are experiencing an extremely high volume of calls. BA, easyJet, Ryanair and Virgin Atlantic are asking that only passengers who were due to travel in the next 72 hours call or message, so they can help those needing urgent rebooking.
Most travel insurers will ask you to seek a refund from the travel firm first, but if your policy covers you for cancellation, then you can make a claim.
Airbnb says that reservations for stays and experiences made on or before March 14 with a check-in date between then and April 14 will be eligible for a full refund. If a hotel has closed, you are also due a full refund.
If airlines or holiday companies will not pay for cancelled flights or holidays, those who paid by credit card should be able to get compensation under Section 75 of the Consumer Credit Act. But if the hotel is still able to offer the accommodation you are unlikely to get a refund because the provider has not broken their agreement with you.
For bookings after April 16, the situation is less clear. Holidaymakers will have to wait to find out if their flights are affected and what the FCO advice is on travel at that time.
Tuesday 11 April 2017
Flyer beware: why the customer isn't always right at 40,000ft
Dan Milmo in The Guardian
United Airlines shares plummet after passenger dragged from plane
Sunday’s extraordinary scenes on a Chicago, Illinois, to Louisville, Kentucky, flight unfolded because of two regulations that are standard practice across the industry. The first says a passenger can be barred from a flight if the number of customers with tickets exceeds the number of seats. The second says the captain can have you removed from the plane if you get emotional about it.
Air travel is a thicket of regulations and acronyms that, of course, have your safety at heart. But there can be a thin line between guaranteeing your security and dragging a seemingly innocent passenger off an overbooked aircraft.
Flight overbooking is a phenomenon born of an industry that has struggled historically to make money. Indeed, airlines lost nearly $50bn (£40bn) in the past decade due to a combination of the 9/11 attacks, high oil prices and the credit crunch. The sector is making money now, but profits are slender – $9.89 per passenger per journey – so taking a risk and selling 183 tickets for a 180-seater plane is worth it if three of those passengers fail to turn up and you can pocket their fare expenditure as pure profit.
“Airlines have very large fixed costs, so if they don’t fill the plane past a certain point they will lose money. They know a certain proportion of these passengers will not show, so they need to overbook to get to break-even or better,” says Brian Pearce, the chief economist of the industry’s trade body, the International Air Transport Association.
The contract of carriage at United – the conditions to which you agree when you buy a ticket – comes in at 37,000 words and embraces a range of arcane treaties and rules, from the Montreal and Warsaw conventions to FARs, the US’s federal aviation regulations.
According to one legal expert, United was acting within its rights as the furore unfolded when it tried to find seats for four crew who needed to reach a plane they were due to operate in Louisville. But such a calamitous collision of passenger rights and airline prerogative is unlikely. “It is a very rare set of circumstances,” says Kevin Clarke, a flight-delay specialist at UK law firm Bott & Co. Pointing out that US airlines usually seek, and find, volunteers to come off full flights in exchange for compensation, he adds: “It can be a question of who backs down first.” In the case of this United flight, the passenger certainly didn’t.
United’s contract of carriage is a joyless tour of one of the world’s most over-regulated industries, where a minority of colourful terms – “acts of God”; “civil commotions” – is crowded out by tightly worded legalese that will stop you from taking any future journey for granted (at least on United). Under rule five, covering “cancellations of reservations”, the passenger is warned that all flights are “subject to overbooking”, which could result in the airline being unable to put the passenger on the flight. In that scenario – please bear with this – rule 25, on passengers denied boarding compensation, kicks in.
United Airlines CEO calls dragged passenger 'disruptive and belligerent'
Using language that inadvertently acknowledges the confrontation inherent in the situation, it states that, if no passengers agree voluntarily to give up their seats in exchange for compensation, “other passengers may be denied boarding involuntarily”. Admittedly, there is recompense of about $1,000 available in this scenario, but it appears that the United passenger in this case said no. This brought him head to head with the far tougher rule, enshrined under the 1963 Tokyo Convention, that says the captain’s word is law on an airliner and that he or she has “the ultimate authority” in dealing with any onboard incident.
Rule 21 of United’s contract states that removal of a passenger may be necessary if their conduct is deemed to be “disorderly, offensive, abusive or violent”. It appears that the Louisville-bound passenger refused to give up his seat voluntarily and the crew deemed his behaviour to be out of line, prompting them to call in the security team at Chicago O’Hare international airport.
Compensation for delays caused by overbooking is guaranteed by EU law. Photograph: Justin Sullivan/Getty Images
Speaking to the Guardian on the condition of anonymity, a senior pilot at a major airline said: “The legal position is that you are not guaranteed to travel and that you must obey any ‘reasonable commands’ of the crew. So, legally, the airline is right.
“If it were me, I might have sought to promote a different solution [to allow] the crew to travel. I suspect a crew was ‘out of hours’ [about to exceed its working-hours limit] or sick or injured somewhere else on the network and the decision was therefore a little late to send them on that aircraft. I think the reputational damage from the events on Facebook will be significantly worse than a delay – even significant – elsewhere.”
Airline professionals are astonished that United’s overbooking procedures, in a market where overbooking is prevalent, resulted in a passenger being allowed to board before they were subsequently dragged off. John Strickland, an industry consultant whose career has included managing the overbooking process at a major airline, says carriers now have sophisticated computer systems that calibrate whether flights can get away with being overbooked – right down to the specific route, the time of day and whether demand will surge due to holidays or special events. However, he adds: “It is not a perfect science, which means when it goes wrong it needs to be handled sensitively.” This is where United, a so-called full-service airline that tries to offer a level of customer service superior to that of budget rivals, could suffer lasting reputational damage.
At the end of rule 25, United states: “UA shall not be liable for any punitive, consequential or special damages arising out of or in connection with UA’s failure to provide the passenger with confirmed reserved space.” Best of luck with that one, United.
An argument in favour of airline laws is what happens when they disappear. In the UK, compensation for delays caused by overbooking is covered by a regulation called EU 261/2004. According to industry lore, it came into fruition when MEPs grew exasperated with being bumped from flights to Brussels and Strasbourg. But airline passenger compensation could be one of the items of red tape that will be lobbed into the Brexit bonfire come EU independence day. One of the unintended consequences of severing links with Brussels, and abandoning EU 261/2004, is that passengers flying from the UK could be exposed when we say goodbye to the single market.
“There is the possibility that we adopt the principles of the regulation [after leaving the EU],” says Bott and Co’s Clarke. “But it is a possibility that we will be left without that protection. The obligation to put you on an alternative flight, the entitlement to compensation, that would not be there. You could be left stranded.”
Another reason for Michael Gove and his fellow Brexiters to stick to the staycation.
United Airlines planes at San Francisco international airport. Photograph: Louis Nastro/Reuters
Airline passengers beware: when you buy a ticket, you are not only subjecting yourself to the ordeals of security queues, baggage limits and turbulence. You are also signing a near-40,000-word contract with a carrier that, in the extreme case of a United Airlines passenger on 9 April, could have you hauled off an overbooked aircraft – legally – as fellow customers and a global web audience look on aghast.
Airline passengers beware: when you buy a ticket, you are not only subjecting yourself to the ordeals of security queues, baggage limits and turbulence. You are also signing a near-40,000-word contract with a carrier that, in the extreme case of a United Airlines passenger on 9 April, could have you hauled off an overbooked aircraft – legally – as fellow customers and a global web audience look on aghast.
United Airlines shares plummet after passenger dragged from plane
Sunday’s extraordinary scenes on a Chicago, Illinois, to Louisville, Kentucky, flight unfolded because of two regulations that are standard practice across the industry. The first says a passenger can be barred from a flight if the number of customers with tickets exceeds the number of seats. The second says the captain can have you removed from the plane if you get emotional about it.
Air travel is a thicket of regulations and acronyms that, of course, have your safety at heart. But there can be a thin line between guaranteeing your security and dragging a seemingly innocent passenger off an overbooked aircraft.
Flight overbooking is a phenomenon born of an industry that has struggled historically to make money. Indeed, airlines lost nearly $50bn (£40bn) in the past decade due to a combination of the 9/11 attacks, high oil prices and the credit crunch. The sector is making money now, but profits are slender – $9.89 per passenger per journey – so taking a risk and selling 183 tickets for a 180-seater plane is worth it if three of those passengers fail to turn up and you can pocket their fare expenditure as pure profit.
“Airlines have very large fixed costs, so if they don’t fill the plane past a certain point they will lose money. They know a certain proportion of these passengers will not show, so they need to overbook to get to break-even or better,” says Brian Pearce, the chief economist of the industry’s trade body, the International Air Transport Association.
The contract of carriage at United – the conditions to which you agree when you buy a ticket – comes in at 37,000 words and embraces a range of arcane treaties and rules, from the Montreal and Warsaw conventions to FARs, the US’s federal aviation regulations.
According to one legal expert, United was acting within its rights as the furore unfolded when it tried to find seats for four crew who needed to reach a plane they were due to operate in Louisville. But such a calamitous collision of passenger rights and airline prerogative is unlikely. “It is a very rare set of circumstances,” says Kevin Clarke, a flight-delay specialist at UK law firm Bott & Co. Pointing out that US airlines usually seek, and find, volunteers to come off full flights in exchange for compensation, he adds: “It can be a question of who backs down first.” In the case of this United flight, the passenger certainly didn’t.
United’s contract of carriage is a joyless tour of one of the world’s most over-regulated industries, where a minority of colourful terms – “acts of God”; “civil commotions” – is crowded out by tightly worded legalese that will stop you from taking any future journey for granted (at least on United). Under rule five, covering “cancellations of reservations”, the passenger is warned that all flights are “subject to overbooking”, which could result in the airline being unable to put the passenger on the flight. In that scenario – please bear with this – rule 25, on passengers denied boarding compensation, kicks in.
United Airlines CEO calls dragged passenger 'disruptive and belligerent'
Using language that inadvertently acknowledges the confrontation inherent in the situation, it states that, if no passengers agree voluntarily to give up their seats in exchange for compensation, “other passengers may be denied boarding involuntarily”. Admittedly, there is recompense of about $1,000 available in this scenario, but it appears that the United passenger in this case said no. This brought him head to head with the far tougher rule, enshrined under the 1963 Tokyo Convention, that says the captain’s word is law on an airliner and that he or she has “the ultimate authority” in dealing with any onboard incident.
Rule 21 of United’s contract states that removal of a passenger may be necessary if their conduct is deemed to be “disorderly, offensive, abusive or violent”. It appears that the Louisville-bound passenger refused to give up his seat voluntarily and the crew deemed his behaviour to be out of line, prompting them to call in the security team at Chicago O’Hare international airport.
Compensation for delays caused by overbooking is guaranteed by EU law. Photograph: Justin Sullivan/Getty Images
Speaking to the Guardian on the condition of anonymity, a senior pilot at a major airline said: “The legal position is that you are not guaranteed to travel and that you must obey any ‘reasonable commands’ of the crew. So, legally, the airline is right.
“If it were me, I might have sought to promote a different solution [to allow] the crew to travel. I suspect a crew was ‘out of hours’ [about to exceed its working-hours limit] or sick or injured somewhere else on the network and the decision was therefore a little late to send them on that aircraft. I think the reputational damage from the events on Facebook will be significantly worse than a delay – even significant – elsewhere.”
Airline professionals are astonished that United’s overbooking procedures, in a market where overbooking is prevalent, resulted in a passenger being allowed to board before they were subsequently dragged off. John Strickland, an industry consultant whose career has included managing the overbooking process at a major airline, says carriers now have sophisticated computer systems that calibrate whether flights can get away with being overbooked – right down to the specific route, the time of day and whether demand will surge due to holidays or special events. However, he adds: “It is not a perfect science, which means when it goes wrong it needs to be handled sensitively.” This is where United, a so-called full-service airline that tries to offer a level of customer service superior to that of budget rivals, could suffer lasting reputational damage.
At the end of rule 25, United states: “UA shall not be liable for any punitive, consequential or special damages arising out of or in connection with UA’s failure to provide the passenger with confirmed reserved space.” Best of luck with that one, United.
An argument in favour of airline laws is what happens when they disappear. In the UK, compensation for delays caused by overbooking is covered by a regulation called EU 261/2004. According to industry lore, it came into fruition when MEPs grew exasperated with being bumped from flights to Brussels and Strasbourg. But airline passenger compensation could be one of the items of red tape that will be lobbed into the Brexit bonfire come EU independence day. One of the unintended consequences of severing links with Brussels, and abandoning EU 261/2004, is that passengers flying from the UK could be exposed when we say goodbye to the single market.
“There is the possibility that we adopt the principles of the regulation [after leaving the EU],” says Bott and Co’s Clarke. “But it is a possibility that we will be left without that protection. The obligation to put you on an alternative flight, the entitlement to compensation, that would not be there. You could be left stranded.”
Another reason for Michael Gove and his fellow Brexiters to stick to the staycation.
Tuesday 6 December 2016
How airlines and Uber rip you off
Arwa Mahadwi in The Guardian
Flighty prices: many airlines employ ‘dynamic pricing’ – and the practice is growing. Photograph: Getty Images/iStockphoto
Even rocket scientists, I would wager, are befuddled by airline pricing. One minute, a flight you’re looking at costs £400; 30 seconds later it has increased by £100. Panic sets in; you buy a ticket before it ascends out of your price range.
I experienced this fluctuation frustration recently while trying to buy a ticket home to London from New York for Christmas. After about a gazillion visits to British Airways’ website, I decided finally to book something. Immediately, the price went up. That’s OK, I thought, trying to console myself. I read on Twitter that London has gone all Islamic anyway and Christmas has been banned. Probably nothing to go home to any more, just ritual stonings and sharia. Then I remembered a rumour that clearing your browser cookies could get you a cheaper flight. I gave it a go and, voila, the flight reverted to its earlier, cheaper price.
The thinking behind the cookies trick is that airlines can tell from your browser history when you’re particularly interested in a flight – and thus willing to pay a higher price – and take advantage of this. Whether this is true is known only to a few (when the Guardian asked BA about this in 2010 they said they didn’t use cookies this way). What is clear, however, is that airlines – and many other companies – are increasingly moving towards “personalised pricing”. Sometimes called “differential pricing” or “price discrimination”, this means charging customers different prices for the same product based on how much they think people are willing to pay.
Price discrimination, to be clear, is not the same as “dynamic pricing”. Airlines have practised dynamic pricing for a long time: there are a set number of prices available, and you get a different fare based on factors including when you book and the availability of seats on the flight. Prices, however, are starting to get more personal. In 2014, a US regulator approved an industry-wide system, the implementation of which started only recently, that allows airlines and travel agencies to collect personal data – information such as marital status, address and travel history – and use that data to offer you “more agile pricing and more personalised offerings”. So, if an airline can see that you live in a fancy neighbourhood and regularly fly business-class, it may offer you a higher fare than it would someone whom it believes is more price-sensitive. As technology grows more sophisticated, companies may be able to serve you higher prices based on factors such as your emotional state.
Businesses are already using customised pricing online based on information they can glean about you. It is hard to know how widespread the practice is; companies keep their pricing strategies closely guarded and are wary of the bad PR price discrimination could pose. However, it is clear that a number of large retailers are experimenting with it. Staples, for example, has offered discounted prices based on whether rival stores are within 20 miles of its customers’ location. Office Depot has admitted to using its customers’ browsing history and location to vary its range of offers and products. A 2014 study from Northeastern Universityfound evidence of “steering” or differential pricing at four out of 10 general merchandise websites and five out of five travel websites. (Steering is when a company doesn’t give you a customised price, but points you towards more expensive options if it thinks you will pay more.) The online travel company Orbitz raised headlines in 2012 when it emerged that the firm was pointing Mac users towards higher-priced hotel rooms than PC users.
Price discrimination doesn’t happen only online. Supermarkets have used personalised pricing based on information gleaned from loyalty cards and shopping habits. Broadly speaking, economists tend to think of price discrimination as a good thing for businesses and customers. Essentially, it is algorithms robbing from the rich to subsidise the poor, all while growing a company’s market.
There is the potential for this to go further still and for customised pricing to help reduce some of the inequities in society. In Finland, speeding tickets are linked to income, a system known as progressive punishment. Could we not have progressive pricing, a system where the cost of necessities such as bread and milk is linked to your ability to pay for them?
However, it seems more likely that companies will exploit the increasing amounts of data they have about us to our detriment. Take Uber, for example. Its much-hated “surge pricing” is an example of dynamic pricing: prices change according to supply and demand. They don’t change according to how desperate you, as an individual, are to get a cab, but this may not be the case for long. Uber knows a hell of a lot about you – including, for example, how low the battery is on your phone. It also has data that shows people are more likely to pay surge pricing when their phone battery is low. “We absolutely don’t use that ... but it’s an interesting kind of psychological fact of human behaviour,” a behavioural economist at Uber said earlier this year. This may be true, but why do you think Uber employs behavioural economists? It is not simply to marvel at the psychology of human behaviour.
As airlines become more adept at gathering and exploiting data, I shudder to think what “interesting facts” of human behaviour they will start to factor into their pricing strategies. Fares will stop being linked to variables such as seats already sold and start fluctuating according to how many times your mum has texted you to ask if you’ve bought your ticket yet, and how guilty you feel that you haven’t. Good luck trying to clear your cookies to fix that.
Even rocket scientists, I would wager, are befuddled by airline pricing. One minute, a flight you’re looking at costs £400; 30 seconds later it has increased by £100. Panic sets in; you buy a ticket before it ascends out of your price range.
I experienced this fluctuation frustration recently while trying to buy a ticket home to London from New York for Christmas. After about a gazillion visits to British Airways’ website, I decided finally to book something. Immediately, the price went up. That’s OK, I thought, trying to console myself. I read on Twitter that London has gone all Islamic anyway and Christmas has been banned. Probably nothing to go home to any more, just ritual stonings and sharia. Then I remembered a rumour that clearing your browser cookies could get you a cheaper flight. I gave it a go and, voila, the flight reverted to its earlier, cheaper price.
The thinking behind the cookies trick is that airlines can tell from your browser history when you’re particularly interested in a flight – and thus willing to pay a higher price – and take advantage of this. Whether this is true is known only to a few (when the Guardian asked BA about this in 2010 they said they didn’t use cookies this way). What is clear, however, is that airlines – and many other companies – are increasingly moving towards “personalised pricing”. Sometimes called “differential pricing” or “price discrimination”, this means charging customers different prices for the same product based on how much they think people are willing to pay.
Price discrimination, to be clear, is not the same as “dynamic pricing”. Airlines have practised dynamic pricing for a long time: there are a set number of prices available, and you get a different fare based on factors including when you book and the availability of seats on the flight. Prices, however, are starting to get more personal. In 2014, a US regulator approved an industry-wide system, the implementation of which started only recently, that allows airlines and travel agencies to collect personal data – information such as marital status, address and travel history – and use that data to offer you “more agile pricing and more personalised offerings”. So, if an airline can see that you live in a fancy neighbourhood and regularly fly business-class, it may offer you a higher fare than it would someone whom it believes is more price-sensitive. As technology grows more sophisticated, companies may be able to serve you higher prices based on factors such as your emotional state.
Businesses are already using customised pricing online based on information they can glean about you. It is hard to know how widespread the practice is; companies keep their pricing strategies closely guarded and are wary of the bad PR price discrimination could pose. However, it is clear that a number of large retailers are experimenting with it. Staples, for example, has offered discounted prices based on whether rival stores are within 20 miles of its customers’ location. Office Depot has admitted to using its customers’ browsing history and location to vary its range of offers and products. A 2014 study from Northeastern Universityfound evidence of “steering” or differential pricing at four out of 10 general merchandise websites and five out of five travel websites. (Steering is when a company doesn’t give you a customised price, but points you towards more expensive options if it thinks you will pay more.) The online travel company Orbitz raised headlines in 2012 when it emerged that the firm was pointing Mac users towards higher-priced hotel rooms than PC users.
Price discrimination doesn’t happen only online. Supermarkets have used personalised pricing based on information gleaned from loyalty cards and shopping habits. Broadly speaking, economists tend to think of price discrimination as a good thing for businesses and customers. Essentially, it is algorithms robbing from the rich to subsidise the poor, all while growing a company’s market.
There is the potential for this to go further still and for customised pricing to help reduce some of the inequities in society. In Finland, speeding tickets are linked to income, a system known as progressive punishment. Could we not have progressive pricing, a system where the cost of necessities such as bread and milk is linked to your ability to pay for them?
However, it seems more likely that companies will exploit the increasing amounts of data they have about us to our detriment. Take Uber, for example. Its much-hated “surge pricing” is an example of dynamic pricing: prices change according to supply and demand. They don’t change according to how desperate you, as an individual, are to get a cab, but this may not be the case for long. Uber knows a hell of a lot about you – including, for example, how low the battery is on your phone. It also has data that shows people are more likely to pay surge pricing when their phone battery is low. “We absolutely don’t use that ... but it’s an interesting kind of psychological fact of human behaviour,” a behavioural economist at Uber said earlier this year. This may be true, but why do you think Uber employs behavioural economists? It is not simply to marvel at the psychology of human behaviour.
As airlines become more adept at gathering and exploiting data, I shudder to think what “interesting facts” of human behaviour they will start to factor into their pricing strategies. Fares will stop being linked to variables such as seats already sold and start fluctuating according to how many times your mum has texted you to ask if you’ve bought your ticket yet, and how guilty you feel that you haven’t. Good luck trying to clear your cookies to fix that.
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