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Charging for service

Airlines are rushing to charge their customers for speaking with a live agent. It may be needed in a highly competitive industry but don't expect the practice to spread, says one analyst.

It was only two weeks after the first major airline introduced a fee for purchasing tickets via telephone that three more followed suit. But don't expect the trend to take over customer service everywhere, said one analyst.

United Airlines, a division of Elk Grove Township, Ill.-based UAL Corp., announced last Wednesday it was adding a $10 fee for tickets purchased at the airport counter and a $5 fee for tickets purchased via phone. It joins Northwest Airlines, American Airlines and Continental Airlines in establishing a fee.

"The airlines in some ways are a special case," said Chris Selland, vice president of sell side research with the Boston-based Aberdeen Group. "They're under huge cost pressure. Generally speaking, most customers prefer to serve themselves anyway and preferably if there's something in it for them."

The cost pressure was made clear Sunday when US Airways Group Inc., in Arlington, Va., which operates the nation's seventh largest airline, filed for bankruptcy protection for the second time in two years.

The airlines have tried the "carrot" approach, such as offering frequent flier bonuses for those who make reservations online. Now they're turning to the "stick" approach of charging those who make reservations via phone or in person.

Banks tried a similar approach a few years ago, charging people to use live tellers rather than ATMs.

"That went over like a lead balloon," Selland said.

Airline customers, however, are used to price discrimination, like required Saturday night stays and business traveler rates, he added.

While it may seem like the perfect way to alienate a customer base, they have few alternatives. So far, among the major carriers, only Delta Air Lines has kept from adding the charge. The move to charging for reservations through a live agent spread as quickly as the industry's "price wars" over fares.

"It's the traditional customers who are going to be bent out of shape by this," Selland said. "They'll certainly get some complaints and it won't endear their customers anymore, but I don't know that they really lose that much."

The end result may create what Selland called "the Nordstrom of the airlines." A company that, in contrast to discount providers like Southwest Airlines and JetBlue Airways, will charge extra for superior customer service.


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