If you’ve put on a few kilos over the festive season then reading this article may not be to your taste – particularly if you’re about to join the throng of Aussies heading overseas for a holiday.
To cut to the chase: people who weigh more should pay more to fly on planes – in the same way that people who exceed their baggage allowance must fork out extra.
The rationale is simple. The fuel burnt by planes depends on many things but the most important is the weight of the aircraft. The more a plane weighs, the more fuel it must burn.
If the passengers on the aircraft weigh more, the aircraft consumes more fuel and the airline’s costs go up.
In turn, the airline will need to lift airfares to recover these additional costs. And when they do, the burden of these higher fees should not be lumbered on those who are shedding a few kilos or keeping their weight stable.
In fact, airline fuel costs have increased since 2000 not just because of higher oil and jet fuel prices – although these are by far the most important drivers of higher costs – but also because the average adult passenger is carrying a bit more heft.
Between 1926 and 2008, the average weight of an Aussie female adult increased from 59 kilograms to 71 kilos and the average weight of an Aussie male adult increased from 72 to 85 kilos.
These increases represent weight gains of around 0.23 per cent and 0.20 per year for woman and men, respectively. Since 2000, the extra loading that an average adult passenger carries is about 2 kilos.
All adds up
So what does this increase mean for additional fuel consumption on a big, modern aircraft like the A380?
On a route like Sydney to London via Singapore, it means around 3.72 extra barrels of jetfuel per flight is burnt, which at current prices cost about $472.
This tally may not seem like a lot of money but when you add it up over all flights for a year the extra cost can all but wipe out an airline’s profits, such is the thinness of margins these days particularly on international routes.
For example, if the airline flies three times a day to London the cost of carrying two extra kilograms per person is about $1 million per year. This cost represents around 13 per cent of profit if the airline only clears $10 per passenger from the route.
Assuming that a “weight surcharge” would be applied on a per-excess-kilo basis for both men or women who weigh above a certain limit, the fee that would recover costs at current jet fuel prices is about 58 cents per kilogram on the Sydney to London via Singapore route.
This calculation means that if the critical weight limit is 75 kilograms and a man weighed 100 kilograms, then the surcharge would be $14.50 one-way or double this for return. Conversely, a female weighing just 50 kilos would get a “petite” discount of $14.50 each way.
This debate may sound discriminatory, but in fact what economists term price discrimination – charging consumers who buy essentially the same product a different price – is a common feature in the modern market.
Movie theatres practise price discriminate on the basis of age and employment status. Trains price discriminate on the basis of time of travel. Taxis price discriminate on the basis of the payment method customers use.
Retailers price discriminate on the basis of whether a sale is in-store or over the internet. Insurance companies price discriminate on the basis of where a car is usually parked, or the suburb in which a house is located.
In short, companies usually practise price discrimination because they think they can make more money by doing so.
There are usually two general rationales for such discrimination. The first is that one segment of the market costs more than another and so should pay a higher price to recover those costs. The weight surcharge is an example of this.
The other rationale is that one segment of the market is less sensitive to price than others and so they can profitably raise the price paid by that segment relative to others.
Airlines practise this price discrimination today by charging passengers that book a long way out from departure less than those who are booking a short time out from departure.
The people who book a long way ahead are usually more sensitive to price than the desperadoes who are booking today for a flight tomorrow.
Of course, while a weight surcharge may be a good idea in theory, it won’t be easy to implement. Quite apart from the public uproar that would accompany its introduction, such a fee would be difficult to implement. Passengers would have to be weighed at check-in, which is not great for the speed of the airport experience (although some Indonesian airports require passengers to stand on scales with their bags).
As the obesity crisis worsens, however, and the price of jet fuel continues to spiral upward, such user-pay charge may be something the airlines can’t ignore for too much longer.
Tony Webber was Qantas Group chief economist between 2004 and 2011. He is now managing director of Webber Quantitative Consulting and Associate Professor at the University of Sydney Business School, and contributed this article to BusinessDay.
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