Samoa Air Pay-By-Weight Scheme Hailed A Big Fat Success

 @MarkJohansonIBT
on December 11 2013 8:29 PM

It’s been nearly a year since Samoa Air made headlines around the world as the first carrier to charge passengers by their weight, rather than a flat fare for the seat. Now, the tiny South Pacific carrier’s chief executive is back in the news reporting that the experiment was a big fat success.

In fact, CEO Chris Langton told the Australian Broadcasting Corporation Wednesday that the trial was so successful that the company will upgrade its fleet to accommodate the pay-as-you-weigh system.

“The profile that we would use for the next aircraft, we would bring it from 14 seats, which would be its traditional layout, and we’ll actually only put in nine seats,” Langton said. “And that way we can provide for people who are paying more because they are larger.”

“Everybody gets what they’re paying for,” he added.

World Heath Organization statistics show that Samoa has one of the world’s largest rates of obesity. Indeed American Samoa, a U.S. territory within the archipelago, has the absolute highest percentage of overweight citizens on the planet, at more than 94 percent. Health officials blame an unhealthy fast-food culture exported from the mainland powerhouse and an abandonment of traditional foods for imported ones.

Langton believes the pay-by-weight method is not only the way of the future for Samoa Air, but a system that could benefit other nations like the U.S., where 67 percent of the population is overweight. Under the Samoa Air model, a passenger’s body weight and baggage weight are added together to give a total weight and price.

“We find that generally speaking, if you look at any operation anywhere between any destination worldwide, a person that comes in at about 120 kilos (264 pounds) or less will always be better off to travel on a pay-by-weight system,” Langton noted. “The interest hasn’t diminished anywhere. Worldwide there’s still massive discussion going on as to how pay-by-weight is going to transcend into larger airplanes.”

If penny-pinching global carriers heed the advice of Norwegian Economist Bharat P. Bhatta, they, too, will enact a pay-as-you-weigh pricing scheme to “achieve greater efficiency, fairness and environmental stability.” Dr. Bhatta, associate professor of economics at Sogn og Fjordane University College, called the concept “intuitive, logical and consistent with simple mathematics and economics” in a report published in the Journal of Revenue and Pricing Management in March.

The growing debate over a so-called “fat tax” began in earnest in 2008, when the skyrocketing price of jet fuel forced airlines to shift toward a model more dependent on ancillary revenues. Dr. Bhatta, however, believes he has the solution to balancing the weight-fuel equilibrium. “A reduction of 1 kilo weight of a plane will result in fuel savings worth US$3,000 a year and a reduction of CO2 emissions by the same token.”

The professor of economics cited current airline overweight policies as well as increasing fees for luggage as reasons to adopt his pay-as-you-weigh model. “Charging according to weight and space is a universally accepted principle, not only in transportation, but also in other services,” he wrote in the study. “Weight and space are far more important in aviation than other modes of transport, and airlines should take this into account when pricing their tickets.”

Dr. Bhatta suggested three possible models:

1)    Passengers pay for their flight per kilo, combining body and luggage weight for the final fare.

2)    Companies set a base fare with a per-kilo discount for “underweight” passengers and a per-kilo surcharge for “overweight” passengers.

3)    Companies set a base fare with a predetermined discount for those under a certain weight threshold and a predetermined surcharge for those above a certain weight threshold.

The professor hinted in the study that he preferred the latter, noting that passengers would be free to declare their own weight. However, one in five would be selected at random and weighed to dissuade false declarations, and penalties would apply to those who attempt to cheat the system.

“Some people consider that charging air travelers according to their body weight is not appropriate because this policy treats human beings as goods. They think that charging based on personal characteristics is discriminatory,” Dr. Bhatta noted. “Nevertheless every business does this already. This is not different but just a little hard to imagine because we are not used to weight-based fare yet.”

If Dr. Bhatta’s proposal gains weight in the coming years, you can thank a little airline in the South Pacific for showing the world just how profitable it can be.

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