The Wall Street Journal is unhappy with the move by President Biden to go after “junk fees,” by setting up a task force to uncover abusive pricing. It complains that this will interfere with companies’ ability to set prices where they think best, and will lead them to offset junk fees with overall price increases.
While the ending of junk fees may lead to some increase in advertised prices, this is exactly the point. We want people to know what they are paying. It doesn’t do you any good to get a cheap airline seat and then find out you have to pay big bucks for your carry-on luggage, an in-flight soda, and even using the restroom.
In every economics class we teach students that we get the best market outcomes where everyone is fully informed. If you see a plane seat advertised as $200, it should actually be $200. Then you can compare it to the price other airlines are charging. No one wants to get out a calculator and figure out what the price will be with all the various extra fees, if they can even find out about them before they get on the plane.
What President Biden is doing might be popular, as the WSJ suggests, but it is also good economics. Scam runners might be angered, but fans of the free market should be applauding.
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