Transcript: Nickel and Dimed?

This is a partial transcript from "Your World with Neil Cavuto," November 22, 2005, that was edited for clarity.

NEIL CAVUTO, HOST: Think that flight home you're about to take for Thanksgiving was pricey? Wait until you get on the plane! From the street to your seat, the airlines are hitting fliers with extra fees.

My next guest is outraged by these extra fees.

Joining us now is Michael Boyd. Michael is president of The Boyd Group.

Michael, what the heck is going on?

MICHAEL BOYD, PRESIDENT, THE BOYD GROUP: It's bad management, nickel-and-diming of customer.

I mean, first of all, pillows are a hygiene item. You shouldn't even pay. What's the next step, putting a pay toilet in the back of the airplane for coach? It's really very misguided. And I think they need to rethink these things.

CAVUTO: How is it possible we're at the state now we're being nickeled-and-dimed like this?

BOYD: Well, I think some airlines hire advisers who don't know the airline business, look at numbers, and say, "Well, yes, let's charge somebody if they want to go on the 9:00 flight, when they're really booked on the 10:00 flight and already there." That's just opportunistic gouging, when you have a lot of other costs they can cut out.

To go through security, you have to have a boarding pass. So, then, why do they have three people standing there at the gate? The reason is, they have done it all along. There's a lot more they can cut before they start charging for pillows and blankets.

CAVUTO: You know, Michael, though, what's so unique about what airlines are doing? Hotels do this all the time. There's a surcharge if you use the Internet, a surcharge for long-distance phone calls, surcharges for lots of stuff. You could argue airlines are just, you know, catching up.

BOYD: Well, I could also argue, when you get on JetBlue (JBLU) and you get a TV set and a seat assignment, and you get on a major carrier and you don't get any of that. And, in some cases, actually, hotels are going the other way. They're starting to give that stuff away.

Service gets people back on an airplane. But, when you get gouged for a $3 meal, or worse, charged $2 for a pillow that probably someone sat or walked on the prior flight, that's ridiculous.

(LAUGHTER)

CAVUTO: But let me ask you something. I mean, are there airlines that you fly that are less offensive than others?

BOYD: Well, you know, Frontier (FRNT) here in Denver does a very good job. When you get on that airplane, it's like going back to the 1950s. When the flight attendant says, "May I help you put your back away?" she's not talking proctology. They want to really help you.

(LAUGHTER)

BOYD: So, those are the airlines people fly.

CAVUTO: What about the major carriers? They're all hurting. Half of them seem to be in bankruptcy. Is this just you avoid the ones that are in bankruptcy because they're cutting corners left and right?

BOYD: Well, no, you have got to be careful with that.

I mean, one of the carriers that has the best customer service on the planet is really United Airlines (UALAQ). They do a superb job, even though they're in bankruptcy. They will be out soon. But it's really what management does — it's not the employees — making bad decisions, like charging you $25 to go on a flight an hour earlier, or $2 for a pillow, or taking — in some cases, in Europe, they have even taken seat pockets away and — and make seats not recline anymore.

It gets to the point where, some time, the customer is going to say, enough.

CAVUTO: Yes. But the customer is not saying, enough, Michael.

The fact of the matter is, these planes have never been more crowded. The airports have never been more packed. So, obviously, they feel they can just keep doing this.

BOYD: They can, but I think you're going to get to a point now where you are going to have more competition.

JetBlue on the East Coast has set the standard. Even Southwest (LUV) is now chasing them now. So, I think there will be a turnaround as you go forward, because people just are not going to look at this stuff and say, why put up with it?

But you're quite right. Airlines are setting all their products. And econ 101 says, when you are selling everything, you can raise your prices.

CAVUTO: All right, Michael Boyd, thank you very much. He's with The Boyd Group, the president, in Denver.

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