A commenter on a post I published last week raised an interesting concept, discounts for vaccinated travelers. But at what point does a price benefit vs price discrimination?
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Interesting Question Raised In The Comments
In an article about a recent court battle between the CDC and the state of Florida, the topic was raised of circumventing the Florida state law by making COVID vaccine declarations voluntary as opposed to mandatory.
Rene, of Rene’s Points, wrote:
“The solution is simple – Charge those who refuse to voluntarily show proof of vaccination an extra $1000 per person and require them to wear a mask everywhere onboard including when in the pool and on the sun deck etc.
The fools who refuse to get the shot will soon wise up or not sail!”
Initially, I responded that this would likely violate the Florida law, SB 2006, and to the spirit of the law (but perhaps not as it’s written) I maintain that a court would likely see it the same way. More on that later.
However, as we explored that more together another commenter, Stannis, did challenge the notion that it was not price discrimination, it was a discount. That’s an interesting thought. With regard to cruises, the CDC COVID 19 vaccine travel policies have been under the agency’s purview beginning with the No Sail Order. Discounts (like free donuts) or incentives (like bonuses) have been handed out by other businesses with the voluntary display of inoculation. These have heretofore gone unchallenged.
When Does Cost Incentive Become Price Discrimination?
Most of the price discrimination laws are from the Great Depression (Robinson-Patman Act) and refer almost exclusively to monopolistic pursuits. Each of the cruise lines is able to pursue its own policies, however, if they perform in lockstep it could be argued as price-fixing which is very much actively pursued on far more recent laws. Southwest, American, and others have all paid settlements as a result.
Therefore, they couldn’t all charge $1,000 more for unvaccinated passengers and they also could not coordinate their unvaccinated surcharge amount. That would pit Royal Caribbean against Princess and Carnival. Cruises are competitive and if one line were to charge $900 more, and another $1100 the cruise line charging $900 would have a cost advantage and begin a race to the bottom.
Charging customers more based on their vaccination status is generally believed to be illegal (though Robinson-Patman wouldn’t necessarily apply) but discounts are not. However, if customers are charged a separate price based on this status, a discount versus a surcharge is really the same thing.
Impending Legal Issues
Vaccination is widely embraced and encouraged by the Centers for Disease Control and Prevention (CDC) but just as the agency lost in United States federal court against the State of Florida statute challenge, they may not hold water. The below are just some of the reasons why a traveler may not become vaccinated and many of those could pose a legal challenge for businesses that disadvantage customers because of it.
Not FDA Approved
While given special permission in the US for release, the FDA has not officially approved the product. The Centers for Disease Control and Prevention (CDC) cannot attest to the accuracy of the claims made and officially, guidance on its federal website does not constitute an endorsement by the CDC.
For those not yet vaccinated, finding a vaccine is easier than ever in the US, but some have reasonable insecurity that the treatment still hasn’t been officially authorized by the Food & Drug Administration.
Some have been advised not to receive the vaccine due to allergic reactions they may encounter, or a variety of other pre-existing autoimmune conditions as advised by their medical professional. Just this week, new warnings were added regarding heart inflammation. That makes an additional class of unvaccinated Americans cautious, at least until the CDC or FDA find new guidance on the matter.
Those who have experienced recovery from COVID-19 may still have antibodies. It’s not known how long the antibodies will last, however, if they have them in their system at the time of the cruise departure, antibodies have been proven to be more effective against COVID-19 infections than any of the current vaccines.
For the discount, however, only fully vaccinated people would be eligible. This would suggest that those who have antibodies are penalized for not taking the vaccine despite current medical guidance; for fully vaccinated travelers who are more at risk, they would be incentivized and welcomed aboard. It ignores the science and increases the risk.
Some religions advise against inoculation. The freedom of religion, awarded in the First Amendment of the constitution, allows members to decline otherwise required inoculations for reasons that align with their beliefs. As such, a Jewish neighborhood in New York was found to be exempt of state-required inoculations for this reason.
If a discount is given for vaccinated travelers, what is to stop businesses (of any kind) from choosing to incentivize other customers based on their health information. Could a business then choose to discount prices for those in better health? What about those that do not have a heart condition? Detractors might say, that’s absurd and it isn’t transmittable, but what about other maladies? What if there was an HIV-negative discount, would that not unfairly discriminate against those who have contracted the virus?
While technically legal in word but perhaps not in the spirit of price discrimination laws, incentivizing travelers based on the voluntary disclosure of their status would open operators up to significant legal questions. Assuming that those who remain unvaccinated are doing so solely for preference ignores medical guidance that states they should not become vaccinated at all. Travel companies who engage in this will likely find more trouble than it is worth.
Lastly, I appreciate the active engagement of our comments section and found it thought-provoking and relevant. The civil discourse on these interesting topics is what opens us up to new ideas, and helps strengthen our opinions on held notions.
What do you think? Is it legal for travel companies to incentivize vaccinated passengers? In so doing do they penalize unvaccinated passengers unfairly?
“Therefore, they couldn’t all charge $1,000 more for unvaccinated passengers and they also could not coordinate their unvaccinated surcharge amount.”
One of the most common misconceptions of “price fixing” is that equal prices, or equal surcharges is proof of collusive price fixing. To the contrary, similarity in pricing is as consistent with robust competition as it is of collusion.
Re what is to stop businesses from incentivizing customers based on their health information.
I suppose this has been done for quite some time now in the insurance industry. With lower rates given from a number of voluntary choices like not smoking.
There is likely an argument to be made that unvaccinated individuals subject a business to a higher risk than vaccinated individuals. Especially for cruise lines that may have to disembark all guests, deep clean the ship, and cancel future cruises if an outbreak occurs on board. Ability to show economic damage would be a fair justification to charge a premium for increased risk an individual subjects a business to.
Reminds me to never read Rene’s points.
Not just antibodies…check out T Detect. T-cells. I’m planning on doing this, though I’ve hesitated the last week as I don’t want to give any more $$ to the COVID test mafia than I already have.
Latest UK Public Health England death report on variants…shows majority were vaccinated. Nevermind death from side effects nor what’s going to happen this fall/winter in Northern Hemisphere. Nor that cases/deaths have spiked all over the world right after vax rollouts due to ADE / variants.
https://twitter.com/TheRustler84/status/1408503802995560454 – has link to public health england report.
page 14….is where the graph is.
You really need to learn to read the data.
The delta variant in the UK has a death rate of 0.13% BECAUSE enough people are vaccinated. The fact that some of those who died were older vaccinated people is *NOT* proof of what you are trying to assert.
The inability to comprehend numbers and statistics is really the scourge of humanity.
Did you know that 100% of people who die of heart attacks are human beings? And the vast majority of road accidents involve drivers, so we should get rid of drivers too.
Heaven help us all.
Wonderful idea, I approve. Those who have chosen not to get vaccinated (and probably not worn masks the last few months) have upheld their freedoms and rights over the general good of society. So they should fully understand the cruise & travel companies have the freedom and right to not offer them a discount – if they are even allowed on board at all.
I find the analogy in the “slippery slope” paragraph flawed – people do not chose to have a heart condition.
People choose to be fat and fat people are a far bigger burden on society than unvaccinated folx. And, yes, obesity can be considered contagious. Obesity drastically worsens outcomes of all sorts of diseases and conditions, including COVID-19.
Quite the leap of “logic” to compare a highly contagious & deadly disease transmission-wise to…obesity. Keep banging that drum though, anti-vaxxer!
I know you aren’t a lawyer Kyle, but what you describe isn’t price fixing and wouldn’t violate any price fixing rules. For example outside of sales, most items you would purchase at a store will cost the same no matter which store you buy them from.
Also, while large scale discounts for vaccinated people probably would face difficulties in the courts (and probably would run afoul of the paw in Florida), we have seen examples of this happening for one-off events like concerts where they charge a normal price for people with proof of the vaccination and an absurdly high price for the rest, but a large scale, ongoing implementation of something that might have more trouble in the courts.
I’m all for Darwinism making its choice on those vaccinated vs the anti-vaxxers. Easy choice personally.
Business can and do price discriminate based on people’s health status. Look at insurance, a pre-existing condition can cause premiums to go up. Smokers also can incur higher costs.
As for religious people, you have a right to practice your religion, but not every religious viewpoint must be accommodated by businesses. Muslim guests don’t get a discount at all inclusive resorts with open bars. Just because Greg Locke says the virus is fake, it doesn’t mean that his followers don’t contract and distribute the virus. The choice they made based on their religious viewpoint makes people less safe. The Constitution doesn’t guarantee all Americans the right to sail to the Bahamas for a good price.
Here is the answer – they MUST pay for insurance if they do not show they are vaccinated!
I am happy to stick with NCL that will require all to have the shot.
Friendly question: If NCL requires all to have the shot, but they can’t legally ask if they have taken it for Florida departures, how will that work?
They will not be allowed on the ship if they do not comply. Period. See:
“What happens if I don’t comply with health and safety requirements?
All guests and crew are required to comply with our health and safety requirements to protect everyone onboard, at the terminal and at destinations we visit. Individuals who do not comply with requirements will be denied boarding or disembarked from the cruise.”
As to breaking the law? No idea. Clearly they will ask you if you say NO – you will not sail. At least until the end of OCT 2021
Looks like this is coming to fruition, non vaccinated won’t have the right wrist bands to access certain areas, have to mask, pay for covid tests, etc. Pretty interesting stuff
Yeah this is the obvious solution that also complies with the letter of the law. Any cruise ship operator that doesn’t mandate vaccinations are going to have to pay a lot more for their own insurance policies. They should absolutely be allowed to pass those costs down to the unvaxxed.
Also, the law only prohibits businesses from requiring customers to share vaccine info, which would be needed for a mandate. Now, the reporting system is still voluntary, but if you can’t prove you were vaccinated you have to show proof of a compliant insurance policy, and if refuse to provide that the ship can deny boarding.