04 November 2009

Hate new airline fees? Get ready for more

How to make consumer-hated airline fees more digestible was the subject of a three-day meeting of the Ancillary Revenue Airline Conference in Huntington Beach, a gathering of airline executives and businesses that serve the industry.

At the Huntington Beach meeting, the two main questions asked were "What else can we charge for?" and "How can we add new fees without upsetting customers?"

Throughout the conference, the executives got tips on how to collect what they liked to call "ancillary fees" without drawing the wrath of passengers, according to The New York Times.
The terms "ancillary fees" and "a la carte pricing" are business-speak for charges for products and services that passengers used to be given free, such as checking a second bag, or other charges that airlines have recently added such as wireless Internet.

Ancillary fees are not new.

"In 2008, airlines worldwide collected US$10.25 billion in such fees -- a 346 percent increase from 2006. Low-fare carrier Allegiant Air, the world leader in cashing in on ancillary fees, gets nearly 23 percent of its revenue from such charges," said the Times quoting a survey.

There are obvious reasons why airlines are so desperate for more revenue. The steep drop in travel demand and unpredictable fuel prices places the industry in a tailspin.

"I think we are going to see more of this spread throughout the United States," said Jay Sorensen, president of IdeaWorks, a consultant on airline ancillary fees and loyalty programs. He added:

"The revenue is just too compelling."

The big trend in ancillary fees is called "unbundling," the practice of offering coach passengers separate products and services typically offered as part of a package to business- and first-class passengers.

The other new trend for airlines is to sell third-party services, such as hotel and rental car reservations, on their web sites. This puts them in competition with Expedia, Orbitz and other travel web sites.

But industry experts warned that passengers would revolt if airlines took the fee trend too far.

One expert cited the US$14 fee that Allegiant charges passengers to book a flight, either online or by phone. The only way to avoid the fee is to buy a ticket at the airport.

In the future, airline passengers can expect to see ancillary fees repackaged to appeal to a variety of customers, according to experts at the conference.

By David Wilkening

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Your Comments (5)

Have all airline execs reapply

Several years ago I observed that all the executives of all the airlines should be fired. Each would have the opportunity to reapply for their position. The interivew board would ask a series of questions to determine qualification for the position for which the person applied. The first question would be "When you were five years old and an airplane flew over, what did you do?" If the answer was not something like "Look up to see what kind it was", or "Look up to see what air carrier it was" or some similar respsonse, thank the applicant for their time and send them on their way. If executives in any company do not have a passion for what they do, all they have is a job. If that's all they want, let them take their apathy elsewhere.

By Charlie Funk, Thursday, November 12, 2009
Just more of the same old ...

I'm wondering when Southwest is going to expand their route system so I can move ALL of my business to them!! Obviously the other "legacy" carriers are drinking their own Kool-Aid, and they're doing so in Huntington Beach, no less. Isn't someone gonna call BS on that one?? Probably as expensive as the AIG confab at Dana Point!! What a crock. If the carriers want to see their passengers come back, GET RID OF ALL THESE #$%^&^%$ FEES!!!!!

By Terry Wall, Thursday, November 12, 2009
Ancillary fees are not taxed either

The best part of adding on fees and unbundling is that none of these fees are taxable according to current air ticket tax law that deals with the ticket price and not the cost of these ancillary charges. I have an abiding belief that someone in some federal agency is going to figure this out pretty soon as well and stop that silliness.

By Charlie Funk, Tuesday, November 10, 2009
Airlines to charge more "ancillary" fees

Let's see...a conference attended by airline executives, where "they" discuss what they might consider to charge for next.... Am I the only one who smells a serious antitrust violation here? Isn't this price-fixing? Or is this just more government aiding and abetting businesses to avoid real competition?

By Ken Hall, Tuesday, November 10, 2009
Get rid of airline execs

Do you really think CEO's, CFO's, etc. really earn their ridiculous salaries. I say, "NO". All the "good old boys" are doing is solidifying their positions so they can "cash in" on helpless people.

By Carole Weitzman, Tuesday, November 10, 2009