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
Wednesday, November 4, 2009