1 November 2022, London Marriott Hotel County Hall
21 November 2022, Hilton London Metropole
12 December 2022, etc.venues Monument, London
In a couple of weeks time executives from many of the world”s budget airlines, or as they prefer ”low cost carriers”, will gather in London to essentially discuss the future.
Such is the importance of this part of the air travel market place, amongst the keynote speakers will be Willie Walsh, CEO of British Airways. British AIrways is not a low cost airline. Instead, Mr Walsh will tell us what British Airways has learnt from its budget competitors. However the crucial speaker is likely to be Herb Kelleher, founder and executive chairman, Southwest Airlines. Kelleher defined the budget airline, cutting out the fancy trimmings and creating a quality carrier that is still low cost but offers a service at least the equal of its contemporaries.
The real question at the conference is where do the airlines go from here? With escalating fuel charges and legacy airlines themselves becoming more frugal, the competition is hotting up, and revenue still has to come from somewhere.
Participating in this, the World Low Cost Airlines Congress (23/24 September ” Queen Elizabeth II Centre, Westminster), are IdeaWorks, a Wisconsin (USA) based research organisation that in recent years has tended to specialise in airlines and travel, and in particular what it calls ”a la carte pricing”. This side of the water it is called ancillary revenue or additional pricing.
In its latest worldwide survey IdeaWorks says that 69% of airline executives claim charging fees for services, instead of including benefits in the price of a ticket, will become more prevalent. This, its second annual report, lists 19 additional items (a la carte fees) charged by the airlines. Add to that the passengers” costs where the airline gains commission, travel insurance for instance, plus hotel and car hire, and the end price is no longer cheap. Sales of duty-free and consumer products add to the revenue. Ryanair even charges for the use of debit cards, the handling charge to the bank nominal, with the money changing hands on the day of the transaction.
More and more traditional airlines now add fees for services that were once part of the ticket price. Scandinavian Airlines sells food to its economy passengers on flights within Europe. Aer Lingus passengers pay for beer and wine on long haul flights. Air New Zealand charges a fee for reservations made via its call centre. Passengers on American Airlines pay a fee to check baggage on domestic US flights. Lufthansa has implemented a ”ticket service charge” for tickets issued at its call centre, airport counters and website (this last, only in Germany). As mentioned, with Ryanair you pay to make the booking.
United Airlines recently made a bold move to test a buy-on-board concept on its transatlantic flights. The plan was for economy class passengers to pay for meals on flights to and from Washington Dulles during the fourth quarter of 2008. This was dropped after bad publicity (see the story on our sister publication at Business Traveller).
The results are clear: with excess capacity keeping a lid on airfares, more and more airlines are turning to a la carte pricing to provide an ancillary revenue boost. A la carte pricing has become especially prevalent in the USA, where major airlines have made an unprecedented rush to new fees for checked baggage, in-flight services, and frequent flier benefits. Airline accountants are obviously desperate to recover the profits lost to the spiralling cost of jet fuel.
How far has this practice spread among carriers? What new fees are airline executives planning for the future? What will be discussed when the bosses get together at the conference held opposite the mother of Parliaments.
Coincidentally, it takes place just when the City of London Magistrates Court is about play host to three BA executives on cartel charges (24 September), or if you prefer, getting together with the opposition.
The trend amongst business travellers has been to restrict the use of premium class travel to long haul trips where a lie flat bed, use of a lounge, priority boarding and other forms of service more than compensate for the high charge, often three times the cost of the economy fare available. Undoubtedly you arrive fresher.
Will this surge in these a la carte charges in fact bring about a renaissance in the use of short haul two-class cabins? Rather like a restaurant is it worthwhile paying for all the extras on an a la carte basis, or in effect taking the quality inclusive menu where there are no extras, and where the price in fact could be less. Mr Walsh will hopefully give us his views. Mr O”Leary, of Ryanair, has to date not checked in.
When we were young we used to fly on the British charter airlines. It was cheap. Not always cheerful. They sold drinks, refreshments, duty free and other items on board. Nothing really has changed!
See also http://www.ideaworkscompany.com
World Low Cost Airlines Congress http://www.terrapinn.com/2008/low/