Comments on: Ancillary revenue: A boon or a bane for the airline brand?

By: Colt Cooper

Colt Cooper — Fri, 27 Mar 2009 12:27:10 +0000

Like it or not, these fees are here to stay – especially with ultra low cost carriers. Some of these are practically printing money now that gas is cheap, but wouldn’t dream of letting AR fly out the window. The big carriers are just copying what the ULCC’s have innovated on.

By: Shashank Nigam

Shashank Nigam — Fri, 27 Mar 2009 12:26:29 +0000

@Joseph: Very sad indeed.

By: Joseph Goss

Joseph Goss — Fri, 27 Mar 2009 12:25:21 +0000

FYI .. VX has joined the other airlines. This is from yesterday’s SFO Business Times: “… Virgin America Inc. will begin charging $15 to check a single bag, joining other airlines that are turning to similar fees to generate cash as the recession drags down travel demand. …”

By: SimpliFlying » Blog Archive » Is the Southwest Airlines model, the future for full-service airlines?

Mon, 23 Mar 2009 09:31:57 +0000

[...] Ancillary revenue: A boon or a bane for the airline brand? [...]

By: Patrick Coval

Patrick Coval — Thu, 19 Mar 2009 08:08:29 +0000

This is an interesting discussion that I can’t determine whether it’s the right approach or not. Intuitively, charging for services or goods that have an incremental cost makes sense for the airlines and for all passengers. Why should I pay the same as the person who checks 4 bags and consumes lots of items on the plane? Or stated another way, why should the airline give away these value added items for nothing?

Part of the issue lies in the execution by the airlines. Instead of simply recovering cost, they are trying to make a large profit. I had the misfortune of traveling on US Airways while they were charging for drinks and it leaves a bad taste in your mouth, and not from the diet soda, to pay $2 for a drink they likely paid less than $0.25 for. The same with luggage. What is the realistic cost for slinging and carrying (fuel burn) each 25 lb bag. If they were really intent on covering cost, bags would be weighed and charged per lb. right?

Ron’s comments are right on. I recall actually with fondness how on People Express you would pay for each item. But there, I think the cost of a “snack pack” was less than $1., not $6.00!

Bottom line. Ring up the fees close to actual cost so that passengers don’t feel chewed to death by extra costs. It should feel more like a “tip” than a bill. Something you really feel the airline has earned.

By: Ken Botterbrodt

Ken Botterbrodt — Thu, 19 Mar 2009 08:03:59 +0000

The ancillary fees are just a cheap shot. I can’t believe the selling me a glass of water will make the airline profitable. Yes, I avoid these airlines.

By: Ralph Richardi

Ralph Richardi — Thu, 19 Mar 2009 08:00:14 +0000

I doubt it–they will bitch and moan but they will fly

By: Ronald Kuhlmann

Ronald Kuhlmann — Thu, 19 Mar 2009 07:55:52 +0000

Patrick, your comments are bang on. The idea of paying for what you use–and at a reasonable rate–has validity. The biggest problem with the US majors is that they have not really changed the business model, just the part that benefits them and that is the crux of the frustration by many passengers. They see themselves being overcharged for goods in a captive environment. And the fees are often collected by surly folk who exhibit little if any warmth.

There is also the observation that the liability for baggage and its timely delivery should have new boundaries if it is a paid service. If I borrow my neighbors car and it runs roughly, too bad. I hold Avis to a different standard for a rental.

By: Tom Griffin

Tom Griffin — Thu, 19 Mar 2009 07:53:25 +0000

I think that ancillary revenue through the right channels makes sense, the airlines need to look at themselves as a channel for advertisers to reach their customers. It’s better than having to pay for peeing.

By: Shashank Nigam

Shashank Nigam — Thu, 19 Mar 2009 07:51:33 +0000

@Jeff: Indeed! If it’s value-adding, I think it’s a boon. But unscrupulous un-bundling in pursuit of ancillary revenues without any regard for the overall brand strategy would result in a disaster in the long run. You got it right – it’s a fine line.