Airlines to Passengers: We Have Not Yet Begun to Gouge You
By Scott Reeves Mar 23, 2009 1:47 pm
Brief scrutiny of today's headlines.
But that probably won’t stop airlines from offering new fee-based services in an effort to boost revenue, such as better meals, day passes to special waiting lounges at the airport, or even the ability to purchase frequent flyer miles.
Last year, record high fuel prices forced carriers to find additional sources of revenue. Many airlines quickly added fees to check a bag, to secure a prime seat assignment and even charged for routine things such as a pillow and a blanket. Such fees appear to be more or less permanent.
Major airlines, including American (AMR) and United (UAUA), now charge to check a bag, but US Airways (LCC) backed off a fee for in-flight soft drinks after customers complained - and the competition failed to follow its lead.
Ryanair (RYAAY), Europe’s largest budget carrier, has talked about charging a pay per pee fee while in flight, but so far hasn’t imposed it.
The new fees for formerly free services appear to be a smart move for airlines. Reuters reports that American Airlines boosted its ancillary revenue to $2.1 billion in 2008 from $1.3 billion in 2002, an increase of 61.5%.
The friendly skies? Sure - but a smile will cost you.
No positions in stocks mentioned.
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2009-03-23 15:24:32
Airlines and Gouging
I fear the article is right: the airlines will come to rely on these extra fees as a normal part of their revenue streams and thereby alienate the very leisure travelers they will need to rebuild their customer base when the economy turns around. Maybe they ought to consider "sunset" dates on policies like this, where during times of crisis they could impose fees or other changes for a set amount of time (18 months, say) which would then expire when conditions improved. Even politicians do this so it can't be that hard. Policies would be effective based on when you travel rather than when you bought the ticket, because by then everyone would likely know economic conditions warranted drastic measures. Whattya say, legacy carriers?
2009-03-23 16:05:04
These airlines are going to come under pressure to drop their "fuel surcharges" probably starting sometime this summer as more and more consumers get ticked off that they're paying a fuel surcharge when oil is 1/3 of what it cost at its height...
2009-03-23 16:08:38
Ridiculous
This is quite possibly the most ridiculous title for an article ever. Airfares are at their lowest point in history, it has never in the history of air travel been cheaper to fly on the airlines. Yet, people still write articles like this because the airlines are changing their fare structures as they desperately try to stay in business. Understand this people, if your tickets get any cheaper, you'll soon be complaining that there is no air travel network at all, or at the very least that you have no choices in air travel. To pay the airlines costs, your tickets should be double what they are, and that's without any of the employees having a retirement plan!
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