Airfare discounts and the price you pay: Don Pittis
Airlines profit as travel enters the discount era and passengers pay extra for everything
Well wake up and smell the bad coffee.
As WestJet starts charging just to take a single piece of luggage, and practically everyone else is cramming passengers into bare-bones cattle class, airline beds are not likely in your future.
Instead, the entire airline industry is learning a lesson from the discount carriers and has discovered the gold mine lies in supplementing basic airfares with extra fees and charges.
A few years ago, you might have been forgiven for imagining that the world of air transport was only going to get better and better. Free booze. Free food. Why wouldn't spacious seats be next? With the introduction of flying palaces with names like Dreamliner, we would soon all be travelling in all-inclusive luxury.
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Instead, even traditional luxury carriers have decided that going downmarket pays off. And travellers are learning that you only get what you pay for.
This week, Air France, famous for its first class food and drink, faces a global strike for that very reason. Air France-KLM is expanding its bargain basement airline called Transavia, and a protest by staff, horrified at being shuffled into the low-rent division, wiped out more than half the airline's flights, leaving passengers desperately seeking alternatives.
Like Air Canada, Air France has watched discount carriers eat its lunch on short hauls while Middle Eastern and Asian airlines — with lax labour laws and without legacy costs like pensions and an aging fleet — gobble up the long-haul flights. Now upmarket airlines are learning that if you can't beat 'em, you should join 'em.
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Airlines continue to advertise luxury, even if just to increase their brand appeal. As Air France KLM CEO Alexandre de Juniac told Bloomberg last month, "You don't see airlines featuring their last row of seats in their ads."
But those increasingly cramped seats are where the action has been happening. Close-quarter battles and flight diversions over "knee defenders" are just a recent reminder.
For economy passengers looking for a bargain, close-packed seating may be unpleasant, especially for those of us over six feet tall. But the trade-off has been cheaper fares.
But now, charging for things that used to be free, like baggage and meals, aisle seats and changing ticket dates, has been gradually eating into those airfare bargains. Called "ancillary revenue," those additional charges have become a cash cow for discount airlines. And everyone else has been taking note.
Discount carriers like Spirit make nearly 40 per cent of their revenue from ancillary fees, according to IdeaWorks, a company that tracks the charges and shows airlines how to benefit from them. The head of IdeaWorks, Jay Sorensen, says these fees are the reason the industry has moved from loss into profit this year.
“Without ancillary revenue, the airline industry would be at a loss overall,” Sorensen told Forbes last week.
Although airlines like Emirates and Qatar Airways continue to offer the "bedroom concept" with showers and private rooms, some analysts say airlines are scaling back the super luxury of first class travel in favour of a "two class" system: business and economy.
But another way of looking at it is that the move toward the discount airline model is creating a system of not just two or three classes, but a whole range. And while the bare-bones flight may seem cheap, above that everything else has a price, and every passenger can buy the class they can afford.