As I’ve written many times before, and most recently at the announcement that an airline would charge for a checked bag, the basic economics of flying vs. the price of a ticket are seriously out of whack! Although the cost of doing business has risen substantially, the cost of flying has not. In fact, even without taking into consideration the present day value of a dollar, it seems like in many cases, the fares have dropped.
As costs of airline travel rose, the airlines first went to its vendors and negotiated better contracts. Then it went to its employees for concessions and tighter work rules. When there was no more left to cut, it created new “fees” so that it could still advertise low, slash and burn fare sales.
BUT – and here’s a big BUT! The airlines, with only a few exceptions, are failing using this business model. Want proof? Quick – name a handful of airlines that haven’t been in bankruptcy! Hard, huh?!
So the newest business strategy is to continue these add on fees, while still advertising those attractive, low, “come hither” fares. Those low fare are all sexy and alluring. Until you start adding on your fee to make a reservation, your fee to get a seat, your fee to check a bag, your fee for excess weight, your fee for fuel, and the list goes on. Some of the fees may be legitimate, but some seem so silly that it makes you think the concept of Derrie-Aire is not such a joke after all.
Consider recent announcements that two more airlines are joining the “first checked bag fee.” And another announcement that an airline will start charging for all beverages ($2 for a Coke!). You have to know that it won’t be long till this is the standards industry-wide.
For reference on the current state of extra fees, take a look at this great fee chart that Rick Seaney over at Fare Compare has put together.
Most industry analysts say that prices are going to have to go up, and go up a lot. No one wants prices on anything to go up. And I have a vested interest in wanting the airlines to succeed – I’m part of the industry, after all. But something has to give!
I don’t pretend to have the answers here, but it doesn’t appear that anyone else does either! Do we want ala carte travel? Are travelers getting close to their breaking point? How many more additional fees are we willing to have tacked on? Do we want one all-inclusive price quote?
NOTE: I work in the airline industry. The opinions expressed here are solely my own, and do not represent the position of my employer, nor any employer within the industry.
Photo credit: SXC