Ryanair boss Michael O’Leary’s recent boast that his airline’s average fare in the third quarter of the 2016-17 financial year amounted to just $41 is impressive – at least, it is if you like Ryanair and believe the hype. Equally, IATA says the global average air fare fell by $44 against 2015.
There’s a huge difference between the cost of a ticket and the price of a flight. Travel managers trying to add up the total cost of a business trip now have loads more numbers to juggle, and most of that is down to an airline industry infatuated with “ancillary” revenues.
The global average air fare may well have been $44 cheaper last year, but IATA is careful not to say how much travelers paid to get from A to B when you take into account the cost of priority boarding, advance seat selection, extra legroom, food, drink, wi-fi and a whole lot more.
Ancillaries are out of control, and the airlines are laughing all the way to the bank – and becoming a laughing-stock in the process.
Look at it this way. If a traveler has a particular fondness for an over-wing aisle seat on the right-hand side of the cabin, and is prepared to book that specific seat in advance, what is the cost to the airline? Absolutely nothing. So what is the advance booking fee actually paying for? Again, absolutely nothing.
Ryanair – and it’s not alone – asks passengers to print out their own boarding passes. Forget to do that, and there’s $18 to pay at the airport. The printing costs are negligible, and the whole process takes no more than a minute, but the airlines calculate that’s worth the equivalent of $1,100-plus per hour.
The old argument that passengers only pay for what they want, and aren’t being charged for “stuff” they don’t want or need (salted almonds, amenity kits, lemon-scented wet-wipes or whatever), simply doesn’t work anymore.
The world is waking up to the fact that ‘complimentary’ inflight snacks were never actually “complimentary”; the cost to the airline was included in the ticket price all along. But it’s a fair bet that the cost of providing those ‘free’ snacks was substantially less than the prices now being charged for today’s ‘optional extras’.
From a corporate perspective, the ancillary costs don’t stop there. In my own company, we reckon that processing the additional expense claims through in-house systems can be as much as $36 per flight – not only are we paying for the ticket, the coffee and the legroom, we’re paying internal costs as well.
So what can we do about it? The obvious answer is to move market share to other, more sympathetic and accommodating airlines. However, that’s never easy, and in some cases, and on some routes, it’s nigh on impossible.
We can try to persuade airlines that they are shooting themselves in the foot – the self-inflicted reputational damage they are doing is putting off employees and employers alike. It’s the aviation equivalent of self-harming.
But they’re not going to buy that. Globally, airlines are thought to be ‘earning’ more than $60 billion a year in ancillary revenues, and no-one in their right mind is going to kiss goodbye to that kind of money. Like it or not, ancillaries are here to stay.
They just might be persuaded to add in the extras at the point of sale, and so cut expense-processing costs. Then again, how many of our travelers can accurately forecast how many cups of coffee they will want on an early-morning flight, or whether or not they will feel peckish on the way back in the evening?
There is one other solution. Just as we have ‘all-inclusive’ holidays, why can’t we have ‘all-inclusive’ flights? A return to the days when even an economy fare included a modicum of ‘hospitality’? On a red-eye flight, I’d happily pay a slightly higher ticket price in return for a bacon biscuit and unlimited coffee refills.
This Mystery Buyer opinion piece is from Buying Business Travel, and was translated from its original British.