If you’re tired of being nickeled and dimed to death when you fly, you might want to be in Miami on May 12 and 13. That’s when hundreds of executives will gather at an industry conference to figure out how to grow the $3.5 billion in so-called “ancillary” revenues they expect to collect from us this year.
The Airline Sales Channel and À La Carte Pricing Conference appears to be there for one reason alone, at least from a customer’s perspective: To help companies find new ways of separating you from your money.
Makes you wonder if any of these folks have heard of the Sherman Antitrust Act.
Among the highlights:
• Vik Raman, Spirit Airlines’ senior manager for ancillary revenue, will answer the provocative question of “What can airlines really sell?: How, when and where?” (Based on feedback from Spirit’s customers, the answer is “anything” and “anywhere.”)
• John Guidon, co-founder and chief executive of in-flight wireless provider Row 44, will talk about “the state of in-flight connectivity and its ancillary revenue potential.” Well, so much for free Wi-Fi on planes.
• Travelport’s vice president for product programs and services, Paul Hesser, will discuss “A-La-Carte Fee Transparency: How can you effectively display your fees with Online Travel Agencies and relay them clearly to your Customers?” Again, based on reviews from customers, I can’t imagine anyone attending this seminar. Why tell your customers about fees when you can surprise them?
• Alan Wyley, Eurocommerce Payments’ chief executive, will answer the question of whether payments are a cost or a “touch point” for ancillary revenue. In other words, should you pay to pay. Betcha I know the answer to that. Spirit Airlines does.
• There’s a forum on social networking and loyalty supporting new business initiatives. I would expect to see my friends from Royal Caribbean and Cruise Critic at that one.
• Don’t miss the closing panel, “New Airline Business Model: are commission-based sales & a-la-carte really ‘ancillary revenue’ or they simply revenue in the 21st Century airline business?” It’s moderated by Paddy Murphy, the former chairman of Ryanair, so you can don’t have to be a rocket scientist to guess the answer.
If you want to know which companies are interested in adding more fees, here’s a handy list of attendees.
Let me be clear about this. Industry executives have a constitutional right to gather and discuss these customer-hostile ideas. But their customers also have a constitutional right to express their opinions about “ancillary” revenues, deceptive practices such as “unbundling” and the overall lack of price transparency in the travel industry.
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DELTA? At a “separate-you-from-your-money symposium? Geez, I’m SHOCKED!
I mean, I WOULD BE shocked if Delta WASN’T THERE!
Delta leads the world now in p****ing off it’s customer base, particularly the elite flyers
As a savvy traveller, this delights me. If somebody else’s hotel reservation, change-fee or in-flight wifi charge is subsidising my cheap flight, then great.
But sometimes these things can go too far. Three cheers for the lobbyists who will be making the trip to Miami next month.
Good luck to those looking to protest at that conference. :)
I’m trying to figure out why an industry gathering to discuss ways of raising prices isn’t prima facia evidence of collusion and price-fixing. Can’t wait to find out how many closed-door, off-the-record, face-to-face, “never happened and you can’t prove it” meetings between airline execs happened, at which discussions of prices “never happened, ’cause that would be illegal”.
While not authoritative, I found some details in Wikipedia that might give some clues:
http://en.wikipedia.org/wiki/Price_fixing
http://en.wikipedia.org/wiki/Collusion
I can be wrong, but I understood the main part there to be various players intentionally agreeing on a price among themselves. But then, I gather that many legal issues involve intent which, unfortunately, isn’t always easy to demonstrate.
It’s disappointing that the “world’s leading travel expert” can only offer such an amateur and unbalanced “analysis” of airline a-la-carte fees and of our event on this topic. By mentioning the Sherman Anti-Trust Act, you clearly implied that airlines holding an event on a-la-carte fees is anti-competitive, although you later go on to state that industry executives have a Constitutional right to gather and discuss these “customer-hostile ideas.” Let me make something very clear, anti-trust laws prohibit competing companies from agreeing prices. This event discussed what products and services, traditionally included as part of the airfare, can be de-bundled and how to best obtain customer buy-in for doing so. In this event, no prices of a-la carte fees were discussed, so no anti-competitive behavior occurred- either in front of or behind closed doors. The link to the conference presentations is open to the public and was sent to Department of Transportation and Department of Justice officials, who were also invited to attend. (That link is http://www.airlinesaleschannel.com.) Many from the Press were also in attendance to further ensure openness. In your “analysis,” you also completely dismissed the presentation on “A-La-Carte Fee Transparency: How can you effectively display your fees with Online Travel Agencies and relay them clearly to your Customers?” This topic was also a major focus of this event in its various panel and audience discussions. To put this into context, in 2008, due to the high cost of fuel, and now in 2009, due to the evaporation of business travel as a result of the recession, airlines have been forced to quickly add new revenue streams (as well as cut costs) in order to avoid going out of business. It’s in this atmosphere that airlines added a-la-carte fees for items such as checking a bag or for onboard food, similar to cellular telephone companies which charge separately for texting and data plans. (And, cellular telephone companies in the USA are much more profitable than airlines, while this past week’s study by the Organization for Economic Co-operation and Development found U.S. cell phone bills to be among the highest in the world, in some cases almost 6 times the average of those in some European countries!) So, airlines added a-la-carte fees, in what I fully admit was a survival-mode panic without placing transparency first, to ensure their very existence and are now working to make them transparent to their customers within what is a very complicated IT and multi-channel airline fare distribution model that includes call centers, Online Travel Agencies, their own websites, corporate travel agencies, mom-and-pop travel agencies and sales via airline partners. Airlines are also now working to have their customers buy-in to the idea of a-la-carte fees. If passengers understand that airlines are losing Billions of Dollars, they often don’t mind paying such fees, as long as they are transparent. Your “analysis” failed to mention that less than a hand full of the dozens of airlines that participated in the conference on a-la-carte fees will be profitable this year or that the airline industry as a whole will lose more than 9 Billion Dollars this year, including the 3.5 Billion Dollars expected to be generated through a-la-carte fees. Your “analysis” only referred to a discussion of “customer hostile ideas,” while completely failing to mention that in addition to charging new a-la-carte fees (which as I said already do not have to be “customer hostile” and can be accepted by airline customers, as they have been by Ryanair’s) that airlines are also working very hard to generate revenues by offering their customers value-added products and services, such as event tickets, hotel packages and guidebooks. This is a win-win for airlines and their customers, since airlines earn a commission for selling these products and services, while their customers gain a “one-stop-shop” travel purchase and often gain discounted prices for these value-adds, since airlines can often obtain low prices due to massive volume. You failed to mention that in our event in Miami, selling value-added products and services to airline customers was fully 50% of the agenda of this two-tracked event. Frankly, your “analysis” is very weak and demonstrates a total lack of understanding of the airline business. Admittedly, as an industry, we don’t do ourselves any favors in terms of PR, making us in part responsible for uninformed reactions like yours, but in this case, you did not even attempt to look beyond your own emotional reaction to airline fees and consider them within the larger picture of the current financial situation of airlines or the other value-added services that airlines are starting to offer to customers. All of our events are open to the Press and you are welcome to attend them and speak directly to the airlines in order to gain a more informed and less naive and emotional point-of-view. We will organize another ancillary revenue event for airlines in Los Angeles in October (www.ffp-arac.com). Best Regards, Christopher Staab, Head of Conferences, Airline Information
@Christopher Staab you’re a little late to the party, don’t you think?
Your attempted defense of an indefensible practice is laughable. You’re basically saying it’s OK to charge customers for extras that used to come with the airline ticket, like drinks, luggage and the ability to make a reservation, because airlines aren’t profitable enough.
And you’re also saying that this is nothing more than a PR problem — that as long as you explain the new fees to passengers, they’ll understand.
Wrong — and wrong.
The reason airlines are unprofitable is that they’re incompetent. The good airlines can make money without nickeling and diming their passengers to death. Good PR will never, ever, be able to fix that.
And a point of clarification: Of course these airlines have a constitutional right to meet with one another. It’s what they discuss at the meeting that may — or may not — have antitrust implications.
Your wrongheaded defense of the airline industry’s most customer-hostile practice would have been more credible if it were written in English. Let us hope these bad ideas don’t spread to the rest of travel.
Perhaps you should consider going back to university and taking “Economics 101?” Yes, I am saying exactly that it is okay for airlines to charge customers for extras that used to come with the airline ticket, like drinks, luggage and the ability to make a reservation, in order for airlines to be profitable! In the current recession and with fuel prices spiking, such fees are required for airlines’ survival. At the same time, customers should protest such fees with their pocketbooks and choose another airline not charging such fees if they do not find value in paying for them. Customers upset by a-la-carte fees should also write to airlines to complain in an attempt to convince airlines to remove them, while airlines should clearly explain to their customers why and for what they are charging fees in an attempt to convince their customers to accept and understand them. This is how business works! Companies strive to be profitabile while consumers strive to get the lowest price.
Cell phone companies, insurance companies, cable television, hotels, and banks all of have debundled their services to a great or lesser degree than airlines.
If I am wrong that customers will never accept a-la-carte fees, why have they done so in these other industries? And, how has Ryanair grown from a tiny regional airline to become the largest international carrier in the world in terms of passengers flown? This growth has occurred since Ryanair invented the concept of airlines charging separately for services that used to be included as part of the ticket. Now nearly every possible service with Ryanair is charged a-la-carte. However, it now has tens of millions of customers each year versus the tens of thousands that it had before it operated using an a-la-carte model. Easyjet is the world’s 3rd largest international carrier and it also operates using an a-la-carte model.
Customers in Europe have a broad choice of airlines and yet they often choose Ryanair and Easyjet over competitors which do not charge a-la-carte fees- so much so that they are two of the three largest international airlines in the world! According to you, Ryanair and Easyjet could not exist because customers will never accept a-la-carte fees. However they do exist and are very profitable, so want to re-think your amateurish and unsound argument?
@Christopher Staab, not particularly.
You’re all over the map with your impassioned but misguided defense of an industry that often treats its customers like cargo. I scarcely know where to start with my response.
You’re comparing apples and oranges — Ryanair and Easyjet are European carriers. This is a discussion of the U.S. airline industry, where the most successful airline, Southwest, doesn’t nickel and dime its passengers with a la carte surprises.
I cover customer service issues in the travel industry. To me, and to the people I represent, unbundling is another word for lying.
For example, an airline is quoting a $99 fare, but you need a reservation, which will add another $10 to the cost of the ticket, and checking a bag will set you back by $30. If those aren’t properly disclosed — and they rarely are — then that fare is a lie.
And lying, even if it’s in the name of making a profit, is wrong.
But let’s stay with your “Econ 101″ argument for a minute. If we assume that it’s acceptable to lie … er, I mean, unbundle … for the sake of earning a profit, then why haven’t U.S. carriers been successful in their a la carte efforts?
Where’s the profit?
Why has the most successful U.S. airline still not unbundled its fares?