A Closer Look: BTC: Who’s Surprised By Hidden Airline Fees Now?
May 12th, 2011
In April I wrote that U.S. airlines’ Q1 2011 billion dollar loss was perhaps just the beginning of the unnecessary unraveling of demand that could continue with consumer backlash this summer from travelers increasingly tired of hidden ancillary fees. This hypothesis gained considerable probability this week as Consumer Reports published a survey of nearly 15,000 travelers who told about their experiences on 29,720 domestic U.S. round-trip flights taken over a recent 12-month period.
According to Consumer Reports: “The proliferation of added fees at or after check-in by many carriers further contributes to passengers’ low opinion of today’s flying experience, and even to their decision of whether to fly at all. Forty percent of survey respondents who said they’re flying less these days gave increased fees as the major reason—far more than those who blamed flight delays, poor service, or any other annoyance.”
The news for airlines only gets worse. Some 40 percent of overall U.S. travelers are brand loyal and purchase their air travel at airline.com. However, of those travelers surveyed by Consumer Reports, more than 70 percent are brand loyalists who purchased their tickets at airline.com. When airlines’ most loyal customers are fed up and begin to reduce their air travel, someone in the boardroom ought to be asking questions about ancillary fee strategy. What’s more, when customers are surprised by fees and feel duped, any positive relationship with them is largely destroyed.
As BTC has publicly advocated since 2009, airline ancillary fee models can be very positive for airlines and consumers if strategies are wrapped around the needs and interests of consumers and the requirements of those intermediaries serving them. However, most airlines have apparently decided to wager that they can ignore consumer interests in this area without penalty. The Consumer Reports’ findings, in addition to other recent surveys and analyses, are contributing to a growing body of evidence that strongly suggests that airlines are on the verge of “Killing The Goose That Laid the Golden Eggs.”
If, as an alternative course of action, airlines came to participants in the travel agency sales channel and managed travel community with coherent ancillary fee strategies that were in alignment with consumer interests, support would be fast and substantial. Travel agencies are eager to sell these services and could power airline ancillary revenues forward must faster than airlines can alone. The airlines have built a very low-cost transmission system for the dissemination of fees through the airline-owned Airline Tariff Publishing Company. The system has been tested with some 26 airlines and 3 reservation systems and would cost no more than $3,000 per airline, per month. It’s ready to go.
What’s the bottom line? Travel agencies, travel management companies and corporate travel departments require the ability to instantaneously compare all-in prices (fares plus fees) across all relevant airline offerings. This is an immutable fact. To delay responding to this marketplace requirement is a strategic mistake at the individual airline level, and shows a lack of true leadership at the industry level.
When legislators and regulators intervene in the marketplace to protect consumers from these ongoing unfair and deceptive hidden fee practices, airlines will have no one to blame but themselves. Stonewalling is not an effective strategy over the long-term; just look at the 3-hour and international tarmac delay rules as indisputable proof of this.
Business Travel Coalition