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Fare Complexity - How Will It Develop?  
User currently offlineFlexo From St. Helena, joined Mar 2007, 406 posts, RR: 0
Posted (6 years 5 months 2 weeks 2 days 21 hours ago) and read 1974 times:

Airline fares are becoming more and more complex by the day with new fees and surcharges being announced almost every day. I always thought one of the key success factor of low cost carries like Easyjet and Ryanair was their low fare complexity - One price for one way, no matter if you do a round trip or one way and that's it. No hidden fees.

But that is changing rapidly now, Ryanair has become a fee monster and Easyjet is not far behind. Major carriers, instead of making things easier, add a second bag fee, snack fee, fuel surcharge and what have you.

What I find interesting is that the airline business is the only business I can think of where things are becoming more complex rather than the other way around (think telephone flat rate, internet flat rate,...). One should imagine the outrage if you had to pay a fuel surcharge in a supermarket because the Diesel for the delivery trucks has become more expensive. Of course you still pay for it but it is included in the price.

Now here's the question: In your opinion is this a smart move for the airlines? And would something like a flat rate - one price, no hidden fees, everything is included attract or scare away customers?

8 replies: All unread, jump to last
 
User currently offlineMayor From United States of America, joined Mar 2008, 10427 posts, RR: 14
Reply 1, posted (6 years 5 months 2 weeks 2 days 21 hours ago) and read 1951 times:

I always thought that the fares should work something like the cargo rates when I worked for DL Cargo. The U.S. was divided into zones and the rates were based on one zone to another. Of course, if the airlines tried to do this, customers and government would cry "PRICE FIXING" and it would all go away.


"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
User currently offlineDLPhoenix From United States of America, joined Aug 2007, 419 posts, RR: 0
Reply 2, posted (6 years 5 months 2 weeks 2 days 16 hours ago) and read 1884 times:

The airline industry has yet to learn that "helping your customer hellps your business", in particular when it comes to pricing. The recent developments are just one more detail in the general aproach to keep the customers (and to be fair, also the competitiion) in the dark and encourage them to purchase tickets as soon as possible, with WN being the only exception.

I can't see this changing mainly due to the conservative nature of the industry.

WN is running TV commercial mocking other airlines for charging to use overhead bins, open the windiws, use the lavatories etc. All this while full service airlines are starting to charge for things this LCC doesn't.

And my experience with other industries in the US (Internet ISPs, Cellphone carriers etc.) is that they are following the smae trend.

It seems that at least in the US businesses are yet to learn that "you can't fool all the beople all the time".

DLP


User currently offlineFlexo From St. Helena, joined Mar 2007, 406 posts, RR: 0
Reply 3, posted (6 years 5 months 2 weeks 2 days 15 hours ago) and read 1861 times:



Quoting DLPhoenix (Reply 2):
I can't see this changing mainly due to the conservative nature of the industry.

I see your point, but that's why I specifically mentioned the relatively new LCCs which started out with easy to understand fare rules and now going the same way the legacy carriers are going. I just can't understand why they are ruining their own business model like that!


User currently offlineAirNZ From , joined Dec 1969, posts, RR:
Reply 4, posted (6 years 5 months 2 weeks 2 days 15 hours ago) and read 1833 times:



Quoting Flexo (Reply 3):
I see your point, but that's why I specifically mentioned the relatively new LCCs which started out with easy to understand fare rules and now going the same way the legacy carriers are going. I just can't understand why they are ruining their own business model like that!

Now wait though, are you meaning Fare Rules or the actual prices of fares themselves, as these are two completely different things? If the latter, whist I understand what you're basically trying to say, I really don't see anything 'complex' about them in that you simply choose what (services) you wish to pay for, book and your credit/debit card charged accordingly. Irrespective of the prevalent 'crying foul' on this forum at times, every charge is clearly given before one chooses to finalise the booking. That is why I have little time for so much crying....the charges were outlined, one choose to pay the quoted price and certainly nothing is mysteriously added after finalisation. For all who repeatedly complain about the final price not necessarily being the advertised FROM price (from being the operative word) all I can say is what difference does it make.....no-one is forcing the sale and it's entirely the choice of the person. If you don't like the final price, simply don't book it! I thus don't see anything particularly complex about it.
Now, Fare Rules themselves are an entirely different thing altogether and those of any LCC are INFINITELY less complex than those of any full service carrier with multiple ticket types. Now, whilst it's probably not the correct word to use, they are largely irrelevant in the sole sense that if you don't agree with them then you can't book the ticket. Again though, you'll always get some on here who should know better will claim "who reads those" (usually when they fallen foul of them).......too bad, whether read/understood or not, one agreed to them when purchasing the ticket so no such complaint is justified. In general, for those booking on an LCC the Fare Rules are not a major stumbling block/issue as the sole purpose is simply to fly from A to B without having grandoise ideas about fully flexible/refundable tickets being a necessity.


User currently offlineGoldorak From France, joined Sep 2006, 1843 posts, RR: 4
Reply 5, posted (6 years 5 months 2 weeks 2 days 4 hours ago) and read 1733 times:



Quoting Flexo (Thread starter):
I always thought one of the key success factor of low cost carries like Easyjet and Ryanair was their low fare complexity - One price for one way, no matter if you do a round trip or one way and that's it. No hidden fees.

No hidden fees for LCC ?????  Confused Actually, I think there are more hidden fees with LCC than with any legacy carriers. Among others, I'm thinking of :
- credit card fee
- airport check-in fee
- luggage check-in fee
- priority boarding fee
and don't forget that some LCC have been highly criticized (and even sued) for advertizing fares without mentioning taxes.


User currently offlineFlexo From St. Helena, joined Mar 2007, 406 posts, RR: 0
Reply 6, posted (6 years 5 months 2 weeks 1 day 18 hours ago) and read 1688 times:



Quoting AirNZ (Reply 4):
Now wait though, are you meaning Fare Rules or the actual prices of fares themselves, as these are two completely different things?

I am not talking about prices, travelling by airplane obviously produces costs and of course the airline employees need to feed their families.
I am also not trying to whine here and I am aware of the fact that no one forces anyone to buy anything from an airline. My point rather is that, from a business perspective, does it make sense the way they are doing it?
Your very comment that no one is forcing anyone to buy reflects the attitude of the airlines. They should ask themselves what would make people WANT to buy my products!

Quoting Goldorak (Reply 5):
No hidden fees for LCC ????? Actually, I think there are more hidden fees with LCC than with any legacy carriers. Among others, I'm thinking of :

If you would read the next line which you conveniently omitted, you would see that I mentioned exactly that!


User currently offlineViscount724 From Switzerland, joined Oct 2006, 25332 posts, RR: 22
Reply 7, posted (6 years 5 months 2 weeks 1 day 11 hours ago) and read 1636 times:



Quoting Flexo (Thread starter):
Major carriers, instead of making things easier, add a second bag fee, snack fee, fuel surcharge and what have you.

Excess baggage fees and charges for meals/snacks are not part of the fare. Being in Germany, you must be aware that the EU now requires that amounts such as fuel surcharges be included in the advertised fare. Advertised fares in Switzerland have included all fare-related charges and government taxes for at least the past two years.

Europe is much better in this respect than North America where they still legally permit many mandatory charges and taxes to be shown separately from the advertised fare, and where they still often advertise fares that can only be purchased as a round trip on a per-direction basis e.g. "$99 each way (with round trip purchase)".


User currently offlinePlaneInsomniac From Canada, joined Nov 2007, 678 posts, RR: 0
Reply 8, posted (6 years 5 months 2 weeks 1 day 9 hours ago) and read 1609 times:



Quoting Flexo (Thread starter):
What I find interesting is that the airline business is the only business I can think of where things are becoming more complex rather than the other way around (think telephone flat rate, internet flat rate,...).

Hardly. I would make the claim that everything is getting more complex. The reason for this are the ever more integrated data processing and online booking systems. These make it possible to conceal the complexity of fare and fee systems from the end user as well as agents. In the past age of paper, form sheets, and real-life salespeople, this kind of complexity would have been impossible to handle.

Just two examples:

German railway company Deutsche Bahn. Ticket price used to depend strictly on the distance traveled, as well as simple added fees for high speed trains (IC, ICE). Now your ticket price depends on when you book, and when your travel date and time is. Moreover, there are several stages of discounted prices for early bookings (Sparpreise), several types of membership cards (BahnCard 25 and 50), and you still have additional rules for students, pensionists etc. Some tickets are bound to a certain train number running at a certain time, others are more flexible. As a matter of fact, I once spoke to one of the McKinsey consultants involved in the new Deutsche Bahn system, and he told me that they drew a lot of inspiration from the developments in the airline industry (in particular the LCCs' yield management).

Telecommunication. Granted, there are flat rates, but they only represent a fraction of the market. Everything else is getting more and more complex. More competitors, more plans, and often the packages and price structures change almost monthly. Take mobile phones, for example. It's a jungle, which is almost impossible to understand, no matter which country you live in. You have plans with monthly fees or prepaid plans, included minutes, wildly varying minute rates for different hours of the day, plans with a list of "friends" or "partners", different levels of multimedia service and included multimedia content, etc. etc. etc. It's almost impossible to follow. As far as Internet providers go, their transmission speeds and various limitations often change, as do their prices. Moreover, many now offer various packages combined with different levels of cable TV, mobile plans, and domestic phone service.

Honestly, I cannot see how everything outside of aviation is getting simpler. As a matter of fact, the opposite appears to be the case. A pretty good book about this phenomenon has been published recently - "The Paradox of Choice" - which I can recommend.



Am I cured? Slept 5 hours on last long-haul flight...
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