It’s me again. Sorry It’s been a while since you’ve heard from me, but that wasn’t by choice. It certainly wasn’t for a lack of things on which to comment, that’s for sure.
One recent trend in the airline business that, although is a logical result of too much capacity and $100/barrel oil, bugs me is ancillary revenue. There was even an “Ancillary Revenue Airline Conference” held recently. Heck, it must be here to stay if it is an acronym.
Call me a purist, but I think it is a sad day in Whoville if airlines can’t make enough money from selling airline tickets to make a profit, so they have to resort to selling display ads on their tray tables and charging most customer for checking more than one bag. To be sure, the current conditions have created some strange bedfellows, including an alliance between Allegiant Air and The Blue Man Group, which still baffles me. However, people a lot smarter than I have determined that “it is good”.
It may be helpful in the short term, but if an airline can’t make enough money selling its services to support itself taking people to and from where they want to go, I don’t think you can sell enough sandwiches, check enough second bags, or sell enough hotel rooms or show tickets to have any long term success. You might make it in the short term, perhaps make a few bucks in an IPO and get out before the house of cards falls in; but eventually the business plan needs to be sound.
Well that’s all from Godzilla this evening. If, due to my absence, you have forgotten who I am you can check out Holly’s introduction of me here. I would certainly be happy to read your comments; posted here or sent directly to Godzillaspeaks@gmail.com.
Godz,
This “new breed” of cheap airlines are the bottom feeders of all things called airlines. If they could, they would operate on any old piece of concrete (or maybe even grass) strip, without a terminal (competing goods and restaurants) or TSA or anything else for that matter. Watch and see if they don’t get into the car rental and automobile parking businesses too!
I believe that their ancillary revenues now approach 20% of their income and that is just a start for them – they even charge people who call to find out when the flight will be arriving!
The fact is that more than just the LCCs are looking at non-flying revenue, the legacies are as well. Charging for checked baggage is just a symptom of the sickness. The airline ticket has become such a commodity, with at least domestic travel being an almost identical experience regardless of the airline, that airlines are no longer able to charge a premium for their brand. There is virtually no brand loyalty.
It’s a helluva way to try and make a living.