Travellers don’t understand them. Corporate travel managers loathe them. And airlines love them.
What are they? Fees. Lots, and lots, of fees.
US carriers have elevated the auxiliary fee to an art form, finding all sorts of ways to charge the traveller extra for things that used to be standard. Checked bags. Choosing your seat. Nabbing an exit row. Food (bad, good or otherwise.) And my personal favourite- pillows and blankets. Laying your head down for a snooze and paying for the privilege is no longer just the business model of hotels apparently.
But what really is driving me nuts is not so much these numerous fees (which, unfortunately, are obviously here to stay and will be leveraged by more and more Asia Pacific carriers in the near future- more on this in a moment) but the fact that both airlines and the distribution systems which help sell seats for those airlines really don’t seem to be making things easy for those people buying and booking their product.
Case in point: Abacus recently announced the findings of the Abacus Merchandising Survey 2010 after interviewing Asian airline executives about their plans for capturing ancillary revenue through new fees charged to their customers (read the article courtesy of TravelMole here. http://www.travelmole.com/stories/1141434.php?mpnlog=1) Abacus vice president of marketing, Brett Henry, said, “The survey has made it clear that airlines in all segments across Asia, not just LCCs, are making ancillary revenues a key component of their future revenue growth strategies.” Well surprise, surprise.
But what’s troubling for everyone who works in the trenches in booking, tracking and reporting on airline costs for corporations (read: travel management companies and corporate travel buyers) is that there was very little Abacus said about what they plan to do about finding automated solutions for managing these fees. In fact, if you read the article closely – they said absolutely nothing about what they plan to do in terms of offering travel agencies solutions for being able to book, track and manage such fees so that corporations have a clear understanding of how they impact their business travel expenditure.
To be fair to Abacus, I’ve not heard or read anything from the other GDS’ with respect to their plans about ancillary fee management/automation/process improvements in Asia Pacific. For US and European markets, the major GDS’ are spending millions on developing solutions for airlines to help them merchandise, market and sell all these extra “services” with fees attached. But there seems to be very little in the way of how travel management companies are going to muddle through in the interim. Especially in Asia Pacific where this is an issue that is yet to really hit the radar of regional travel buyers and agencies, but I’m sure will be a front-of-mind migraine very, very soon.
So on that level, kudos to Abacus for the wake-up call to the Asia Pacific corporate travel community.
But now the challenge is- will Abacus now back up their research with solutions? And if not them, who else will step up?
And in the meantime – to all the TMC’s and corporate buyers out there – to paraphrase the Rolling Stones: be free, to do you want...for now, because pretty soon there will be no freedom from fees.
EXTRA SHOT FOR THE DAY:
Last week I questioned the seemingly full-on retreat by airlines like Qantas, BA and Air New Zealand with respect to traditional premium on-board products given what seems to be a relatively healthy rebound in demand in Asia Pacific at least. Since then, Qantas is reportedly reducing their SYD-JFK services to remove the daily B747 SYD-LAX-JFK services and replace it with an A330 service, but only 5 days a week.
The reduction is frequency is one thing, but it also means that there will no longer be First or Premium Economy products offered through to JFK from SYD as they only exist on the B747. And that may turn out to be a bad idea, given that many companies who have used the GFC to pull back their air spend and ask travellers move from Business down to Premium Economy (or even Economy.) And now Qantas is eliminating that “step-down” option for corporate travel buyers. So now all you QF Freaky Fliers, if you want to go to the Big Apple, it’s either the A380 then transfer to American Airlines (ugh) or scramble for limited business class seats on an A330. Things that make you go hmmm....
AND NOW FOR A DOUBLE EXTRA SHOT:
The International Air Transport Association (IATA) announced that February 2010 international scheduled air traffic showed a 9.5% year-on-year rise in passenger demand. Even more surprising, given that February isn’t usually a high-traffic month, IATA reported that adjusted for seasonality passenger traffic then translates to an all-time record February load factor of 79.3%.
So, some would think the airlines should be breaking out the bubbly rather than the doom-and-gloom quarterly earnings they’ve actually been preparing the investment community for. Yes, comparing February 2010 to February 2009 is like comparing apples to worms (ie- 2009 was an aberration) nonetheless the adjusted load factor record is somewhat astonishing.
So if you’re like me and have experienced packed airports, crammed planes, and waitlisted flights recently, you’re probably scratching your head like I’m scratching mine wondering: how on Earth can’t these airlines be making money????
I love the travel industry, but you couldn’t pay me enough to be in airline revenue management. When the numbers show that things are bad, but the “physical” indicators like the aforementioned packed planes make one think that times are rather good, would make for quite an unsatisfactory job I’d think. Not that I’d be very good at it anyway....
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