Friday, August 17, 2012

Cheap flights and those hidden costs

For all the major economies in the world either have flatlining economies or grind along with such low growth rates, they are hard to detect, it’s somewhat surprising that the number of people flying rose quite sharply last year and the majority of airlines made a profit. In part, this profit came from what the airlines happily call “ancillary revenue”. That’s all those hidden fees and charges they forget to tell you about until it’s too late to do anything about it. In 2011, some fifty airlines decided to break down their account to separate the revenue for the seats, from the revenue for selling all the other services like checking in the bags when you arrive at the airport. Between them, they collected $22.6 billion for doing all the stuff we thought they should be doing as part of the ticket price.

We have been caught two ways: the existing fees have been rising and the airlines have been introducing new fees. The question is how far this trend is likely to go. The leading exponents of cheap flights that are only slightly less than the full-price fares is Ryanair. Although there are many jokes about the airline, it does not actually charge people for using the onboard toilets, nor is it about to introduce vertical seating – that’s people standing at the back of the airplane. But there’s a remarkably long list of fees for priority on booking, reserving a seat, changing a flight, asking for a boarding card to be reissued, and so on. The real kickers come when you walk up to the gate and find there’s a fee for passing through with a carry-on bag (that’s a surprise organized by Sprint). No matter whether you’re booking on a full-cost legacy airline or a low-cost carrier sellingcheap flights, you should be able to see an all-in price before you make the booking. For the record, this is equally important for the business traveler who may not get reimbursed for all expenses. No matter how you book, through a travel professional, at the airline’s own ticket counter, by telephone or on the internet, prices should be transparent. Always ask before you book to avoid surprises.