March 21, 2009

Things I didn't know last week - March 21st 2009

This is a regular post in the series of 'Things I didn't know last week'. This week 'Cheap airlines - are they performing a walletectomy?'

Over the last week or so I was out of the country. I spent a relaxing 5 days with my parents in their holiday home in Spain. The weather was nice, the location was nice and I played 4 rounds of golf in 5 days.


The only thing that ruined it for me were the flights out and back. I took a flight with a lo-cost "budget" airline who pride themselves on being 'Number 1 for Customer Satisfaction' - a claim that falls apart when you realise that 'customer satisfaction' for them is indicated by on-time arrivals and no lost baggage. It makes no mention of good customer service, friendliness or other real measures of customer satisfaction.

To give them their due, they arrived at the destination 15 minutes ahead of time and all the baggage arrived promptly at the baggage claim area on the way out. However the flight back the departure was delayed due to a faulty electronic steps on the incoming aircraft ("A delay due to operational difficulties") and as a result we spent 90 minutes sitting in the terminal building waiting for any news (none of which was forthcoming). Needless to say we arrived back at our destination considerably behind schedule.

I jotted my thoughts down on these lights and posted them on The Flying Cafe blog (If you wish to read them they can be found by clicking the link).

Rather than rehash these in this post I wanted to focus on another aspect of the whole experience which is the airline's business model. As a 'lo-cost' airline they pride themselves on being the cheapest airline flying between the destinations they serve (and this is probably true - especially as they fly to destinations that few other carriers serve) but what they don't advertise is the flip side of this. Let me explain:

Many years ago I lived in London, England and shared an apartment with a friend of mine who became a manager at a top London restaurant. She told me once that when customers arrive to eat at this establishment 'we perform a walletectomy on them' By that she meant that the aim of the restaurant was to extract as much money as possibly from partons wallets. This was achieved through expensive food, extortionate wines, long waits for a table which encouraged patrons to wait in the bar and drink, and other such practices. As the patrons were, generally, high net worth individuals this was not frowned upon and was even expected.

But the 'lo-cost' airlines are now starting to do the same thing. They lure punters in with 'cheap flights' and then attempt a walletectomy during the flight by offering items such as food, drinks, scratchcards and phone cards for purchase, in a constant rotation throughout the flight.I believe the chief executive of this airline is quoted as saying each customer spends on average £35 over and above the cost of their ticket when flying with them.

It is an interesting model for airlines and one which a number of the other budget carriers are starting to emulate. Unfortunately if they are not careful the overall cost of a flight will start to drift higher and higher until people realise that the scheduled carrier's fares are now no longer that much more expensive. After all, would you rather spend £150 on a regular carrier and get free food and drink, an assigned seat and no extra payment for your baggage, or £0.00 for your flight, £105 in "extras" and taxes (including paying to check-in, check your bags in the hold and having to board in a scrum to get your seat, pay for your food and drink on board on top of that) and then end up at an airport 120km from where you wanted to stay (which is the case if flying to Frankfurt's Hahn airport)? The additional cost of commuting to and from your destination airport to your actual destination will soon eat up any 'savings' from the free ticket.

There are those who are extholling the virtues of 'lo cost' airlines - and far be it from me to tell anyone how to spend their hard earned cash - but somewhere deep inside my I can't help feeling that sooner or later the public will start to see through this 'free ticket' scam and the budget airlines will have to sort themsleves out if they are to stay in business.

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