For the past week I’ve been in Italy, the country of great food, hospitality, and a complete lack of organization. Aside from being stranded for half a day in the middle of nowhere because of a train strike, I’ve been enjoying myself. I travelled around the central-Northern region (Veneto and Lombardy), which features spectacular mountain landscapes, well-preserved ancient towns, the magnificent city of Milan, some excellent wines, and most importantly amazing cheese. In fact, I think this is the only place on Earth that can compete with my home country (the Netherlands) for making the best cheese in the world.
But I’m digressing. I got to Italy by plane, which is nothing remarkable. On short intra-European flights I tend to use low-cost airlines, provided they serve a conveniently located airport. In this case Ryanair would transport me between Budapest and Bergamo for less than 40 euros (about $50) return, which was an excellent deal. While I’m sacrificing some comfort by flying low-cost, that is well made up for by the price difference. Had I chosen a major airline instead, the same trip would have cost me at least 150 euros ($188). The money saved I can spend on delicious food and wine.
The low-cost airline business model
If you look at the business model of low-cost airlines, there are two underpinning principles. One: they reduce their costs in any way possible to be able to charge a lower fare to the customer. There are no meals or drinks included with the flight; they use the least conveniently located airport terminals and fly at unpopular hours, to keep their landing fees to a minimum; the seats are pitched at the minimum distance allowed by health and safety regulations to pack the maximum number of passengers; they use inexperiences pilots who are willing to fly for a rock bottom salary to get their necessary flight hours before they can be hired by a normal airline. While each of those points is a small concession on comfort and convenience (and safety?), it’s one I’m willing to make for the money it saves.
Two: they try to make most of their profit on extra services sold at a premium. While their base fare is usually incredibly low (and in some cases might even run at a loss), the total price can increase rapidly if you purchase any of those extra services. A checked bag: 15-45 euros ($19-56); priority boarding: 2 euros; an assigned seat: 5 euros or more (depending on the seat); a sandwich and a coffee during the flight: 8 euros; print your boarding pass at the airport: 15 euros. If I wanted to upgrade my 40 euro flight to a level comparable to that of a full-service airline, it would have turned into a 150 euro ($188) flight.
Add to that additional services that have little to do with flying, but are an excellent opportunity for cross-selling: hotel bookings, car rental, airport shuttle services, travel insurance, and in-flight duty free sales. Ryanair takes the cake by even playing on your gambling temptations: they sell lottery tickets while up in the air. Also noteworthy are the advertisements on the back of the seat in front of you, and the captcha codes required during the booking process like “I love my mastercard”. Whether you fall for any of these offers is up to you. They are competitive offers at best (e.g. hotel rooms) and sucker bets at worst (e.g. travel insurance).
Both parts of the business model are justifiable. They offer the consumer the opportunity to trade some comfort for real savings (part one). And they offer additional opportunities that you may or may not find interesting (part two). But in recent years low-cost airlines have started to use a third trick, and this is one of questionable ethics. I call this ‘deliberate discomfort’. They go to extra lengths to make your travel experience at the base fare extra uncomfortable, in order to push you towards their premium services.
Where Ryanair used to offer free seating (available in order of boarding the plane), they now offer randomly assigned seating (printed on your boarding pass) instead. In the past you’d get your choice of aisle, window, or centre (provided you got in line early enough). Now you’ll have to either leave this decision to fate, or pay for the privilege of making it yourself. There is no economic rationale for this. Some people prefer aisle seats, some prefer window, and a few will take centre. If you leave it up to people themselves, the seat choice will usually balance out. But by deliberately giving people a two in three chance of getting a seat they don’t want, the airline pushes people to paying extra for choosing their seat.
Another example is priority boarding. Since about half a year Ryanair has introduced a rule that only the first 90 ‘large bags’ (trolley-size) are allowed into the cabin. The ones after that have to go into the hold, with all inconveniences that come with it. While there is some rationale for limiting the amount of luggage in the cabin, I see this mostly as a way to push the ‘priority boarding’ service onto people. If you want to be sure to be allowed on board with your cabin-size trolley suitcase, you’d better be in the priority queue.
Scaring off your customers
It is understandable that low-cost airlines try to promote their extra services to make a profit. There is nothing wrong with this when it enables customers to purchase something that has real value to them. But by introducing deliberate discomfort I think the airlines have gone too far. In the short run they may indeed succeed in forcing a basic fare customer to buy premium services. In the long run they may lose that customer to a competitor.
Indeed there has been an increase in the number of low-cost airlines operating in Europe. Major destinations are now served by Ryanair, Easyjet, Wizz Air, and other smaller budget airlines. But most of the regular airlines have also started their own low-cost branch. Air France-KLM has Transavia; British Airways has Vueling; Lufthansa has Germanwings. These should perhaps be considered intermediate-cost airlines. Their pricing is usually a bit higher than the bargain basement prices offered by the likes of Ryanair, but they are also not quite as vicious in creating deliberate discomfort.
With the increasing competition in the European flights market I expect the price gap between low-cost and intermediate-cost airlines to get smaller. And I for one am willing to pay 20-30% more for my flight if it means I don’t have to stand in line like cattle for an hour just to get my bag on board. Deliberate discomfort will ultimately end up hurting the airline that introduces it.