It’s the fares, stupid

by Charlie Leocha on April 18, 2004

The low-fare/low-cost airline industry seems to be edging back towards the foolish ways of the majors.

JetBlue has always had the best in-flight entertainment and others are trying to emulate it. Frontier, AirTran and America West are all adding business class seating. There are even reports that Southwest is planning some sort of entertainment system on its aircraft.

In the meantime, the major legacy airlines are bleeding red ink. Bleeding at an amazing rate that means bankruptcy if they stay the course.

“Whoa,” I say to the low-cost airlines. Ask yourselves what brought you to this position of consumer acceptance and profitability. The answer is clear: low fares, understandable fares, fair fares and dependable schedules.

Don’t forget that recipe for success as sugarplums of higher-fare business traveler revenues are dangled in front of your noses. Leaving your path of low-cost thinking will only lead to your ruin.

Watch out. Another airline will come and undercut Southwest airlines and the rest of the low-cost pack if they don’t stick to their knitting – low fares, understandable fares, fair fares and dependable service.

Here is the shape of things to come from Europe where Ryanair and Easy Jet are leading the way in real no-frills transportation.

This approach is leading to hard-to-believe airfares ranging from free to $15 to more than 60 destinations on the home page of Ryanair.com. Admittedly, this is a special promotion, but when have you seen a promotion like that in the USA.

Easy Jet flies folk from London to Scotland for about $15 and from London to Barcelona and back for less than $50 on their web site, www.easyjet.com. And these aren’t the cheapest prices.

These airlines are making a profit. A good profit. Month after month.

How do they do it?

Here is the direction Ryanair is taking. It is focused on the low-cost side of the equation. Low prices and dependable service always trumps expensive frills in the long run.

Passengers often have to walk to their plane. Often the planes are parked a 10-minute or more walk from the terminal gate. And bring your own umbrella.

Ryanair is buying new Boeing 737s with no window shades and they are eliminating any recline in the seats. This obviously saves money – a lot of it. The seats cost less, they break less and they solve the need for a Knee Defender. When was the last time you used your window shade?

The new seats will not have any seatback pockets. Imagine not having to clean out the junk passengers stuff into these seatback pockets after each flight. The savings in cleaning time and turn-around time, thus money, will mean millions of dollars over a year.

Headrest covers will soon carry advertisements for things such as soft drinks, coffee, candy and car rental companies. It is not rocket science. This means more income for Ryanair to guarantee lower fares.

These are simple frills that are being eliminated, but they will result in millions of dollars of savings.

How are passengers responding? They seem to love it. British Airways has been losing passengers within Europe while Ryanair has grown more than 35 percent to become the largest low-cost airline. Complaints are low. And the real service – getting to your destination safely and on-time – has never been better.

The noise in the newspapers seems to be saying the low-cost airlines are starting to add frills. Don’t be so sure.

Remember: low fares, understandable fares, fair fares and dependable service will always win out.

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