Are airlines heading towards a cruise ship revenue model?

by Janice Hough on September 18, 2009

ship plane

As many frequent cruisers know, and occasional cruisers soon discover, cruise ship fares are often just the tip of the iceberg in terms of the total vacation price.

Except for the most deluxe lines, most ships now have restaurants and snack bars with surcharges, activities with surcharges, and drink prices that rival those of big-city hotels. Not to mention expensive shops and spas on board, and of course, tipping. Which means that the $499 a person cruise you see advertised could easily end up costing double that.

While airlines have seldom sold their flights as a vacation in and of themselves, in the not-so-distant past, your ticket covered your total flying cost.

Now, except for Southwest, U.S. airlines are all charging for basic checked baggage and onboard meals, for starters. Plus, not only are those prices going up, but the list of additional items with costs attached keeps growing too.

The original snack boxes, for example, on United, were $5. Now the boxes range from $6 to $7. And sandwiches and salads are $9. On American and United, it’s $3 to $4 for a bag of nuts, a granola bar, potato chips or something similar. And American charges $10 for a sandwich or salad with chips.

Most other carriers use similar pricing, which also will no doubt keep increasing. As to soft drinks and bottled water, US Airways for now has canceled their experiment in charging passengers for all beverages, but the odds are good that some airline will start it up again.

And then there’s the other options like priority boarding, priority seating, and single-day airport lounge access, all of which have also been increasing in price. Along with ticket change fees and various fees connected to frequent flier mileage, from last minute booking fees, to co-pays for upgrades, to reinstatement fees when miles expire.

In the not-too-distant future, some carriers will start adding wi-fi for an additional charge as well.

The airlines call this “unbundling” or “a la carte” pricing. But what it means in practice is that that discount airline ticket you purchase, may only be a fraction of your total trip cost. Already many change fees are more than the price of the ticket. And bringing a pet or a couple extra suitcases can also more than double a fare.

All these extra fees, in addition, are never subject to corporate or other discounts, so they mean revenue that goes directly to the airline.

Getting back to the cruise model, cruise lines often offer those ridiculously low rates because they know they can make a profit with the passenger’s onboard revenue. Even if they break even or lose money on the fare itself. As the list of “options” grows, it’s not too far fetched to imagine these extras – not the tickets themselves – will be the airlines’ chosen route back in the direction of profitability.

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Are airlines heading towards a cruise ship revenue model? : Cruise News, Information, Booking, Planning and Vacations
September 18, 2009 at 11:20 am

{ 4 comments… read them below or add one }

Hapgood September 18, 2009 at 12:13 pm

Let’s just hope they don’t adopt the cruise lines’ practice of charging solo travelers a 200% “supplement” that doubles the cost!

Jane September 18, 2009 at 1:56 pm

The difference between cruise lines charging for things and what the airlines are doing is that what the cruise lines charge for are added options.

When the cruise lines added the premium restaurants, for example, they didn’t have those before. They didn’t take away any of the food already included or downgrade the quality of the main restaurants; they just added something even better than they had and charged for that. There are other things that people buy on a cruise that they have always charged for, such as drinks or shore excursions.

The airlines, on the other hand, are just charging for things they used to include in the price. They then neither decreased the price of the original product nor added any value to what they were charging extra for. That model is quite different from what the cruise lines are doing.

Joe Farrell September 20, 2009 at 6:08 pm

I agree – lets close all the airports serving all those rich people.

They may be some consequences however. first off, the aircraft which support fire suppression in California and the west are general aviation airports. So, more acres and more homes burn because these aircraft fly further to refuel and deal with delays at the major airports.

All flights must depart from airline service airports – that might just add to the delays as the next generation of pilots trains at airports amidst the 737′s and airline jets. You don’t mind sitting at the end of the runway for that 100mph Cessna to land for the third time in the last h hour, do you?

Anyone need an organ transplant or medevac flight? These usually land at general aviation airports because they are faster and easier to get in and our of. You don’t REALLY need that kidney or heart fast, do you? It can wait its turn at the large airline airports that are over scheduled and busy and maybe even get canceled or held on the tarmac for 7 hours – you can live with a stale heart, right?

Air freight. Hey – its ok that all the air freight ALSO goes into airline service airports? Right? Dozens and dozens of more flights into airline airports. Oh, you don’t have an airline airport near you? Well, then you can’t get parts, checks, tickets or anything else overnight since if you are a 4 hour drive from an airline airport then too bad. Its too far to run trucks back and forth economically.

Does ANYONE understand that ALL this is class warfare? As usual the press creates a hit piece on someone or some industry with ZERO effort to explain the consequences of their ‘oh how horrible this all is for the average person, someone else is getting something you don’t have’ journalism.

The press, over and over again, continues to display that, like police, there is an intelligence range for their profession. . . remember that those ‘rich’ people you are trying to get to pay more, already probably pay alot more in taxes than you do. In fact, 3% of the people pay 90% of the income taxes to the federal government. You are going to tell them that they can’t own an airplane now? Fair is fair – lets have YOU pay 45% of your income to the federal government in 2009 – like they do. See how you feel.

Jim September 23, 2009 at 11:30 am

Again, I believe it goes back to the basic issue of RE-REGULATION of the airlines industry, AND the simple fact that HUBS do not make it easier; it makes it far more expensive because fuel prices have to be factored in. It amazes me that airline travel in the 50′s-60′s EVEN WITH the higher cost of tickets for that era was CIVILIZED, could actually present you with a full meal, and travelers were treated with RESPECT by the airlines and their crews. Other than GREED, and mis-management, what has happened to change all this?

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