Airlines Continue to Unbundle

Remember the days when an airline ticket was an airline ticket? It included travel for you and your luggage from your origin to your destination, a drink and a meal during the flight, perhaps even a movie or an episode of Mr Bean on a short hop?

How times have changed. Low cost airlines have unbundled the airline ticket described in the forgoing paragraph. Sure your fare still gets you from your origin to your destination, but what about that meal and drink? You’ll have to pay for that – no longer included in the ticket price. And the movie or that episode of Mr Bean? Well you’ve heard of pay-per-view, haven’t you?

Now the low cost airlines are unbundling your luggage from the ticket price. Flybe, a regional UK low cost airline started the trend a couple of weeks ago, and last week, Ryanair announced that it will start charging passengers to check in their baggage from 16th March 2006 (aka price signalling, to see if other low cost airlines will follow suit).

Flybe, is reported as saying it will charge £4.00 per check item, discounted to £2.00 if pre-booked, while reducing its fares by £1.00. It is also increasing cabin baggage allowances from 5kg to 10kg, and check baggage to 25kgs (probably from 20kg?).

Ryanair is reported to be “planning” to lower fares by £2.50 on the same day it starts charging £2.50 to check in a bag. According to Ryanair, 50% of its passengers travel with one piece of baggage and will therefore be unaffected. Overall, the change will be revenue-neutral for the airline.

But low cost airlines appeal to price sensitive passengers. So expect to see more cabin baggage being crushed into overhead lockers and under seats by passengers seeking to pinch every penny they can (especially on Flybe!).

Michael O’Leary (Ryanair’s CEO) has already given away £1 and free tickets (passengers still had to pay taxes and fees), and is on record as saying he believes it is possible for airlines to pay passengers to fly (how many other forms of public transport can you name that pay passengers to travel?). Of course, the way that model is evolving, passengers will still be paying for in-flight entertainment, food and drink, luggage, and anything else that can be monetised. My bet is that it won’t be too long before they monetise the use of the toilets.