Rather than tack on fees...

[harvyk]

I recently read an article entitled "Can you be 'Low-Cost' When you tack on high fees" - Can You Be “Low-Cost” When You Tack On High Fees? | BNET

What was interesting was one of the comments, to para-phrase it suggested that rather than charge fees for usage of things which used to be free, airlines again use an all encompasing fare, and then gives vouchers to customers who don't use that part of the service... Eg a customer who doesn't check a bag in gets a $15 voucher which can be used towards future flights.

My personal thoughts echo the posters, it would prevent people from getting upset because they didn't read the legalese fineprint (and thus didn't know xyz was going to cost extra) the people who say "why should I pay for something I'm not going to use" are happy, because they are not paying for something they are not going to use, and the airlines are happy because they get to charge extra for the extra services...

What are peoples thoughts?

 

[ftm]

I have often had similar thoughts regarding merchant fees. Instead of adding on a fee for using a credit card, how about offering a discount for using cash?

That said, my experience is that people's buying behaviour doesn't work that way. They are attracted by the lead in price and seem to commit to the purhcase based on that, rather than the total price after all fees etc. Most people would search for airfares based on the fare price (indeed that's how all the online search engines present the information). It is the fare price that they compare, and then based on that they go in and make a booking. Subsequent fees don't seem to affect the decision significantly.

 

[codash1099]

The added fees usually far outweigh the actual costs, so turning them into a form of credit would result in a loss.

 

[harvyk]

That said, my experience is that people's buying behaviour doesn't work that way. They are attracted by the lead in price and seem to commit to the purhcase based on that, rather than the total price after all fees etc. Most people would search for airfares based on the fare price (indeed that's how all the online search engines present the information). It is the fare price that they compare, and then based on that they go in and make a booking. Subsequent fees don't seem to affect the decision significantly.

They could still advertise the "after refund" airfare, which is what the airfare will cost after the extra's are removed...

The added fees usually far outweigh the actual costs, so turning them into a form of credit would result in a loss.

But if airline 1 offers a flight from A to B, for $100, but charges a $15 bag check fee, how would that result in a loss compared to airline 2 who also offers flights from A to B, for $115, but then offers a $15 voucher for not checking a bag?

 

[dajop]

I have often had similar thoughts regarding merchant fees. Instead of adding on a fee for using a credit card, how about offering a discount for using cash?

As far as redemptions go that is what Singapore Airlines, Emirates & Malaysian all do. Instead of adding 3,500-6,000 points like QF (or $100 like NZ) when you book over the phone, these airlines provide a 15% (SQ, MH) or 5%(EK) discount for booking online. Amazing how much better that feels.

As for a discount for using cash it amuses me (you have to laugh) when I travel home how prolific credit card surcharges have become in Australia over the last 2-3 years .... a contrast to here in Singapore where it is common to get rebates for using certain credit cards instead of cash!!!

 

[odysseus]

What was interesting was one of the comments, to para-phrase it suggested that rather than charge fees for usage of things which used to be free, airlines again use an all encompasing fare, and then gives vouchers to customers who don't use that part of the service... Eg a customer who doesn't check a bag in gets a $15 voucher which can be used towards future flights.

My personal thoughts echo the posters, it would prevent people from getting upset because they didn't read the legalese fineprint (and thus didn't know xyz was going to cost extra) the people who say "why should I pay for something I'm not going to use" are happy, because they are not paying for something they are not going to use

Except it wouldn't, as those people still have to pay. They just get a credit they may be able to use in the future, if their travel plans suit, if that airline is still preferred and if it has the best deal. That's a lot of ifs.

As many companies know, whenever vouchers/credits are issued, there's always a fair number of them that don't get used. They either get lost, forgotten about, expire, or just the situation doesn't arise that they can be used.

To many customers, even if the credit was for the same value as the surcharge, it would be inferior, and a fair proportion would lose out.

 

[elbarto]

Except it wouldn't, as those people still have to pay. They just get a credit they may be able to use in the future, if their travel plans suit, if that airline is still preferred and if it has the best deal. That's a lot of ifs.

As many companies know, whenever vouchers/credits are issued, there's always a fair number of them that don't get used. They either get lost, forgotten about, expire, or just the situation doesn't arise that they can be used.

To many customers, even if the credit was for the same value as the surcharge, it would be inferior, and a fair proportion would lose out.

But the average travellers lack of research would make them think the airline is working in their favour rather than giving them a nasty surprise when they get charged a fee. The airline would end up keeping revenue for a service they never provided because the pax didn't red the t&cs.



Sent from my iPad using Aust Freq Fly app

 

[codash1099]

They could still advertise the "after refund" airfare, which is what the airfare will cost after the extra's are removed...



But if airline 1 offers a flight from A to B, for $100, but charges a $15 bag check fee, how would that result in a loss compared to airline 2 who also offers flights from A to B, for $115, but then offers a $15 voucher for not checking a bag?

Because it doesn't cost them $15 to cart the bag, so they wind up ahead in that case.

 

[harvyk]

Because it doesn't cost them $15 to cart the bag, so they wind up ahead in that case.

But under the traditional model, if you don't check a bag, you don't pay the $15 fee...

 

[codash1099]

But under the traditional model, if you don't check a bag, you don't pay the $15 fee...

True, but my initial comment related to the airline's point of view and why they wouldn't want to hand you a $15 credit note.

 

[odysseus]

But the average travellers lack of research would make them think the airline is working in their favour rather than giving them a nasty surprise when they get charged a fee.

In which case they'd go with the airline with the lower advertised rate. And you couldn't offer a lower rate if you _have_ to pay more, under the law. Plus the average customer who doesn't research would think you're ripping them off if you advertised $80 for the fare then charge $95.