Thu, Mar 19, 2009
Get Ready For "Rebundling"
You may have wondered, when it comes to a la carte fees on
airline flights... what could be left? That's a question you might
wish we didn't ask.
Airlines seem to have found just about every service we've taken
for granted for years, broken it out as a separate fee, and now
they're raising the fees.
As ANN reported Tuesday, United Airlines
recently raised its fee for pets in the cabin to $350, and charges
$500 for pets in the cargo hold.
As fuel prices have plummeted in recent months, all that
ancillary revenue has been a windfall for some airlines. American
Airlines saw its secondary revenue skyrocket 60 percent in 2008, to
$2.1 billion, over 2002 levels. That's entirely due to such
unpopular new charges as $15 to check a single bag.
"That's been a pretty big success story," AMR Chief Financial
Officer Tom Horton told Reuters.
As the carriers approach what may be the theoretical limit of
what travellers will put up with, Business Travel Coalition
Chairman Kevin Mitchell tells Reuters the next tactic by
cash-strapped airlines will be selling you things you never thought
about buying on an airplane.
"They're going to use the cabin for all manner of
merchandising... You have a captive audience," Mitchell said.
Airline Consultant Andrew Watterson calls it "rebundling." That
means we'll see more high-quality meals, day passes to airport
lounges and the option to purchase frequent flyer miles, if people
want to spend the extra money.
"Unbundling was the trend, and that did create lots of value in
the airlines," he said. "The future is in rebundling."
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