A story below says United States airlines are thinking of modeling their charges after Ireland-based Ryanair, which has cheap fares but charges for many things that come with a normal airline ticket.

That includes $3.40 for a coffee, $4 for priority boarding and $7 for checking a bag. In addition, Ryanair has incorporated online shopping and gambling at 30,000 feet.

People are buying the idea because Ryanair is increasing its passengers and profits.

The question is would you mind paying for the little things if the airfare is cheap enough?

Posted by Steve E. Swenson

U.S. AIRLINES EYE RYANAIR’S LOW-FARE, HIGH-FEE MODEL
BY SHELLEY EMLING
Cox News Service
LONDON - Inspired by the success of Ryanair, which has grown to be Europe’s
leading low-cost carrier one small fee at a time, some U.S. airlines are
re-examining their own business models.
The move may bring an end to the days of free drinks and snacks, and even
free checked luggage.
Passengers on Ireland-based Ryanair pay $3.40 for a coffee, about $4 for
priority boarding and nearly $7 for the privilege of checking a bag.
Indeed, Ryanair’s strategy is to charge for everything but the seat. The
airline gave away about 25 percent of its seats last year, and chief
executive Michael O’Leary has said he hopes someday to make them all free.
Squeezing pennies out of passengers can be controversial. When a disabled
customer successfully sued Ryanair after being charged $34 for the use of a
wheelchair, the colorful O’Leary decided to tack 63 cents onto every ticket
as a “wheelchair levy.”
But over all, passengers don’t seem to mind paying small fees in exchange
for very cheap airfares - for example, London to Rome round-trip for 4
cents. More than 42 million people are expected to fly Ryanair this fiscal
year, which ends in March, up from 35 million last year.
Such popularity has helped boost the short-haul carrier’s profits for the
six months ending in September by 39 percent to $422 million, on sales of
$1.6 billion, even in the face of rising fuel costs.
“The business model really works,” said Lorna Farren, a Ryanair spokeswoman.
Now Ryanair, which initially modeled itself after no-frills Southwest
Airlines, is motivating other airlines.
For example, Orlando-based AirTran Airways, which operates from an Atlanta
hub, recently sent two marketing staffers to Europe to spend a week flying
around on Ryanair in order to get a sense of what the airline is doing
right.
Tad Hutcheson, vice president for marketing at AirTran, said he still
believes that most American travelers expect certain goods and services to
be bundled in with their airline tickets.
“For example, I do not think American consumers will pay for Cokes, snacks,
blankets or in-flight magazines,” he said. “But we could increase ancillary
revenues by charging for extras such as premium seat assignments, such as
aisle seats near the front.”
Hutcheson said the airline might also consider a tie-in with SkyMall, the
airline’s onboard catalog, so that flight attendants might accept
credit-card orders during flights.
“The airline would make a commission for such sales,” he said.
Meanwhile, American Airlines began selling snack boxes and sandwiches on
flights last year, a move that has proved popular.
On international flights, the airline also sells alcohol in the main cabin
as well as duty-free items on selected flights.
“Feedback from both customers and employees indicate that they like the
option to purchase food in the main cabin,” said spokesperson September
Wade. “In fact, when the program was first tested, feedback showed that
snack boxes rated very well when compared to the current in-flight meal
service.”
Tim Jones, a principal at London consulting firm Innovaro Ltd., said there’s
little doubt that the Ryanair model underpins much of the sector at the
moment.
“Many are seeking to emulate Ryanair and charge for everything,” he said.
“At the same time, others are offering low fares, but with extras.
”For example, (London-based) Monarch Airlines makes a big thing about your
being able to choose your seat, get food and a paper under the banner
’expect more, pay less,’ “ he said.
In general, Jones said airlines are tweaking their model wherever they can
in order to gain margin.
Robert Mann, an aviation consultant at RW Mann & Co. in Port Washington,
N.Y., said there’s little doubt that passengers will eventually see airlines
trying to sell them more.
For example, he said that more in-flight entertainment options will mean
opportunities to sell media content, as opposed to just headphones.
And sales of carrier-related products such as trip insurance, tour packages,
and cell service - already part of the landscape - will become more
pervasive.
”Ryanair is not alone in this category, though they may have pushed the
envelope the farthest,“ Mann said.
Ryanair already has boosted its non-ticket revenues by using its Web site to
sell rental cars, hotel rooms, and even ski packages.
The airline recently added online gambling to its Web site and is
considering offering casinos at 30,000 feet, allowing passengers to use
either their cell phones or BlackBerry devices provided by Ryanair to gamble
during flights.
Many airlines caution that there’s a fine line between charging for extra
value-added service and nickel-and-diming customers to the point they take
their business elsewhere.
Henry Harteveldt, vice president and travel specialist at Forrester Research
in San Francisco, said that while U.S. airlines are ”unbundling“ their
product - for example, charging for curbside check-in - he doesn’t think
they will ”totally“ adopt the European model of essentially charging a fee
for everything.
”I don’t think this will happen even though PEOPLExpress set the model for
Ryanair - even more than Southwest - when it started in the early 1980s and
charged for things like soft drinks,“ he said. The pioneering no-frills
airline operated from 1981 to 1987.
Harteveldt noted, however, that Skybus Airlines, a new carrier based in
Columbus, Ohio, plans to start service next year, ”is expected to adopt the
Ryanair model. We’ll see if that works, and much will depend on the fares
that are charged.“