No matter where one goes this holiday season, the first visit for millions of travelers will be the airport. Airline passengers have come to expect long lines and fluctuating ticket prices when they fly, but now they are also facing decreases in service.
Once complementary amenities such as food, beverages, movies, and in some cases, even blankets now require an additional fee. Because many consumers continue to value low-cost over comfort when paying for a flight, some industry analysts suggest that such a trend is likely to continue.
"The American consumer has proven time and again that the price of the ticket is more important than a little more leg room," explains Robert Cowen, an airline trends consultant and software salesman from Detroit who has racked up more than a million frequent flier miles from his own travel.
Through hosting informational seminars on his Web site (http://home.netcom.com/~rcowen/index.htm), Cowen shares his expertise of air travel from the perspective of the consumer. He observes the growing industry inclination toward what is known as "unbundling," or charging separately for these individual amenities in an effort to lower the ticket price. As the costs to airlines continue to increase, these extra services are available only to those willing to pay extra for them.
"Air Canada has just said if you want to use a credit card it will cost you more, if you want to get frequent flyer miles it will cost you more, to check luggage it will cost you more," reports Cowen. "This is over and above charging for meals and seat assignments."
While recent developments like rising oil prices have contributed to the cost of air travel, separate charges for conveniences and services have been steadily building over time.
"For the root of all this, you almost have to go back to the deregulation of the airline industry which was prompted by two airlines that flew wholly within single states," comments Jim Asker, Managing Editor of Aviator Week, considered an airline industry standard.
"These airlines were able to do all kinds of things that escaped federal regulation," he mentions, referring to Southwest and PSA out of California.
Legacy carriers such as Northwest, American, and others have continued making cutbacks with the stiff competition brought by "low-cost" airlines. The growing number of the budget upstarts like JetBlue and AirTran persist in offering lower rates and still make a profit, driving down the price consumers expect to pay.
"There is more competition that wants to sprout but the old line carriers are trying to stomp it out quickly," comments Cowen.
How do the low-cost carriers do it? Hedging fuel prices is one way—buying fuel at a reasonable price over a long-term contract. More importantly, the budget airlines do not carry the extra infrastructure, pensions, and expensive heavy maintenance needed for older craft borne by the old line carriers.
"These low-cost airlines make some of the cutbacks in the U.S. look really good," jokes Cowen. "Their planes have less leg room, they have no window shades, their seats don't recline, but some of their prices are actually rock bottom. You basically fly for fees and taxes in some cases. Ryanair (from Ireland) is now going to put gambling on board and actually have no-cost flights. You're talking about a whole different definition of the term 'low-cost' airline."
While the legacy carriers have cut back on service to reduce their costs, Asker believes they have reached the limit. "The network carriers are backing off on that," he says. "You make a few bucks on it but you really irritate your customers."
So what shape will the industry take? According to Asker, both models have something to teach.
"What is happening right now is a blurring of distinction of the kinds of airlines in the U.S. The low-cost guys are starting to form hubs and agreements with other airlines, as the legacy carriers have done things to cut costs," he says. Some of the legacy carriers have even started separate divisions to operate completely like low-cost carriers, like United's Ted Airlines.
Regardless of the type of carrier, Cowen foresees fares continuing to increase industry-wide over the next 6 to 12 months. He recommends the Web sites farecompare.com and orbitz.com for consumers seeking a deal. Yet, whether one chooses a legacy or low-cost airline for their next flight, Cowen suggests that passengers themselves are solely responsible for much of their comfort and convenience.
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