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A Word about Airline Fees… And How Air Canada Has Solved This Issue

This week has given us two airline fee-related fiascos.  The first was British Airways announcing that they’ll charge up to $90 to allow you to pick your seat (even in Business Class).  After fighting with Ryanair for years over their fees and shoddy customer service, this is a move that is so ridiculous I didn’t even bother to comment on it.  The second was the backlash against US network carriers for adding a small fee on peak holiday travel days (something that had always been done in the form of higher fares, rather than as a fee).  Nobody would ever have complained about higher prices on peak travel days, but people have become so annoyed by the fee situation (even though it makes a lot of sense), that we’ve seen a good deal of backlash since it was announced.

Which brings me to Air Canada.  Many airline-watchers (including myself) have admired Air Canada for introducing their bundled fare categories a few years ago.  If you’re not familiar, they basically have 5 fare classes.  When you search for a flight, they display all 5 fare classes and, with a handy little rollover, you can see what is included in each fare.  Some fares include meals, some require you to buy your food.  Some allow changes, some charge a fee.  Some give full frequent flyer miles, some give only a fraction of the actual miles flown.  If checking bags and having flexibility is important to you, great – buy the fare that includes that.  If you don’t care about food, then don’t pay for it – buy the fare that doesn’t include it.  They are giving you the choice for you to pay for what’s important to you as part of the fare without feeling like you’re being nickel and dimed along the way.  And if you just want to pay for your seat, you can do that; and you’ll pay less for it.  (Spirit has basically done this – they charge very little, and they get you to pay for everything.  For some reason this bothers people that a can of soda is not included in their $17 flight).

U.S. carriers haven’t gone this route (for the most part) because there are significant technical changes that need to be made to make it happen.  But this should be a priority.  They’ve changed the way they’re charging for flights, but without changing how they sell – that’s a problem.  So we’ve ended up with a situation where people are actually paying lower base fares nowadays (average fares are down about 6% in Q1 2009 versus last year), but they feel like they’re paying more because of the fees – even when they, themselves, are not paying a fee on a given flight.  In other words, airlines have lowered their fares without getting any credit for it.

Air Canada has created a model that eliminates these problems while still allowing airlines to be paid for the services they provide.  It’s time for U.S. airlines to move in that direction – everyone will benefit in the end.

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  1. Frontier’s Air Fairs scheme, started by (not coincidentally) Sean Manke, a former Air Canada exec and now Frontier CEO/Republic EVP, is a similar approach and works great. Frontier offers a base fair and for $20 more (RT), you get 2 free bags, advance seat assignment, bonus miles, lowered fees, and DirecTV. It is a huge differentiator for them.

  2. Chris M. Dickson

    I’m no BA fan – I have a slightly irrational love for VS, though both airlines are merely good these days – and fear its financial problems are a natural consequence of decades of excessive salaries, but BA’s seat charging policy has been misreported fairly widely and rather unfairly. It’s not as ridiculous as the world has claimed, though it’s wrapped up in exceptions.

    Silvers and up on BA or partners, First travellers and people with fully flexible tickets all get free choice (with one big class of exception) of seats from the time they book. Everyone else gets free choice of seats (with the same exception) within the last 24 hours before takeoff and can pay to choose a seat between booking and 24-hours-before-takeoff. So if you’re non-elite and in business (well, Club) on a non-fully-flexible fare, you do have to pay for the privilege of choosing seats more than 24 hours before takeoff, and they rake the prices up in such a circumstance – but I wouldn’t have thought it would be all that common an occurrence.

    The big exception referred to above is exit row seats in economy (WT) and premium economy (WT+) which are opened for sale between 10 and 4 days before takeoff, though BA Gold and OW Emerald can have them for free at any time. (If you pay for one and then they decide you’re unsuitable for an exit row seat then they will refund you!)

  3. Air Canada should be an example for European lo cost carriers! Ryanair for example is the best airline ever to hide extra fee since you book you flight till you get out of the plane, this is terrible!

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