Budget Carriers Hit Bottom… And start digging
The race is on amongst budget carriers – a race to the bottom, to see who can inconvinience passengers the most, in return for shaving off a few more bucks off the ticket price.
Budget Airlines - JetAmerica, RyanAir & Spring Airlines
JetAmerica, which started taking bookings for $9 flights with much fanfare in late May, was supposed to launch on July 13. They’ve now postponed the launch to Aug 14. The reason for the delay is a lack of landing and take-off time slots at Newark.
JetAmerica’s VP of Operations Brian Burling says that the FAA flip-flopped on the need for time slots. He says they initially indicated JetAmerica wouldn’t need slots, but after the FAA found that JetAmerica had sold over 20,000 tickets even before the first flight had taken off, they changed their stance and now JetAmerica is grounded until they get the slots.
Of course, this leaves the 6,486 JetAmerica passengers who had booked tickets for dates in-between July 13 and Aug 14 in the lurch. JetAmerica is now refunding all of them, and offering to waive reservation charges if they re-book. This is what happens when you book cheap airline tickets with an airline which has no planes or crew and exists only on paper.
In Europe, cheapskate carrier RyanAir wants to leave no doubt that they’ll do anything to keep the prices down – even if it means leaving customers without a way to check-in. Last month, RyanAir announced a 10 hour downtime for their website, citing a need for essential maintenance.
RyanAir is also phasing out airport check-in desks as part of it’s cost-cutting measures, which basically means passengers can only check-in online. Which, of course, they can’t do if the website is down. This kind of catch-22 situation wouldn’t happen if the airline in question wasn’t going wild trying to save a few more dollars in any way possible.
But China’s first private airline and budget carrier Spring Airlines aims to go where no airline has gone before – They’re planning to get modified planes from Airbus with bar stools and safety belts, instead of seats. The plan is to offer standing-room tickets, and cram in 40% more passengers per flight.
Spring Airlines currently has 13 planes, and they’re not able to cope with the surging passenger volumes and demand for new routes. They’ve ordered 14 new jets, and if they get approval from the aviation regulator, the bar-stool planes could cut the airline’s costs by 20%, and allow them to offer lower prices to passengers.
(Update: Apparently RyanAir is also willing to go where no airline has gone before. Daily Mail, UK reports that RyanAir Chief executive Michael O’Leary, inspired by Spring Airlines, has already held talks with Boeing about designing an aircraft with standing room stools and waist seatbelts. Ryanair estimates it would be able to pack in 30 per cent more passengers while slashing costs by 20 per cent.)
How low can budget carriers go before consumers start weighing the merits of cheap tickets against inconviniences like cancelled flights, check-in problems and standing-room only flights? Apparently a lot more, judging by the 20k tickets sold by JetAmerica, and the 60 million passengers who flew on RyanAir in the 12 months to the end of June.
Assuming cheap carriers will always find customers, regardless of how bad the service is, should aviation authorities step in and draw a line somewhere?
Photo credits:- JetAmerica photo courtesy JetAmerica; Ryanair interior photo by Jon Gos via flickr (creative commons); Spring Airlines photo released into public domain by Follash.
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6 Responses
The challenge with the above, it seems, is that the model is unsustainable. Of course, the pool is so big that there will always be customers for “cheap only” flights, but see what that did to Skybus. Conversely, Southwest’s fares really aren’t that cheap any more, and people still flock to them. “Cheap” is not a branding strategy. Ryanair’s strategy isn’t so much cheap, as to appear cheap but hope that clueless consumers can’t do the math of all the add-on fees (and will put up with terrible service in exchange for thinking they’re getting a bargain). Not to say the dinosaur carriers are any better, chasing their own tails with fare sales that match any competitors. We are, unfortunately, a culture bent on saving a few cents, at any “cost” in convenience, comfort, or dignity.
Ken’s last blog post..Southwest Changes Wine Service – Gosh, Are We Excited
Ken’s absolutely right, this model is no sustainable. As consumers we want cheap flights, but we also want a stable airline industry with great service, that’s on time, and competitive. We don’t have that today. Richard Branson thinks an American airline will go under this year, we’ll see if that’s true and what changes that brings to the industry. Good or bad?
Jeff’s last blog post..476,996 places!
@Ken – Maybe John Weikle could take a few lessons from RyanAir. Or find a new business model. Either way, JetAmerica does appear to be well on its way to following Skybus. As for RyanAir, they make very good use of publicity stunts, like this standing-room bar stools idea, which create an impression that the airline is ultra-cheap. And yes, they do pile on the add-ons. They charged £40 at the airport for anyone who failed to check-in before the site went down.
@Jeff – According to Robert Herbst (airlinefinancials.com), air fares are too low to support current costs, and unless there’s a fare hike, some airlines could go under. Elliott.org has a nice analysis of Herbst’s data, which shows that US Airways and United could be in trouble if they’re not able to raise fares. http://www.elliott.org/blog/us-airways-united-are-closest-to-the-bankruptcy-cliff/
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Some of the things they are doing to cut costs are ridiculous.