Ancillaries cheaper than an airport shop

369050370_310c6c4839.jpgThe Emperor Nero is said to have said, ‘Let them hate me – so long as they fear me.’ At the airlines, it may well be, ‘let them grumble- so long as they pay.’ Or as AirTran’s CFO puts it, “people don’t like the ancillary fees and they may grumble about them but they don’t change their behavior.” The carrier’s senior vice president of finance and chief financial officer, Arnie Haak, told the Calyon Securities Airline Conference that when AirTran introduced optional seat selection fees in June, offering to let flyers choose a seat when reserving for a $5 fee, passengers accepted it. “They say to themselves, ‘I’m going to spend $12 on a magazine, a soda and some chips at the airport. Why should I be cheap?’”

The airline is now raising about $30 million from this and other charges such as bag-check fees or cancellation fees and is on track for double-digit growth in ancillary revenues this year. Haak said, “I think it’s the reality of how the airline customer shops.” Haak, at the Orlando-based AirTran since 1999, said, “You can’t be afraid to make decisions that push up unit costs. It’s unit revenues that must rise.”

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2 Responses to Ancillaries cheaper than an airport shop

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