April 2010 | According to ancillary revenues specialist Collinson Latitude the first wave of ancillary revenue was focused on unbundling, but today’s air traveler is getting lots of confusing messages, so repackaging will make ticket fares simpler again. Collinson Latitude sees 3 phases in the development of ancillary fees (full presentation here): The first ‘product unbundling’ phase is about introducing fees for services such as ticket booking, baggage check-in, and seat selection. In the second ‘product enhancement’ phase passengers can purchase paid extras such as priority security, lounge access and inflight Internet. The third stage is a ‘repackage / rebundle’ phase in which airlines rebundle paid services in packages.
Network carriers such as United and Air New Zealand (ANZ) are among the first airlines to introduce bundled fares. For example, United Airlines’ ‘Premier Line’ travel option combines checked luggage, airport fast-track and extra legroom. ANZ recently introduced new bundled fares on its short-haul routes that range from seat-only to the full works.
Lufthansa’s low-cost subsidiary Germanwings last month (March 2010) introduced a new pricing structure that gives passengers the option to choose between Basic, Best and Flex fares. A ‘Basic’ ticket provides a seat, hand luggage up to 8kg, and frequent flyer miles. The price of a Basic ticket is similar to Germanwings’ previous fares. A ‘Best’ ticket also includes one piece of checked luggage, advance seat selection, and an onboard snack and drink. Buying this bundled fare is 25 percent cheaper than purchasing the extras separately. ‘Flex’ fares include all of the items of the Best option, plus checked luggage allowance up to five pieces, double miles, and the ability to change booking without charge (or cancel it for a EUR25 fee).
Germanwings has also launched a ‘Private Seat’ option, which allows passengers to purchase the seat next to them to ensure it stays free. With legacy carriers currently repositioning their service offerings on short haul and ‘hybrid low-cost carriers’ such as Germanwings introducing bundles fares, the lines between both types of airlines are increasingly blurring.