Centerlines - December 2010 - (Page 24)

AO NE C I RLLUIM N F E E S FEES VS. PFCs Airline arguments don’t make sense BY K AT HR Y N B. C REEDY A fter decades of failure to become sustainably profitable, it seems airlines would be correct in arguing they can’t afford any price increase that would result in declining demand, including the proposed $2.50 increase in passenger facility charges. They would be correct, that is, if airlines had not shot their own argument in the foot by imposing nearly $8 billion in ancillary fees in 2009 alone. For the fi rst half of 2010, the top 10 airlines have already imposed nearly $4 billion in fees. “I’m so used to hearing airline executives complain that consumers are so price sensitive that anything added to bottom line turns people away,” Consumer Reports Contributing Editor Bill McGee said. “Here we have the industry itself going crazy with ancillary revenues. What about fees turning people away?” It is the way airlines charge for ancillary fees that skews the debate. First, ancillary fees come into play after a passenger books a ticket, masking the ultimate cost of travel. But if airlines think passengers are not noticing, they are sadly mistaken. Passengers describe fees as nickel-and-diming the passengers who can least afford it, according to the new Mad-as-Hell Campaign. Fees are dampening the carrier’s ability to raise fares, Kevin Mitchell, chair, Business Travel Coalition, said. That may be so for this year, when only two of several fare hikes stuck, compared to four domestic airfare hikes in 2009, 15 in 2008 and 17 in 2007, according to FareCompare Founder Rick Seaney. “Average fares were up only 15 percent in the fi rst quarter 2010,” 24 CENTERLINES | DECEMBER 2010

Table of Contents for the Digital Edition of Centerlines - December 2010

Centerlines - December 2010
President’s Message
Canadian Airports
Associates’ Corner
On the Hill and On the Stump
Cover Story: Evolving Airport Concessions
Passenger Focus: Measuring Customer Satisfaction
Fees vs. PFCs
Grand Openings
Now Underway
New Members
Index of Advertisers/
Box Scores

Centerlines - December 2010