Airline balance sheets often resemble a train wreck because of rising operating costs and declining passenger traffic.
For airlines to make money, taxes and fuel prices will have to relent. But as neither will - at least not in a hurry - they have been forced to charge high fares. Hence, the shrinking traffic. Pretty bleak, right? You bet. Yet, airlines found a way to make money: charge passengers extra for meals, checked bags, more legroom and the like.
The charges for ancillaries have become the best bet for airline profitability in recent times. Are these fees reasonable?
That depends on whether you are a passenger or an airline executive. In any case, airlines began to eventually "unbundle" ancillary services, which essentially means customers can pay for only what they want. To cite an example, low-cost carrier IndiGo charges extra for a prepaid meal on board or faster check-in . It boils down to a passenger paying a lower fee for basic products and a higher price for valued-added products. "Not everybody has to pay for everybody's luxury," says IndiGo president Aditya Ghosh.
31/05/13 Binoy Prabhakar/Economic Times
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For airlines to make money, taxes and fuel prices will have to relent. But as neither will - at least not in a hurry - they have been forced to charge high fares. Hence, the shrinking traffic. Pretty bleak, right? You bet. Yet, airlines found a way to make money: charge passengers extra for meals, checked bags, more legroom and the like.
The charges for ancillaries have become the best bet for airline profitability in recent times. Are these fees reasonable?
That depends on whether you are a passenger or an airline executive. In any case, airlines began to eventually "unbundle" ancillary services, which essentially means customers can pay for only what they want. To cite an example, low-cost carrier IndiGo charges extra for a prepaid meal on board or faster check-in . It boils down to a passenger paying a lower fee for basic products and a higher price for valued-added products. "Not everybody has to pay for everybody's luxury," says IndiGo president Aditya Ghosh.
31/05/13 Binoy Prabhakar/Economic Times
