Are airlines heading towards a cruise ship revenue model?

ship plane

As many frequent cruisers know, and occasional cruisers soon discover, cruise ship fares are often just the tip of the iceberg in terms of the total vacation price.

Except for the most deluxe lines, most ships now have restaurants and snack bars with surcharges, activities with surcharges, and drink prices that rival those of big-city hotels. Not to mention expensive shops and spas on board, and of course, tipping. Which means that the $499 a person cruise you see advertised could easily end up costing double that.

While airlines have seldom sold their flights as a vacation in and of themselves, in the not-so-distant past, your ticket covered your total flying cost.

Now, except for Southwest, U.S. airlines are all charging for basic checked baggage and onboard meals, for starters. Plus, not only are those prices going up, but the list of additional items with costs attached keeps growing too.

The original snack boxes, for example, on United, were $5. Now the boxes range from $6 to $7. And sandwiches and salads are $9. On American and United, it’s $3 to $4 for a bag of nuts, a granola bar, potato chips or something similar. And American charges $10 for a sandwich or salad with chips.

Most other carriers use similar pricing, which also will no doubt keep increasing. As to soft drinks and bottled water, US Airways for now has canceled their experiment in charging passengers for all beverages, but the odds are good that some airline will start it up again.

And then there’s the other options like priority boarding, priority seating, and single-day airport lounge access, all of which have also been increasing in price. Along with ticket change fees and various fees connected to frequent flier mileage, from last minute booking fees, to co-pays for upgrades, to reinstatement fees when miles expire.

In the not-too-distant future, some carriers will start adding wi-fi for an additional charge as well.

The airlines call this “unbundling” or “a la carte” pricing. But what it means in practice is that that discount airline ticket you purchase, may only be a fraction of your total trip cost. Already many change fees are more than the price of the ticket. And bringing a pet or a couple extra suitcases can also more than double a fare.

All these extra fees, in addition, are never subject to corporate or other discounts, so they mean revenue that goes directly to the airline.

Getting back to the cruise model, cruise lines often offer those ridiculously low rates because they know they can make a profit with the passenger’s onboard revenue. Even if they break even or lose money on the fare itself. As the list of “options” grows, it’s not too far fetched to imagine these extras – not the tickets themselves – will be the airlines’ chosen route back in the direction of profitability.

Previous

Next