Ryanair CEO Michael O'Leary. O'Leary has indicated that he is trying to work out a way for his airline to charge passengers for carry-on luggage.Credit: AFP
First, airlines started charging for checked luggage that used to be included in the ticket price.
That alone is an entire new industry created in the past decade that now consumes around $30 billion worldwide in travellers’ cash.
The consequence weren't so much unforeseen as “What the hell! We’ll do it anyway”. Being forced to pay for checked luggage prompted travellers to start bringing huge carry bags onboard that barely fit in the overhead lockers, but avoid the check-in charge.
Boarding and disembarking from aeroplanes is now chaotic. Airlines like Jetstar have been forced to provide even more overhead bin space and to reinforce existing lockers to withstand the daily wear-and-tear of use by oversized bags.
And what is the industry’s reaction? Well, let’s start charging for the oversized bags that travellers have been forced to bring onboard by the new fees for checked luggage.
Gouge, gouge, gouge. It’s something that has a luminescent attraction to the travel industry – not just in airlines, either.
(The latest one I’ve heard about is the hotel “resort fee” – a compulsory add-on in places like Las Vegas, reported by US travel blogger Christopher Elliot.)
In the airline game, there’s an ominous sign: despite the explosion in ancillary fees for check-in, seat selection, credit card use and baggage over the past five years, the rate of increase in the revenue from fees has slowed to a trickle.
Which means the industry is searching for the next target and carry-on fees – still resisted by most airlines – are the elephant in the room.
It doesn’t matter that baggage fees are for services that cost next to nothing to provide. It’s whether the market will tolerate new fees.
That dilemma is exercising the mind of the man who runs Europe’s biggest low-cost carrier Ryanair, who admits he’s not game to bluff travellers into paying carry-on fees for fear of triggering a backlash.
But that won’t stop Ryanair CEO Michael O’Leary trying to invent a plausible excuse. The Ryanair chief executive predicts carry-on fees will become commonplace among airlines in future.
He says his airline has cut the number of passengers checking in luggage from 80 per cent to 19 per cent by steadily increasing baggage fees, saving the airline “a fortune” in fuel and handling charges.
O’Leary says checked luggage will never be completely eliminated, although he believes it is realistic to cut the total still further to just 10 per cent of passengers. “Everyone’s expectation should be that checked-in bag fees will continue to rise,” he told a media briefing in London last week.
So what about hand luggage fees, which have been introduced by US low-cost carrier Spirit Airlines and European LCC Wizz Air?
“That is unlikely in the short term, but it is probably something that is inevitable in the longer term,” O’Leary said.
“Inevitable is perhaps too strong. I think at some point in the future it is likely that most airlines will charge for carry-on bags. I just can’t get my head around how to do it.”
O’Leary says he is concerned that introducing a fee for hand luggage would need to be closely managed at the gate. This could increase Ryanair’s turnaround times, affecting punctuality and daily aircraft utilisation – one of an airline’s key benchmarks – therefore increasing costs.
“Right now, I can’t see much in it for us, apart from delaying turnarounds, but that doesn’t mean that it won’t develop over time,” O’Leary said.
Wizz Air chief executive Jozsef Varadi recently told Air Transport World his new carry-on fee was aimed at solving the problem of excessive hand luggage, congesting the cabin and delaying aircraft turnarounds.
“It was a bold move, but I certainly don’t regret the decision,” he said. “Obviously there was a fear that there might be a setback on customers’ reactions, but it has been taken fairly neutrally, slightly positive I would say, and we are pretty happy with that.
“I think it is a good move. I actually don’t understand why other airlines don’t consider it more seriously, but that’s not my problem.”
According to ATW, Euro MPs earlier this year called for an end to “the excessive restrictions and arbitrary charges that some airlines impose on carry-on luggage.”
Fees are also causing consternation among regulators in the US, with the Department of Justice last week announcing it would oppose the proposed merger between American Airlines and US Airways – after a decade of waving through such consolidation of the air travel industry.
“The department sued to block this merger because it would eliminate competition between US Airways and American and put consumers at risk of higher prices and reduced service,” said Bill Baer, the US Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
“If this merger goes forward, even a small increase in the price of airline tickets, checked bags or flight change fees would result in hundreds of millions of dollars of harm to American consumers.”
“Who will call an end to this fee madness?” writes Christopher Elliot. “Not the government, which has taken a hands-off approach. Not the companies, which can’t resist the revenue fees bring in.
“Only one person has the ability to end this revolution: you.”
With Tigerair embarking on an ambitious growth phase in Australia, there’s no doubt the competition with Jetstar will keep a cap on new ancillary charges Down Under for the time being.
But what eventually becomes standard in the rest of the world will eventually make its way here.
What is your strategy for avoiding fees? Have you noticed new fees popping up in areas other than air travel, such as hotels and car hire? Would you avoid an airline that charged for carry-on luggage? Post your comments below.
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