Move over, Ryanair. Step aside, Tigerair. The airlines that once ruled the world for the number of consumer complaints they attracted have been passed effortlessly by a new champ.
Ryanair has always had the de facto world crown, not just because of the gotcha ancillary fees it slugs often unsuspecting travellers with, but also because its chief executive, Michael O’Leary, has made a sport out of enraging Ryanair customers with jibes about them and a stream of new price-gouging thought bubbles, like the idea of having to pay to use the in-flight toilets.
But a less confrontational Ryanair is now emerging following Ryanair’s realisation last year that annoying the customers might not be the correct strategy to continue the company’s high-growth strategy into the future.
"We should try to eliminate things that unnecessarily piss people off," O’Leary told the company’s September 2013 annual meeting.
Last month, O’Leary launched Ryanair’s “Always Getting Better” plan, starting with “fixing the things our customers don’t like”. In recent months it has relaxed its hard-line cabin baggage allowance, reduced penalties for failing to print out boarding passes and introduced allocated seating.
Tigerair arrived in Australia in 2007 with the same aggressive mindset and became the biggest single source of complaints to the various state consumer affairs departments as well as the Australian Competition and Consumer Commission.
Now Tiger, too, has realised there are better ways of doing business in a tough industry like the airline game, especially since it has never made a profit in Australia.
But in a market that’s big enough to support not just low-cost airlines, but ultra-low-cost airlines, the USA has spawned a carrier that puts traditional price-gougers in the shade.
Spirit Airlines charges more so-called ancillary revenue – money for extras – than any other airline in the world and has been rewarded with an astronomical rate of consumer complaints compared with the rest of the industry.
According to a study released last week by the Public Interest Research Group on airline complaints over the past five years, Spirit Airlines “was nearly three times as likely to generate complaints as the second-place airline each year”.
“As the airline has grown in the past several years, complaints against the airline have skyrocketed,” the report says. “Since 2008, the Department of Transport has hit Spirit with five different fines totalling $US565,000 for violating various consumer protection laws concerning oversales, baggage, and multiple cases of deceptive advertising.”
None of that is surprising when you look at statistics compiled on ancillary revenue by the IdeaWorksCompany, the foremost US experts advising airlines on how they can increase their revenue through charging for extras.
On the company’s June 2013 figures, Spirit is No.1 in the world for ancillary revenue with 38.5 per cent of every dollar of revenue covering chargeable extras.
By comparison, Ryanair was a distant fourth on the list with just 21.8 per cent of revenue for extras, while Tigerair was fifth with 20.8 per cent.
In terms of dollar amounts per passenger, Qantas actually tops the ancillary revenue figures from IdeaWorksCompany because it includes frequent flyer revenue, which isn’t a charge levied on passengers at all.
But in terms of actual charges to passengers, Spirit Airlines also leads the world table with $US48.72 per passenger, just in front of AirAsiaX with $46.31. Tigerair is outside the top 10 on that list since it has no long-haul operations, but Jetstar is at No.9 with $29.60 per passenger.
Spirit Airlines chief executive Ben Baldanza is now defending his airline with a propaganda campaign that contends that the complaint rate is quite low, even though it dwarfs complaints received by other carriers.
“The reality is we’re seeing a growing acceptance of what we do,” Baldanza told a conference last year. “Customers are choosing to nickel and dime themselves.”
Meanwhile, airlines everywhere, including Australia, continue to nickel-and-dime their customers and consumers need to be vigilant.
In a survey of airline websites published last month, Choice reported on the sneaky ways that airlines, including Tigerair and Jetstar, have traps for the unwary where you can end up paying for extras like insurance, baggage or seat allocation if you don’t first untick a box presented as the default option.
Who tops your list for the world’s worst price-gougers? Are there any you’ve found that are particularly sneaky in entrapping customers? What is your personal strategy in dealing with optional extras? Are you better off using a full-service airline where all the extras are included in the ticket price?