This was published 2 years ago
Full-service versus budget airlines: How extra charges are being added by legacy carriers
By Michael Gebicki
Full service airlines are increasingly introducing extra charges for things like food and selecting your seat for those travellers on the cheapest fares.Credit: iStock
Want to fly from Melbourne to Athens this August, return for $1555? That's a fare being offered by mytrip.com, but there's a catch.
Even though you're flying with Lufthansa and Thai on the return journey, baggage isn't included. You're limited to one carry-on, maximum seven kilograms, plus one small bag that must fit under the seat in front. But Lufthansa and Thai are full-service airlines, you might think. Been around for ages, solid reputation - and since when do those airlines charge extra for checked baggage?
Welcome to the new pared-back world of basic economy fares. If you want checked baggage – and Greece with seven kilograms is a tough call – you need to pay extra, an ancillary charge, and ancillary charges are a trick that the full-service airlines have learned from the budget carriers.
Ancillary charges have been the bread and butter of the budget carriers. Their business model is based on tantalisingly cheap base fares, but then bunging on the charges for seat selection, inflight meals, checked baggage and flight changes.
The maestro of mean is Ryanair. Remember when Ryanair floated the idea of pay-for-use toilets on their flights? Saddle-type seats that put passengers in a semi-erect pose so they could fit more in? Neither got off the ground, but Ryanair has created the template for budget-carrier success. By the time you add charges for checked-in baggage, seat selection and an inflight refreshment you've might have doubled the price you paid for that basic fare.
The full-service carriers catch the bug
Seeing the low-cost carriers carve a substantial chunk of the leisure-travel pie, the full-service carriers have dealt themselves in on the game. Rather than offering a base fare with bolt-on extras – those ancillary charges - legacy carriers tend to stratify their fares in a process known as "unbundling". Unbundling means progressively stripping away the perks you take for granted when you fly with a leading carrier. An economy class airfare might now come in three or four different fare types. Pay for a full economy seat and you get the works. Seat selection, full baggage allowance, inflight food and beverage, generous mileage points and fee-free flight changes. Move down the fare categories and those extras gradually disappear, until you're left with just a seat and a carry-on bag.
Different airlines have different names for their basic economy fares. Virgin Australia calls them "Getaway" fares, on Singapore Airlines and Qatar they're "Lite", on Emirates "Economy Saver" and Qantas calls them "Saver". In some cases, even on a basic economy fare, you can engineer a better inflight experience by paying extra for seat selection or more baggage, an ancillary charge in effect, but airline websites tend to shuffle you into a higher fare category to achieve that.
Business class lite
Some leading airlines have also applied the unbundling process to their business class. Select a business class "Lite" fare with Qatar Airways and you don't get to select your seat, nor use of the business lounges, although you can for a fee. However you get the same food, same entertainment, same seat and same baggage and carry-on allowance as higher business-class fare types while saving a motza on the ticket price. Emirates' business class "Saver" fares come shorn of some of the same frills, but on a return flight to Europe, the gap between an Emirates Business Saver fare and a Flex Plus fare can be as much as $4000.
Why not go with a low-cost carrier instead?
Even if you fly on a basic economy ticket with a full-service airline, you're probably paying more than you would if you were travelling with a budget carrier and flying under the same conditions. So why not go for a budget carrier in the first place?
Although they may offer bare-bones fares, the full-service airlines also carry passengers who pay a lot more for their ticket. That will usually include business class flyers, and they're the flyers the airline needs to keep onside. Since you're travelling in the same fuselage as those high-value flyers, you're benefiting from the love spillover effect, like being a close relative of a Kardashian.
Full-service carriers tend to use major airports rather than those with lower fees, which might be located at a greater distance from the city you're flying to or from, and possibly with less convenient transport links. The terminals they use will frequently have limited seating, fewer and lower-quality food and beverage outlets, longer queues for security clearance and fewer toilets. That's particularly the case in Europe. A legacy carrier is also more likely to use an airbridge to access their aircraft direct from the terminal rather than bussing you to and from your aircraft parked at some distant stand, and who doesn't hate that?
Budget carriers are more likely to change flight schedules at the last minute and cancel flights if they need to amalgamate two flights to ensure an economic passenger load or if the aircraft scheduled for a particular flight goes out of service. There is no risk of sabotaging any loyalty credit the airline might have built up. Those carriers know you're only flying with them because they offer the cheapest price, therefore there's nothing to lose if they treat passenger loyalty as expendable.
See also: Ten hours on hold: Customers furious over Qantas phone wait times
See also: Tripologist: What's the cheapest way to do a long holiday in Europe?
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