Delta expands bare-bones ticket option
Delta is expanding a new variety of stripped-down, bare-bones fares. The “basic economy” fare gets you a confirmed seat on the plane, but does not allow you to pick the seat in advance and does not allow any flight changes, even if you’re willing to pay a change fee. You may also end up literally at the back of the line, as the last to board the plane. Airline consultant Jay Sorensen says Delta’s goal is “to stop Spirit Airlines or any other startup” from moving in on Delta markets. “We’re entering an era in which startups will begin to occur again,” due to low fuel costs and airline consolidation, he said.
Los Angeles Times
Airlines warned not to be “greedy” with passenger fees
The world’s airlines are expected to collect $28.5 billion in passenger fees in 2014, a 20% increase over last year, according to a new study. The increase is no surprise as the revenue airlines collect from bag fees and charges for food, entertainment and other onboard extras have more than doubled since 2010. But airlines can’t get too greedy with such fees. That warning came from Jay Sorensen, president of IdeaWorksCompany, the Wisconsin-based company that publishes the annual revenue estimate and advises airlines on ways to boost such income.
We’re Paying an Extra $5 Billion in Airline Fees This Year
A new study from the airline consultancy firm IdeaWorksCompany projects that ancillary revenues—money generated for sales above and beyond the base price of flights—will hit $50 billion (OK, $49.9 billion) for carriers worldwide in 2014, up from an estimated $43 billion last year and $36 billion in 2012. For 2014, $21.4 billion of the total is expected to come from “frequent flier and commission-based” revenues, which include the sale of frequent flier miles and sales commissions from hotels, rental cars, and travel insurance booked through the airline.
New York Times
Big-Ticket Fliers Poised to Gain Still More Miles
“In an industry where everything is plain vanilla, Delta and United have tossed a bunch of strawberry into the pile,” said Jay Sorensen, founder of the airline marketing company IdeaWorks, based in Wisconsin. Keeping with the ice cream analogy, Mr. Sorensen called the move a “delicious lab experiment” because so much of what will happen is unknown. Airlines around the world, Mr. Sorensen said, are “about to see the power of loyalty on the top and the bottom end.”
Brazilians Stuff Suitcases in Last Free Perk for Fliers
In other parts of the world, airlines are getting even stricter about luggage, from carry-ons to suitcases bound for the cargo hold. That means planes flying outside Brazil are lighter and more fuel-efficient, said Jay Sorensen, a former Midwest Airlines executive who now runs aviation consultancy IdeaWorksCompany.com in Shorewood, Wisconsin. In Brazil, “they’re messing with the economics of airlines,” Sorensen said in a telephone interview. Brazil risks bankrupting its airlines by dictating what they can charge for, he said.
Financial Review of Australia
Qantas frequent flyer changes ‘bewildering’ for customers
Qantas Airways may have marketed recent changes to its frequent flyer program as “simpler and fairer”, but in reality the airline added “daunting complexity” to its loyalty scheme, according to a new report from US consulting firm IdeaWorksCompany.
Airlines go à la carte: Why travellers should get used to baggage fees and more ‘unbundling’
“We predict that the inclusion of free baggage as a benefit of a fare will disappear worldwide over the course of the next few years,” said Jay Sorensen, president of IdeaWorksCompany, a Wisconsin-based consulting firm that helps airlines generate more revenue through ancillary fees. According to research by IdeaWorksCompany, global airline ancillary revenue soared nearly 1,200% between 2007 and 2013 as more carriers embraced the concept of “unbundling,” or charging separately for a variety of services.
Selling those little extras pushes Jetstar into top 10
THE Jetstar Group has emerged among the top 10 airlines in the world when it comes to the percentage of its revenue derived from selling extras to passengers. . . IdeaWorksCompany has been trawling through airlines’ results to calculate ancillary revenues since 2007 and its first report identified $US2.45bn from 23 airlines globally, or about $US6.99 a passenger.
Airline Profits Are Up, Thanks To Everything But Airfares
IdeaWorks and its partner, the Irish-based CarTrawler, examined financial reports from 59 airlines around the globe. Among carriers in the U.S., non-ticket fees accounted for 10.2 percent of industry revenue in 2013.
How budget airlines REALLY make their money: Jet2 and Wizz Air rely on optional extras MORE than Ryanair, with only 65% of their income coming from ticket price
The world’s top airlines collected more than £31.5billion in extra charges in 2013, an increase of more than £4billion on the previous year. Some airlines are making up to 40 per cent of their money from charging for extras like seat allocation, checking in luggage and food and drink on flights, according to a report by consultancy IdeaWorksCompany.