While many U.S. airlines, in recent days, have reported first quarter losses of more than $1 billion, attributing those losses to higher fuel costs, the Business Travel Coalition (BTC) said that those higher fuel prices are not an excuse for charging higher airfares.
In a written analysis of how airlines can cope with rising fuel costs and still meet customer needs, Kevin Mitchell, chairman of the BTC, suggested that airlines accelerate the uptake and sale of ancillary fees and defeat surging fuel costs.
“Seven airfare increases so far this year prevented the losses from being even more damaging to airlines’ balance sheets,” Mitchell said. “However, airlines face a potential consumer backlash this summer from angry travelers who are increasingly tired of both fare increases and hidden ancillary fees, which can now double the base price of a ticket.”
Mitchell continued, saying, “… Some airlines pointed to airline product unbundling and the sale of ancillary fees as the ‘magic sauce’ for climbing above increasing jet fuel prices. Well, why not accelerate the uptake and sale of ancillary fees and defeat surging fuel costs?”
Travel agencies, said Mitchell, are eager to sell these services and could power airline revenues above the dark clouds on the horizon of rising oil prices.
“The airlines have built a very low-cost transmission system for the dissemination of fees through the airline-owned Airline Tariff Publishing Company. The system has been tested with some 26 airlines and three reservation systems and would cost no more than $3,000 per airline, per month. This solution would provide rapid acceleration in growth of fee revenue, mitigate consumer anger in the marketplace thus supporting demand, and show regulators in Washington and Brussels that airlines are listening to their customers,” Mitchell said.