Ryanair is the King of Ancillary Revenue... especially explaining it

I am now a convert to the concept of Ancillary Revenue.

It’s a bit like giving into my secret most desires. I want to say NO! but the economic case is compelling.

So I have surrendered to the inevitable and accept the concept both as a user and as a commentator.

So while I arrived at this momentous decision – I think it’s important not to overestimate the value of it and also NOT TO BLOW IT!

Chaps it’s really important not to make it too complex. If you do then you risk the ire of the consumer. And he will not thank you and be very resentful unless you have a compelling reason for him to get over that objection.

Professor Sabena last month http://t2impact.blogspot.com/2009/12/british-airwayss-new-paid-seating.html on the subject of British Airways excessively complex seat assignment policy (21 pages). I agree with his astute point of view.

So I decided to look at several other airlines policies on the largest source of ancillary revenue – baggage.

According to Forrester – baggage fees are the largest single source of extra fees. Indeed this is not just a US phenomenon EasyJet in its last quarter’s results singled out baggage as contributing the lion’s share of its non-ticket revenue.

Take a look at Delta Airlines’ policy. https://www.delta.com/traveling_checkin/baggage/baggage_allowance/index.jsp#checked

If that doesn’t make you cringe then lord knows what will.

In comparison – while there are a lot of fees Ryanair’s fee structure is remarkably simple and easy to comprehend.

Its ENTIRE fee structure is listed here: http://www.ryanair.com/en/questions/table-of-fees it covers dual currency which is even more interesting how simple and easy it is to comprehend the requirement.

Easyjet who is normally pretty good about explaining things – couches everything into the general carrier conditions.

Of course Southwest – well it just flies free – http://www.southwest.com/landing/bags_flyfree.html?int=HOMEWNEW01BFFREE100105 but check out the restrictions!!!

My point here is that trust is all about setting an expectation and delivering against it.

Ryanair continues to run rings round just about everyone. It is also the undisputed king of Ancillary Revenue.

No matter that it consistently ranks at the bottom of branding studies, however I would hazard a guess that users while they may dislike the antics of the mad Irishman who heads now Europe’s largest single brand airline by pax numbers they know what they are getting. It sets a low expectation and doesn’t disappoint.

So if you are going to dive into the Ancillary Revenue pool – do so but do so wisely. And a very personal plea – KISS – yes – you know what it stands for.

I am now a convert to the concept of Ancillary Revenue and it’s a bit like giving into my secret most desires.

I want to say NO! but the economic case is compelling.

So I have surrendered to the inevitable and accept the concept both as a user and as a commentator.

So while I arrived at this momentous decision – I think it’s important not to overestimate the value of it and also NOT TO BLOW IT!

Professor Sabena pointed out last month the excessively complex seat assignment policy for British Airways – a mammoth 21 pages. I agree with his astute point of view.

So I decided to look at several other airlines policies on the largest source of ancillary revenue – baggage.

Take a look at Delta Airlines’ policy. If that doesn’t make you cringe then lord knows what will.

In comparison – while there are a lot of additional charges, Ryanair’s fee structure is remarkably simple and easy to comprehend.

Its ENTIRE fee structure is listed here: it covers dual currency, which is even more interesting how simple and easy it is to comprehend the requirement.

Easyjet, which is normally pretty good about explaining things, couches everything into the general carrier conditions.

Of course, there is also Southwest – well, it just flies free, but check out the restrictions!

My point here is that trust is all about setting an expectation and delivering against it.

Ryanair continues to run rings round just about everyone. It is also the undisputed King of Ancillary Revenue.

No matter that it consistently ranks at the bottom of branding studies, however I would hazard a guess that users may dislike the antics of the boisterous Irishman who heads Europe’s largest single brand airline by pax numbers, they know what they are getting. It sets a low expectation and doesn’t disappoint.

So if you are going to dive into the Ancillary Revenue pool – do so, but do so wisely.

Comments

Bobby Healy says:

January 14, 2010 at 1:17 pm

But…the largest meta-search customer segment for car rental across European airports is actually Ryanair passengers who don’t wish to book car rental from Ryanair but instead choose to seek out the best value possible – rather than relying on a single supplier restricted (and often uncompetitive) offering. …indicating that while they may be the champion of air-related ancillary revenue – they still have a great deal to learn about providing a worthwhile car rental offering to their customers.

Forgive the punctuation. It’s the internet.

Victor Coleman says:

January 19, 2010 at 8:05 am

Interesting that consumers will pay Ryanair for seat related ancillaries but don’t trust them for ground ancillaries. I wonder if legacy airlines have the same level of ‘leakage’ or do people have more faith in a legacy brand.

Bobby Healy says:

January 19, 2010 at 8:35 am

It’s not that they don’t trust Ryanair – it’s that they know they are not being shown a neutral representation of the market for that product. There is a cosy relationship in place to the detriment of the consumer.

If your supermarket only stocked one can of beans, you might be suspicious about the price of that can of beans. Same applies to auto rental.