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How budget airlines make their money: The art of bumping a 2 cent ticket up to $120
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So, how do they do it? How do all those European budget airlines make a profit charging less than a Euro per seat?Last summer, Times journalist Mark Frary decided to find out for himself by purchasing a 1 pence Ryanair ticket from London's Stansted Airport to Berlin. Sounds like a steal, right? Not exactly. Like so many other deal seekers on budget airlines, Frary ended up paying far more than that initial 1 pence. How his final cost netted out at £61.84 ($121.15) provides fascinating insight into an amazing business plan that is succeeding despite naysayers predicting otherwise.
Interestingly enough, the wild price of Frary's final bill did not come from the most common source of increased ticket prices on budget airline: baggage fees. This is where the airlines really clean up. Passengers on Ryanair, for example, can check up to three bags. The first, however, costs £5 ($9.80) while each additional bag is £10 ($19.60). In addition, there is a 15 kg (33 lbs.) checked bag allowance. If a passenger exceeds this weight, they pay £5.50 ($10.78) per kilo--which can add up very quickly. And don't even think of transferring your heavier items to your friend's baggage at the airport either. Ryanair's Terms and Conditions clearly state, "No pooling or sharing of baggage allowances is permitted, even within a party traveling on the same reservation."
Frary was smart and kept his baggage to a minimum. He did fall prey to, however, to a variety of other fees and services--some of which can easily be avoided (e.g., don't order food onboard) while others can not. Despite all this, budget airlines are still a great deal cheaper than normal airlines, providing you have the brains and discipline to avoid be taken advantage of.
The Ticket
The ticket itself: £0.01 (2 cents)
Credit card charge: £ 1.75 ($3.43)
Flight change: £ 24.00 ($47)
Taxes and Fees
Government passenger duty: £ 5.00 ($9.80)
Airport passenger service charge: £ 7.30 ($14.30)
Insurance and wheelchair levy: £ 3.48 ($6.82)
Baggage
Checked in suitcase: £ 7.00 ($13.71)
Food and Drink Onboard
Bottle on water (500ml): £ 1.80 ($3.53)
Pringles and Mars bar: £ 2.60 ($5.09)
Ham and cheese baguette: £ 4.00 ($7.84)
Miscellaneous
Two lottery scratch cards: £ 2.90 ($5.68)
TOTAL £61.84 ($121.15)
The Ticket
The ticket itself: £0.01 (2 cents)
Credit card charge: £ 1.75 ($3.43)
Flight change: £ 24.00 ($47)
Taxes and Fees
Government passenger duty: £ 5.00 ($9.80)
Airport passenger service charge: £ 7.30 ($14.30)
Insurance and wheelchair levy: £ 3.48 ($6.82)
Baggage
Checked in suitcase: £ 7.00 ($13.71)
Food and Drink Onboard
Bottle on water (500ml): £ 1.80 ($3.53)
Pringles and Mars bar: £ 2.60 ($5.09)
Ham and cheese baguette: £ 4.00 ($7.84)
Miscellaneous
Two lottery scratch cards: £ 2.90 ($5.68)
TOTAL £61.84 ($121.15)
Filed under: Airlines, Budget Travel
Reader Comments (Page 1 of 1)
Batsheva Jan 22nd 2008 12:17AM
Really not fair to either RyanAir or the other cheap and cheerful European airlines like EasyJet. I have often used both of these airlines and paid not a cent more than the advertised price. I have gone on one day business trips that would have cost a fortune flying on 'conventional'airlines. Buy a ticket with a debit card, not a credit card, and there is no charge for paying. Don't change your flight and there is no charge for changing your reservation. Unless you need the checked baggage, carry what you need by hand and do not pay the checked baggage fee. The Government taxes are not really part of the Airlines ticket cost any more than the NY sales tax can be blamed on the NY stores. I think it is reasonable to ask that a small handling fee be paid if you need to borrow a wheelchair from the airline. If you bring your own most of them transport it for free and do not count it as part of the baggage allowance. Take your own food and drink and avoid paying inflated prices for garbage. And lastly, the lottery tickets. Don't want, don't buy either on the ground or in the air, but either way, the choice is yours and they are not part of the inflated cost of holidaying in London or the price of flying around Europe. The cheap carriers are really great for people who genuinely want to fly cheap.
Mike May 4th 2011 3:28PM
Being from Miami, I need to get cheap tickets all the time in order to keep up with the economy. I am always looking for the best deal i can get in order to get the best bang for my buck... I'm sure anyone would do the same :) http://www.miamisouthbeach.org
thethirdmoose Jan 21st 2008 3:20AM
This is not fair to the airlines
If you only look at required expenditures (lottery tickets? what?!?!), it comes to about $40 - entirely reasonable.
John Jan 21st 2008 8:39AM
Here are the required ryanair profit making fees
The ticket itself: £0.01 (2 cents)
Credit card charge: £ 1.75 ($3.43)
Insurance and wheelchair levy: £ 3.48 ($6.82)
What is the flight change fee? did the OP change his flight, or was that added by ryanair?
Neil Jan 22nd 2008 12:44AM
Thanks guys,
This post was not meant to bag on the airlines, but to simply point out how they make a profit. It's a fascinating business plan, if you ask me and I couldn't be happier with budget airlines -- mostly because I'm one of those who can resist a $6 Coke while flying and keep my costs down.
Neil