Changing times in Low-Cost Europe

Airlines continue to compete in Europe for a share of the low-cost market. Recently, BA released seats for sale from London Gatwick airport at a reduced price for passengers not checking-in hold baggage. But is this a discount for passengers or a charge?

As with all things, the relative perspective is what counts. For passengers already flying with low-cost airlines such as easyJet, Ryanair and others, enjoying offerings of no-frills for reduced fares, this becomes an equal product for comparison whether BA like to admit it or not.

The legacy airline offer ‘free’ drinks and snacks on board, along with a two-bag cabin allowance rather than one bag and no refreshments on the other carriers. Of course, the truth is that they are not ‘free’ but, as so often misrepresented by mobile phone companies who offer ‘free’ handsets for a monthly priced contract, the cost of these items is amortised and more by the overall price paid.

I recently travelled by train from London Paddington to a destination in the South West of England. The price of the ticket was far more than I would pay to drive the same distance at a time of my choosing. However, in the carriage was a seat-back touch-screen TV. I was clearly paying for that with part of my ticket fare.

Looking then at the BA offering, will passengers see their fares as low-cost with added Frills For Free, or will they see it as an unsustainable last gasp for a share of the low cost market which is eclipsing the profits of BA’s  sister, Iberia? Will regular BA passengers be pleased with the discount or will it bother them that BA are actually eating in to their own profit by offering the same frills for a much-reduced price, simply because of a saving of fuel amounting to, traditionally 3-4% of the weight per hour – in this case for a 20kg suitcase, about a pint of fuel – around $1.

Perhaps this is a Loss Leader for BA, but maybe it will work out. Time will tell.

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