Nine Ways Airlines Cut Costs at the Passenger's Expense

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An airliner's cabin. EasyJet managed to cram in six more seats. Credit: Dreamstime

It’s not hard: When you make plans for a vacation abroad, you go online, check out your options and only then contact a travel agent to get the best deal. The problem is, the airlines are at least as smart as consumers. Both Israeli and foreign carriers are cutting costs by charging for services that were free in the past.

This used to be a ploy for hotels, where you'd reserve a room and only later find out that the rate didn’t include Internet access, the minibar, the phone and the ice cream at the pool for the kids. Airlines are now using this trick to charge more for preferred seats, checked baggage and food and drink.

According to the Idea Works Company, which researches consumer issues, in 2007 airlines sold $2.45 billion in additional products and services. By 2013, this number had ballooned to $31 billion. The average passenger pays $16 for services beyond the cost of the ticket, Idea Works found.

“It started with domestic flights in the United States, where they charged extra for a range of services that had been free in the past. It worked wonderfully; American companies made billions on it,” says a senior airline executive.

First it was the fee for preferred seating, then this happened with luggage. “Israeli carriers have been among the last to join the trend, and it started with the entry of low-cost carriers,” he says.

“Until then, they didn’t want to change their policies. No one wanted to be the first, but then El Al began charging for preferred seating in an exit row, the others followed suit, and it became the norm.”

As Yael Katan, British Airways' country manager for Israel, puts it, airlines’ profit margins are very small, and since expenses for items such a fuel, procurement of planes and personnel only increase, the companies have to take steps to boost revenues.

“I'd be lying if I said British Airways doesn’t try to reduce costs, but we do it in areas such as advertising rather than service to the customer,” she says.

The chief executive of Israir Airlines, Uri Sirkis, notes the companies' special costs in the budget-air industry. The planes are particularly busy, so their reliability has to be very high because one technical problem has a ripple effect delaying many subsequent flights.

“That means you have to use modern equipment all the time, and that means the expense of financing and depreciation of the plane comes to $4 million to $5 million a year," he says. "The major costs aren’t on blankets, water or earphones, but on the new plane.”

According to Sirkis, there’s no attempt here to save at the passengers’ expense; the company simply wants to “define the product differently.”

“People want to get on a flight, drink water, go to sleep and get to their destination,” he says. “They don’t want to be woken up in the middle of the flight and asked what they want to eat or drink.”

Anyway, here are the nine ways airlines cut costs or make money at your expense.

1. Airports in the middle of nowhere

Airlines that use airports far from city centers may offer cheaper fares, but the savings may be offset by the higher cost of getting to a hotel. And of course there’s the cost of precious time.

“It’s substantial savings for the carrier, and it’s not just a question of facility tax, part of which is paid by the passenger and the rest by the carrier,” says another top executive in the airline industry. “There are also less-expensive landing fees, while the cost of electricity and buses at a far-away airport is always less.”

Such an airport might charge an airline $100 less on airport tax and also forgo a charge for landing slots, the executive says.

“A good slot at an airport near the city can cost an airline millions of dollars a year, because this makes it possible to fly at convenient times,” he says. “A carrier that forgoes convenient times at an airport near the city will save the expense.”

2. Duty-free cart

Airlines do their best to offer duty-free products on board that are even cheaper than in the duty-free shops at Ben-Gurion International Airport. The airlines offer a range of products to tempt passengers, and provide commissions to flight attendants. These little carts are money makers.

3. No pillows or blankets

Ever more passengers who ask for pillows or blankets are told to show a little fortitude; there aren't any. Other times, the number of blankets on board is limited. That’s the case on flights to Europe from Israel by carriers like El Al, Arkia and Air Berlin.

EasyJet doesn’t offer blankets at all, and on El Al’s low-cost carrier UP, it’s $4 for a blanket. But at other carriers such as Turkish Airlines, British Airways and Air France, it’s still pillows and blankets galore.

4. Another one rides the bus

After you're allowed through the gate, sometimes you have to hop on a bus to get to the plane, and that too is designed to save money. According to one industry executive, airlines are even trying to shove as many passengers as possible into buses.  And don't forget that cleaning services are available at different levels.

5. Crammed-in seats

Airlines are doing everything to cram seats onto their planes; they forgo storage space for the crew, reduce the number of bathrooms and make do with one galley. If a flight with an empty seat represents a one-time loss, space that could be filled by a seat represents an ongoing loss.

One example is EasyJet, the second-largest foreign carrier at Ben-Gurion  Airport. It has announced that it will be adding six more seats to its Airbus A320s.

6. Charges for overweight luggage

Many passengers dread that moment of truth: The guy or gal weighs your suitcase at the check-in counter. If you’re on your way home and have made too many purchases, the airline might fine you.

Most regularly scheduled airlines allow you 20 to 23 kilograms (44 to 50 pounds) before you have to pay up. When the excess is negligible, some airlines will let you slide.

El Al, for example, charges $55 for overweight luggage on flights to Europe, and $85 for long-haul flights. Air France charges $45 if you let them know beforehand, but $70 if they learn about it at the airport.

Charges at Israel’s two smaller carriers, Arkia and Israir, depend on how overweight your baggage is. They charge $15 for every excess kilogram.

For low-cost carriers, on the other hand, baggage fees are a major source of revenue. The charge for checking a single bag can run between $35 and $70 — that can amount to 10% to 20% of the ticket price.

7. No free food and drink

“Europeans who fly on discount carriers are used to this, and no one gets upset about it. In Israel, we’re more sensitive because there’s no denying it, we like to eat,” says one industry executive on the lack of food and drink.

“And until a few years ago there were no low-cost flights here at all, but now we’re part of a global phenomenon. People buy a seat on a flight and that’s it.”

Still, most major carriers such as British Airways, Turkish Airlines and El Al will continue to serve meals as long as the competition does, he says.

On low-cost carriers, if you’re worried about getting the munchies, you have to bring your own food or pay for it on board. On El Al’s UP you pay $7 for a sandwich. On EasyJet it’s a similar charge — 5.50 euros.

8. Low-service flights

When one Israeli couple flew to Europe about a month ago on Arkia, they didn’t understand why they weren’t being served. Later they figured out that they were on a flight designated "low-service."

Their travel agent hadn’t told them they’d have to pay for food. Arkia operates such flights to Italy, Georgia and the Greek islands, but it’s not alone. Israir flights and those operated by Sun D’Or (other than to Vienna and Lisbon) are designated low-service.

“I personally think it’s a preferable product,” says Israir’s Sirkis. “People often complain about food on a flight and are disappointed that they can’t choose from a menu.”

9. Charges for a comfy seat

For an additional fee, the best seats on the plane outside business class or first class can cost more. They offer more room. Some are bulkhead seats or are in an exit row. Some go to elite members of the airline’s frequent-flyer programs.

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