Airlines ‘cashing in’ as add-on costs soar
- Passengers facing skyrocketing ancillary costs – such as checking in bags
- EasyJet’s average add-on per person has jumped 78% per cent since 2013
- Global airlines make around a fifth of their total revenue from these add-ons
Airlines have been accused of ‘taking cash whilst they can get it’ as the cost of add-ons continue to soar for holiday-goers.
On top of rising fares, passengers are facing skyrocketing ancillary costs – such as checking in bags or sitting together.
Ryanair’s average add-on per person has jumped 70 per cent since 2013, now reaching £19.56, whilst EasyJet’s has also shot up by 78 per cent from £11.38 to £20.22 during the same time.
Matthew Adamo, who is a partner at AIP Capital, the aviation asset management arm of 777 Partners, said this was an opportunistic move while travel continues to bounce back.
‘It is a high demand environment. We are coming out of the pandemic, which was a scary and very tight operating environment. And I think the philosophy in these management teams is that we should take the cash whilst we can get it,’ he told the Mail.
Flying fares: EasyJet add-ons average at £20, up by 78 per cent since 2013
‘They want to push the envelope on fares and ancillaries as much as they can until they find out where that point is, where the passenger substitutes away or just doesn’t travel,’ he added.
Global airlines make around a fifth of their total revenue from these add-ons, according to research firm Ideaworks.
Susannah Streeter, analyst at Hargreaves Lansdown, said: ‘These in-flight add-ons are highly lucrative for airlines, adding a big cushion to the bottom line. For now, these price hikes don’t seem to be putting off passengers from splashing the cash.
‘However, although bookings remain strong in the months ahead, the deepening cost of living crisis due to high interest rates is likely to make passengers more sensitive to add-on costs.’ She warned that there may be a tipping point for these ‘nice to have’ extras.
Concern: Rishi Sunak ordered a review of ‘drip pricing’
EasyJet prioritised boosting its ancillary revenues during the pandemic to bring it closer in line with budget rivals such as Ryanair and WizzAir.
This included a significant change to its cabin bag allowance in 2021, when EasyJet started charging customers to bring even small suitcases on board.
There have been calls to give the industry’s regulator – the Civil Aviation Authority – more power to make airlines add charges up front.
In June, Rishi Sunak ordered a review of ‘drip pricing’ where firms hide the true cost of products and services by charging consumers extra fees.
Concerns about the practice were flagged up by the Competition and Markets Authority last year. The Government is looking at giving the watchdog powers to tackle drip pricing, such as issuing fines to firms.