Ryanair certainly no how to get free publicity, and although they say there’s no such thing as bad publicity. You have to half-admire a company whose strategy seems to be to annoy customers as much as possible.
Recently, the outspoken Ryanair Chief Michael O’Leary stated that the cost of checking in luggage to a Ryanair flight could increase up to £160. Effectively, Ryanair are trying to price out customers bringing check-in luggage.
Ryanair are motivated to increase the cost of checkin luggage because:
- To save weight and hence fuel costs (fuel now accounts for 50% of Ryanair’s total costs)
- To reduce flight turnaround time.
- To reduce staff costs in dealing with check-in baggage.
From one perspective Ryanair have a real economists perspective. They are simply wanting to charge customers the marginal cost of each aspect of air-travel. The weight of check-in baggage could not justify the extra cost. But, to low cost airlines, the speed of turnover is very important for determining the number of flights that they can squeeze in a day. Reduce the number of check-in baggages, and the turnover time at airports is reduced. If Ryanair price luggage out of their flights, they might be able to fly even more. They could become more akin to trains. Arrive at the airport, and a few minutes later, you could be going back out. This means more frequent flights, lower costs, and lower prices
Do Customers benefit?
Ryanair is that service that people love to hate. We love complaining about Ryanair’s excessive charges. But, at the same time, we like the cheap airflights. In theory, charging customers the marginal cost of aspects of airtravel, should increase allocative efficiency. People may prefer to avoid taking a check-in bag, and get the cheaper flight. If you need to take luggage, you may find yourself looking for another airline (assuming Ryanair haven’t beaten all the competition)
One problem Ryanair will have is that customers may not see this £160 tag as a reflection of the marginal cost. Customers will ask, if the flight costs £5, how can putting a bag in the holdall cost £160? Customers are unlikely to see the less tangible costs of turnover time and increased flight frequency associated with less check-in bags. Also, Ryanair have bad form. They used to charge an annoying £6 for processing a debit card payment. – Even when everyone knows, this only costs the company £0.50. Here Ryanair weren’t using marginal cost pricing. They were exploiting customers who had bought a cheap flight and weren’t going to go through hassle of booking another airline just because they found at the end, they had to pay an extra £6. After the OFT ruled this credit charge was illegal, Ryanair just introduced a £6 admin fee for using website.
Penalty for not printing boarding pass
Ryanair charge €60 for customers who fail to print their boarding pass. Recently a mother of two made a splash on social media when she had to stump up £236 for her family to fly back from Alicante, Spain.
The colourful Mr O’Leary said:
Recently a customer turned up at Alicante with no boarding passes for her family.
‘She was fined €60 for each reissue. So she gets on ‘the Twitter’ to complain.
‘Emboldened by the rising tide of support, Mrs McLeod asks for compensation, to which we replied politely but firmly, thank you, Mrs McLeod, but it was your f*** up. We’re not changing our policy.’
How Ryanair’s fares escalate
Return flight from London Stansted to Marrakesh
Out: Feb 3
Return: Feb 7
1 x adult = £46.48
EU 261 Levy = £4
Web check-in = £12
ETS Levy = 50p
Headline fare = £62.98
One checked bag (15kg limit) = £30
Reserved seating = £20
Admin fee = £12
Running total = £124.98
Credit card fee: 2% of £124.98 = £2.50
Total fare = £127.48