Unbundled fares could bring benefits

25 May 2009

26 May 2009 | Martha McKenzie-Minifie

Travel buyers should be able to cash in on the trend for airlines to "unbundle" fares, according to experts.

Michele Lawley, BCD Travel managing director UK and Ireland, addressed the Management Solutions Spring 2009 Corporate Travel & Expense Management Forum in London this month. In the opening speech she predicted the number of airlines unbundling fares would increase, as carriers sought other revenue streams after the extreme squeeze on air fares.

Unbundling sees airlines charging separately for checking bags, in-flight food and drinks, online check-in, choosing a seat and other "add-ons".

Nicola Lomas, director of travel at Omnicom Europe, told the roundtable that the "full transparency" of unbundling was welcome in theory and she would want to negotiate on the cost of each component.

But she was sceptical the airlines were doing this to increase visibility, rather than just charging more.

Many low-cost airlines, including Ryanair, have already adopted unbundled fares. The conference heard unbundling had been picked up by several legacy or full-service carriers and was particularly strong in the US.

When Air Canada, the largest full-service airline in Canada, introduced "a la carte" pricing for checked baggage, air miles, lounge access and seat selection in 2006, it said it was "the only major international carrier that allows this degree of customisation".

American Airlines charges customers with domestic economy-class tickets $15 (£10) each way for the first checked bag and $25 (£16) each way for the second, with some exceptions. Doug Parker, chief executive of US Airways, highlighted "a la carte pricing" as a "great success" when he announced first quarter results for 2009 last month.

Lawley said the change could increase the complexity for purchasers and make it harder to keep track of costs.

Paul Tilstone, chief executive of Institute of Travel & Meetings, told SM that unbundling made travel buying more complex but it could also be beneficial for procurement professionals.

He said buyers could decide the level of service required for staff away on business and still "get the job done".

SMmay2009

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