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Charging Fees Like the Airlines –Farquharson/Tedesco

July 2012

Can you imagine going to a restaurant, dropping your fork on the floor during the meal and being charged for its replacement? Of course not! What about filling up at the gas station and paying extra to have your oil checked or your windshield cleaned? Never! Yet when it comes to charging for things that should be included, airlines are allowed to get away with murder. There are fees to change a ticket, check a bag, pick a seat, pick a comfy seat and even to speak directly to someone on the phone when you want to do business with them. Lucky so-and-so's!

Interesting business model: Charge fares that get customers on board and cover your base costs, and then dream up a series of extras that boost profitably. Like the printing industry, airlines are "profit challenged" these days yet, unlike us, they have stopped giving things away. What can we learn from them?

These days, printers are fortunate to be able to add meager prepress and AA charges to a bill, never mind the cost to download or RIP a file. We print and we charge for what was printed. Plus tax. And shipping. Sometimes. Much of what the printer does never appears on the final bill.

Man, are we ever missing an opportunity! Across town, another business model exists that is making money not only for their core competency, but for just about every other related activity imaginable. What if we could do the same? What if we ran our business like an airline?

According to the ATA, the airline industry generated $5.7 billion in ancillary revenue through non-ticket charges last year. Read with your pinky on the side of your mouth, it seems bigger: $5,700,000,000! Sure, they'll fly you from here to there as promised, but the opportunity to charge additional fees doesn't stop there. As any flyer will tell you, they have figured out a way to make money hand over fist.

Perhaps we can learn something from this high-flying model. Here are a few ideas—presented with tongue firmly pressed into the cheek—but offered to get you thinking...

What they do: Charge a booking fee. If you want to buy a ticket by calling an airline and talking to a real person, you will pay an extra $25. That is, if you can understand what they're saying.



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