Hybrid blend of LCCs and legacy carriers emerges
WITH some low-cost
carriers including
what were previously
considered paid extras into
standard fares, and legacy
carriers introducing basic
economy, no-frill fares that
offer little more than a seat,
airlines have gone back to
the drawing board when
it comes to revenue and
pricing strategies.
For example, fastjet now
includes one piece of
checked luggage, as well as
a snack or refreshment in
the price of all tickets sold.
Previously, fastjet charged
separately for all luggage
and on-board snacks. The
airline has discontinued its
BigSaver and Achiever fares,
replacing them with the new,
inclusive offering.
More than a seat
Commenting on the trend of
LCCs including more than
a seat in their fares, Kirby
Gordon, head of sales and
distribution at FlySafair, says
the idea behind the LCC
model has always been to
have a very basic fare that
you can sell inexpensively.
“This can then be boosted
with add-on services.
What this accommodates
is the ability to meet the
consumer at several price
levels relevant to what
they want out of their flying
experience.”
What has changed of
late, says Kirby, is that a
lot of carriers are looking
at adopting a hybrid model.
“Usually there is still a very
basic, inflexible, no-frills
fare available, but then
carriers will also create
bundled fare options. These
often allow for consumers
to access a bundle of the
extra services at a reduced
rate,” he explains. “The
airline’s ability to offer these
services is metered by the
fact that they aren’t all
always utilised.”
For example, FlySafair
sells a premium fare on its
website as well as a lite
(very basic) fare. Over and
above what the lite fare
offers, the premium fare
includes: two 20kg checked
bags (R155 + R250),
one 32kg sports/special
luggage allowance (R270),
priority boarding (R50), free
seat preselection (between
R40 and R100 depending
on the seat), two penaltyfree
changes (R600) and
cancellation to voucher
option (R200).
“In total, that full suite of
services is ‘worth’ about
R1 625, but you’ll find that
the premium fare is never
more than about R500
more than the basic fare.
The reason is that we know
that it’s very seldom that
all the services will ever be
completely utilised, but the
value allows us to sell more
fares and at higher prices.
Legacy carriers offer
less
At the same time,
legacy carriers seem
to be unbundling fares,
introducing basic economy
options that don’t include
luggage or seat preselection.
Airlines that have
rolled out basic economy
fares include Virgin and
Delta, to name just two.
Kirby says this is
just another form of
hybridisation. “They are
looking for additional
revenue through optional
services, but they are also
looking for the ability to
meet their customer at the
right price point.”
For example, a carrier
may offer three fares:
economy, business and first.
“This means it has three
price points to meet their
consumer at. Now, imagine
adding just one service
that costs a little extra, a
pre-selection of seats for
example. Suddenly it has six
price points now – the three
it had before and the three
with the new service. The
more services you add, the
more price points you get,
which helps you to net each
customer at the highest
possible price point.”
Where next?
Looking ahead, it’s likely
that ancillaries will be here
to stay. “It’s a good model
that works in a number
of industries,” explains
Kirby. “Think of buying a
luxury car – it’s the same
principle. Pay a little extra
and get the cup holders
or, alternatively, buy the
comfort package and get
the cup holders plus this,
that and the next thing at a
reduced rate.”
But in a move that will
probably ultimately benefit
the consumer, Kirby
believes there may be
some elements that will
come in as extras at first,
but then become basic
service elements. “WiFi, for
example, has come in as a
paid extra for LCCs, but it’s
something that everyone
wants and I’m sure we’ll
eventually see it become
part of the basic service.
Hopefully with time we’ll
also see some innovative
new things coming through
as well – who knows where
the future will lead us!”
Rising petrol costs no deterrent to domestic travel
DESPITE the fact that petrol
prices are expected to hit
R17 per litre in October,
KwaZulu Natal remains a
value-for-money destination
for domestic travellers,
according to Phindile
Makwakwa, acting ceo of
Tourism KZN.
Phindile says there
continues to be a range of
attractive special offers by
low-cost airlines to KwaZulu
Natal. However, from the
airport, domestic travellers
now often favour ride-share
companies over rental cars.
“We are finding that an
increasing number of people
are using Uber and that
helps to make their holidays
affordable. There is no
question, KZN offers value
for money.”
She says the weakening
rand has made overseas
travel expensive or even
unaffordable for a great
number of South Africans. In
a recent eTNW survey, travel
agents reported a significant
drop in both business and
leisure forward bookings
compared with the same
period last year, as a result
of the fluctuation of the rand.
“Whilst the drop in the
rand has made overseas
travel expensive, travelling
locally and in KZN will be a
great option for domestic
travellers,” says Phindile.
“There are a lot of hotels,
B&Bs, guesthouses and a
number of additional options
on Airbnb. The KZN Travel
Guide app will also assist
travel agents to find more
options for their clients. We
even have several attractions
travellers can visit that have
no cover charge.”
Five budgetfriendly specials
Mango is offering a
seven-night package
to Uroa Bay Beach
Resort in Zanzibar
from R11 950pps.
The rate includes
return direct flights
from Johannesburg to
Zanzibar taxes?, return
airport-hotel transfers,
accommodation in a
garden-view room and
breakfast and dinner
daily. Valid for travel
between October 30 and
December 1.
The Travel Corporation
(TTC) CostSaver has
introduced a ‘Wonders
of Turkey’ package.
The 11-day package
includes seven cities
with visits to Istanbul,
Ankara, Cappadocia,
Konya, Pamukkale and
Canakkale. Rates start
from R11 000pps and
include accommodation,
transport, daily
breakfast, five dinners
and sightseeing. Rates
exclude flights. Valid
from November to
March.
City Lodge is offering
Sho’t Left weekend
discounts, with 25%
discounts on rooms plus
free breakfast. Courtyard
hotels are priced from
R1 011pps, City Lodge
hotel from R896pps,
Town Lodges from
R742pps and
Road Lodges from
R689pps. Rates include
taxes and are valid on
weekends only. Valid
until January 31.
Thompsons Holidays’
seven-night, three-star
Dubai packages start
from R13 331pps.
Packages include
return flights from
Johannesburg to Dubai
(including taxes), return
airport-hotel transfers
and accommodation in a
Classic King room with
breakfast daily. Valid
from November 1 to
March 31.
MSC Cruises is offering
special rates on a sevennight
cruise on board
the MSC Meraviglia
from R9 695pps. The
itinerary includes Italy,
Malta, Spain and France.
Valid for set departure
date on January 19.
The package is on a
full-board basis, and
includes entertainment
and activities, but
excludes excursion and
port charges.
