Will low cost #airlines aim for new revenue streams at the cost of #ancillary revenue?

Low cost airlines have been trying to generate revenue via various ancillary services such as cancellation fees, re-booking fees, fees for bag checking and some even for large carry-ons. This was one of the methods that LCCs incorporated to make up for revenue which enabled them to provide low ticket prices.

However, that may all change as easyJet has launched a new flexible fare. The flexible fare’s main attractive point is that it does not charge anything extra for re-booking. Passengers have the freedom to change their ticket dates for up to one week before the original travel date to three weeks after. It also allows the passengers: one bag of hand luggage, one bag of hold luggage up to 20kg, free speedy boarding and no extra booking fees.

This new venture is bound to increase revenue for easyJet as frequent fliers might be tempted to go for this option rather than risk the high cancellation and re-booking fees as charged by LCCs in general. But easyJet will have to see if the revenue generated by ticket sales offsets the losses it will see in ancillary revenue. Conversely, other LCCs will also have to keep an eye on passenger traffic in case they might lose customers to easyJet.

Will low cost airlines take a page out of easyJet’s book and come up with their own flexible fare or choose to focus on traditional ancillary service? To know more about strategies of low cost carriers and about various techniques of increasing ancillary revenue visit Low Cost Airlines Congress 2011.