Fuel surcharge can be a massive own goal

TravelMole Comment by Jeremy Skidmore (www.jeremyskidmore.com)

British Airways grabbed some favourable headlines with its plan to slash airfares across Europe by 50%.

The announcement that it is offering one-way tickets to 65 destinations from as little as £29 was a fantastic consumer story. Many people want to fly with BA, provided it offers competitive prices, and this will put pressure on rivals Ryanair and easyJet.

Strange then, that it came just 48 hours after BA handed its short-haul rivals a massive boost by hiking its fuel surcharge for the sixth time in two years.

With some justification, BA said it could not continue to swallow the increase in fuel costs. But the way it chose to deal with the problem – by increasing one-way surcharges on long-haul flights from £30 to £35, while leaving the short-haul fuel surcharge unchanged at £8 a sector – was a heaven-sent gift for Ryanair.

The no-frills carrier promptly announced that BA’s long-haul surcharge was more expensive than many of its fares, even though Ryanair only flies short-haul.

BA believes the best way to deal with rising fuel is to be transparent about charges, rather than hiding the costs by raising fares behind the scenes.

I disagree. People in the industry know there’s a lot of nonsense talked about fuel surcharges. The no-frills carriers shout about not having them, but they are constantly changing their fares and can build any additional cost into the overall price.

But the public don’t know that. Ryanair is one of the most successful brands anywhere in the world, because people associate the name with cheap airfares.

In fact, go into a pub and ask 20 people to name a cheap carrier and I’ll bet the majority will name Michael O’Leary’s airline. Why is that? Because its marketing is so brilliant.

The reality is often different. Sometimes Ryanair is the cheapest on the market; but sometimes it is not.

Now ask yourselves what images BA conjures up. Quality and reliability, certainly. But not necessarily value for money. The announcement about fuel surcharges simply adds to the perception that BA is more expensive than Ryanair. Often that is not the case, but the argument is lost on much of the travelling public.

Not only that, but my view is that people are getting cheesed off with extra costs, however valid they may be. They’d much rather be told that an airline ticket is £335, than £300 plus £35 fuel surcharge.

The last few years have been a golden period for the travelling public. The no-frills airlines have brought flight prices in Europe down to a level that has enabled people who have never flown before to go away, and those who have travelled to take many more short breaks.

BA, after flirting with the concept of having a no-frills airline and then rejecting it, has responded with competitive prices coupled with the service that the airline is renowned for.

But the challenge is to make people really believe that you are competitive.

What’s your view?