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Airlines try to market fees as perks

Jennifer Collins Jul 18, 2011

Airlines try to market fees as perks

Jennifer Collins Jul 18, 2011

Jeremy Hobson: As earnings season continues we’ll get a look at the airline sector today. Delta will tell us how they did in the last three months. Analysts are predicting an increase in revenue at both companies. Thanks in part to all those new fees for things like checked luggage and seat upgrades. But with more and more passengers learning how to avoid fees, the airlines are trying to change the way we look at them.

Marketplace’s Jennifer Collins has the story.

Jennifer Collins: It’s lunch time on a Virgin America flight. Chicken wrap?

Commercial: Is someone in the mood for spicy?

Virgin America also offers a Spinach and Strawberry Salad, Blackforest Ham on Foccacia, and did I mention the Funkin’ Margarita? This is not the average overpriced snack box. Forrester Research travel analyst Henry Harteveldt says if airlines want to sell food — or anything else — they’re going have to offer something people want.

Henry Harteveldt: I think what they’re trying to do is to shift this from being viewed as fees towards selling the customer a product or a service the traveler would value.

After training passengers to pack light, carry on and bring a lunch, airlines need new ways to get them to spend. Peter Yesawich of marketing firm Y Partnership says airlines are also starting to offer a broader range of products: exclusive access to cushy lounges, Wi-Fi at 30,000 feet, hotel stays.

Peter Yesawich: Transportation that will help you get to the airport, even selecting from a full menu, perhaps, on board. All of those options will be available on some type of a la carte-priced basis.

Airlines depend on fees and add-ons for 30 percent of their revenue in some cases. It’s a $21 billion business. Again, Henry Harteveldt.

Harteveldt: If they didn’t have the revenue earned from these checked bag fees and $3 cans of Pringles that they sell on the plane, the airlines’ financial condition would be a lot worse than it already is.

But will these products sell? Caroline Pagani is a travel agent with Uniglobe.

Caroline Pagani: Where are we sending Cassidy?

Pagani says most of her clients are focused on comfort.

Pagani: Most of them just want their seat.

They’ll pay extra for leg room or exit row seating. And Pagani says her clients might buy meals — if they’re better than what they can pack onboard. This summer, Delta is tempting fliers with Ben and Jerry’s. Cherry Garcia anyone?

I’m Jennifer Collins for Marketplace.

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