Intro: Three labels of SEOIn fact, traditional airlines have been earning ancillary revenue, such as excess baggage charges and frequent flyer planned mileage sales. In 2009, when the financial crisis was th
Three labels of SEO
In fact, traditional airlines have been earning ancillary revenue, such as excess baggage charges and frequent flyer planned mileage sales. In 2009, when the financial crisis was the most serious, Citibank paid $1 billion in a lump sum for frequent flyer program mileage for American Airlines (AA), an indirect rescue partner. At present, the focus of auxiliary income is mainly on the charge of value-added services, which is also called optional service charge. In general, the global air transport industry is turning to fee based services.
In March this year, IATA predicted that the total operating revenue of global airlines in 2014 would reach 745 billion US dollars, recording a net profit of 18.7 billion US dollars, equivalent to 5.65 US dollars per passenger. According to the annual review of IATA, the figures in 2012 and 2013 were 2.05 US dollars and 4.13 US dollars respectively, but still fell to 6.45 US dollars in 2010.
According to the 2013 annual report of China’s three major airlines, the total net profit of the three major airlines in 2013 is about 7.4 billion yuan, and the passenger turnover is close to 250 million person times, equivalent to about 30 yuan of financial profit for each passenger in transportation. If exchange earnings and government subsidies are deducted, the operating profit will actually be less.
Considering that the cost of catering for each passenger in economy class of airlines is generally more than 20 yuan, and the airport luggage package is 30 yuan, then the civil aviation industry is really a blade thin profit, especially for ultra-low-cost airlines such as European Ryanair, American spiritual airlines and other income structures, 20% of which comes from auxiliary income, and American spiritual Airlines even set the goal of 50% of which comes from value-added services, So the surcharges are very attractive for traditional airlines, and providing value-added services is not like buying aircraft, which is a heavy asset business, but also requires effort to operate.
According to the data of the U.S. Bureau of transportation statistics, American Airlines collected a total of 3.35 billion US dollars in operating luggage fees in 2013, representing 1.7% of the turnover and 26% of the industry’s profits, respectively. Take Delta, which has a strong performance in the United States, as an example, its current annual profit is almost equal to the sum of entrusted operating baggage fee and rescheduling fee. In the United States, surcharges are popular with airlines because they don’t have to pay a federal excise tax of 7.5% like air tickets.
Ryanair is known as the godfather of ancillary revenue. Ryanair CEO Mike O’Reilly is a controversial CEO. The ticket sales and the charge for the cabin restroom are actually from his creativity. There is no denying that his innovation has set off a revolution in Europe. Ryanair, under his leadership, has reinvented the European short haul market. Spirit air admitted that it got inspiration from Ryanair, but it went further on the road of surcharges, even charging for cabin hand luggage, and only allowed to carry one personal item that could be placed under the front seat. One American passenger even designed a kind of suitcase specifically for spiritual aviation, which was placed right under the seat, and achieved great success.
For Ryanair and American spiritual airlines, which are different from Southwest Airlines, which are ultra-low-cost airlines, it completely unbundles the air transportation services, breaks down the traditional all in fares into “seat + service”, and simply provides a pure air displacement service, that is, “seat”. All other value-added services are optional and charged .
（1） For all inclusive fares, those who do not use these services actually provide a cross subsidy to those who use them. For example, call center, checked baggage, unaccompanied children, front seats, etc. The slogan of American spirit Airlines is not to pay for other people’s luggage. At present, except Southwest Airlines, American Airlines charges for call center booking.
（2） If some services are completed in advance rather than delayed to the airport site, or do not need such services at all, then for airlines, the lower the operating cost, the higher the efficiency and the lower the ticket price for more passengers. The logic of American spiritual airlines for printing boarding passes at check-in counter and punitive charges for baggage without prepayment lies in that it thinks that if all passengers print boarding passes at home, it doesn’t need to rent so many check-in counters at the airport; if all passengers prepay their check-in charges at the official website in advance, then the efficiency of check-in counters will be higher. If the passenger carries less cabin hand baggage or does not have any at all, it will not only help the flight safety, but also the faster the passenger boarding and disembarking speed, the shorter the passing time and the lower the fuel consumption.
（3） Different from the previous unbundled all inclusive fare, the latest value-added services reflect the efforts of airline service innovation and differentiation. Air travel experience is more personalized and customized. For example, fast security check, cabin rental iPad, luggage distribution to designated locations, VIP lounge pay to enter, no queuing, etc. Airlines are also imitating the marketing methods of retailers, trying to package some value-added services. Some low-cost airlines have begun to launch simple and easy to understand multi-level cabin and value-added service package products suitable for business passengers, while providing high flexibility in rescheduling. That is to say, at present, low-cost airlines use unbundling and re bundling to explore the spectrum range of target passengers to price sensitive leisure passengers who only pay the basic fare, and at the same time capture business passengers upward. This is the hybrid operation of low-cost carrier mode.
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