Here’s what Canadian airlines plan to charge new fees on next
The credits may not be rolling yet, but the wide variety of complimentary movies and TV series provided to passengers on many Air Canada and WestJet flights could be in its final act.
The two largest carriers in Canada are preparing to introduce Wi-Fi connectivity to the majority of flights beginning later this year, experts say, moves that will see the pair introduce new services like Internet access on your smartphone, but perhaps take away others — like free movies.
“This will allow the airlines to charge for Wi-Fi connections, charge for device rentals, and charge for content,” analysts at CIBC World Markets said in a note last week.
Bringing Internet accessibility onto planes represents “the next opportunity” for Canada’s air carriers to drive up the amount customers spend on services above the cost of the ticket, the analysts said, including for onboard entertainment.
“We expect the roll out will start at the end of 2014.”
Air Canada said it’s currently testing Internet accessibility on flights between Toronto and Montreal and Los Angeles.
Web access fees
The carrier charges $60 for “unlimited” service for a month for frequent fliers, or $16 for an all-day pass and $5 for one hour. Experts say 29 Air Canada planes running North American routes will be equipped by year-end, and they estimate 130 planes will be connected by December 2015.
Charging customers for access to the Web in the air promises to be lucrative. “Even if [Air Canada] garners $2 per passenger in additional ancillary revenue, they fly 36 million passengers a year. That’s another $72 million right there,” one airline stock analyst said.
That would mean Wi-Fi services would rake in about double what new baggage fees on domestic economy class flights are expected to pull in at Air Canada.
Experts say Canada’s two biggest airlines are mimicking carriers in the United States who have learned to squeeze nearly double the amount of so-called ancillary fees from customers for services like in-flight entertainment and baggage.
Before the new baggage fees, WestJet’s non-ticket related charges “paled in comparison to other North American carriers,” airline analysts at RBC said.
“There is a lot of room to grow for Air Canada and WestJet,” the CIBC note said.
WATCH: Consumers who buy the least expensive airline tickets with Air Canada now face a $25 fee to check the first piece of luggage. Sean O‘Shea reports.
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