WATCH ABOVE: Canada’s airlines are picking up a global trend by charging for in-flight entertainment, baggage and other services beyond base fare. As Sean O’Shea reports, the practice is bolstering the airlines’ income stream.
Canadian airline passengers are growing increasingly accustomed to reduced leg room on airplanes as well as a rising number of fees on everything from selecting your seat to getting an in-flight snack to simply checking a change of clothes.
Don’t expect a change of course at the country’s biggest airline anytime soon, executives from Air Canada indicated on Tuesday.
Even with the financial lift from sharply lower jet fuel prices, Air Canada is pursuing new ways to layer on additional “ancillary” charges while paring back the baseline experience for customers who don’t pay up for perks.
“All of those drivers are part of our business plan going forward, with or without fuel,” Calin Rovinescu, chief executive of Air Canada, said Tuesday.
“We’ve already indicated that on baggage fees and on some of these other ancillary charges. We think these are important drivers of the business model, and they’ve been accepted broadly in the U.S. and in other parts of the world, as well,” Rovinescu said.
Air Canada doesn’t specifically break out ancillary revenues in its financial disclosures, but it did say “non-fare” revenue per passenger climbed 15 per cent in the first three months of the year, led by the contribution of a new baggage charge introduced in November.
WestJet does break out ancillary revenues, which amounted to $83 million for the Calgary-based carrier in the first three months of the year – an increase of 64 per cent.
Both carriers are benefiting from lower fuel prices in additional to the fee windfall, with Air Canada saying Tuesday it spent 25 per cent less on jet fuel in the latest three-month stretch compared to the same period a year ago.
Next up on the ancillary-fee front will be Wi-Fi Internet service across Air Canada’s fleet, according to experts, something chief rival WestJet is introducing as well. That could mean an end to some or all of the complimentary in-flight entertainment that’s now routine on many flights.
Gregg Saretsky, WestJet’s head, said last week the carrier’s new in-flight entertainment systems will offer some free options as well as options that come with added charges. “It depends again on what the consumer chooses,” Saretsky said. “If they choose to take advantage of wide bandwidth, there will be a fee.”
At the same time, carriers are packing more seats onto planes and charging extra for select seats that come with additional leg room.
Air Canada has added roughly 100 more seats on its Boeing 777 aircraft, according to Rovinescu – what he described as a reconfiguration of the aircraft toward “high density.”
Combined with lower fuel prices, the array of revenue-driving moves are delivering impressive financial results for the country’s carriers, experts say. Added Rovinescu: “We’ve started hitting our stride.”