How do you know when an airline is going to have a Sale? Actually, much of the time it is quite easy because airlines hold special promotions at fairly predictable times (Black Friday, after Christmas and so on). However, they do have quite frequent bursts of activity throughout the year and these can take you by surprise.
Sales are actually quite difficult for an airline to handle because they are offering a discount on something with no fixed price. Fares increase as seats are sold so a fare offered at a 20% discount during a Sale could still cost more than the same fare a week ago when fewer seats had been sold. That would not look good.
One technique used by some airlines and hotel chains is to gently edge up the base-price in the week before a special promotion. The price will still increase as sales are made but the starting price has been increased. Then, on the day the “Amazing Sale” is announced, the base-price is reduced again. Some of the fares will be genuine bargains but not all will have quite the amazing reductions claimed.
If you are looking to buy flights for next summer and have been checking up on fares periodically to see when they might reduce, you might notice a sudden slight increase in the week before Christmas. Unless there is just one flight to the destination you are looking at, there is no need to panic. Not many people buy tickets in the week before Christmas so airlines and hotel chains can do their own seasonal decorations on prices – before they suddenly reduce them on Boxing Day.
Travel companies do very little promotional work in August. It is pretty silly to be pushing holidays when an awful lot of people are away on holiday. The August Bank Holiday and “Back to School” period marks the beginning of the new campaign and many companies kick the season off by holding a Sale.
This year is a little complicated because August Bank Holiday actually falls a week before the end of the month so some companies might hold off for a week or so. British Airways normally hold a Sale beginning on August Bank Holiday weekend. Other airlines will follow and, even those who are not publicising their own sales, might want to match the prices of the airlines that are going full tilt. National Cruise Week in September will start a blitz of advertising by cruise lines. Hotel chains will start to unveil their Autumn deals and bonus promotions to members of their frequent guest programmes.
Flights and hotels are normally sold at rates that fluctuate with supply and demand so there is no guarantee that any specific rates offered in the next few weeks will be much better than those currently available – but there will be some good deals. If you are planning any sort of travel over the next few months, it is wise to start looking out for offers from this weekend.
Just as the country goes back to work, the whole travel industry gears up to tempt us away again.
Much excitement this week from some publications about the announcement that Qatar are to start an all-Business Class flight from Heathrow in the Spring. Maybe it will be a huge success but we have a couple of serious doubts.
Firstly, whilst the idea of an all-Business Class flight sounds rather glamorous, the reality is that it is unlikely to be as comfortable as Business Class in a wide-bodied jet. The seats will probably have to be an adapted and slightly smaller version of the ones used on the wide-bodies. There is also less room to move around whilst catering and entertainment might not be as lavish as on the big jets. All-Business flights on narrow-bodied aircraft work reasonably well on a handful of routes where demand is very limited or the airports can’t handle the bigger jets (BA’s service from London City to New York is an obvious example) but have limited appeal elsewhere.
Secondly, Qatar appear to be charging a premium for this flight – about £550 return on the dates we looked at. The evening flight departs just twenty-five minutes after the normal wide-bodied service. Is it really worth paying more for a service that might not be as comfortable?
The third reason is probably the killer though. Qatar were on the verge of paying Cyprus Airways $20 million for a pair of slots at Heathrow a few weeks ago. The deal fell through because someone made Qatar a better offer. So, let’s say they have bought the slots for this new flight for $17 million. It is going to take a very long time to pay for that operating aircraft with just 39 seats.
At a guess, the launch of this service is a bit of an experiment and a slot-filler. Maybe the flight will be a massive success and it will be retained but, more likely, Qatar will use the next few months to try and arrange a swap with another airline so they can get slots that work better with their existing flights and then the all-Business flight will be quietly dropped.
For an airline that is about to take delivery of some A380′s, it really does not make sense to pay just under $20 million for a slot to fly 39 passengers a day from one of the world’s busiest airports.
I just spotted a tweet from a political journalist moaning that he had bought a ticket for £520 to Los Angeles and an astonishing £367 of this was tax. I replied rather quickly to point out that only £65 of this was UK tax and the rest was fuel surcharges (by far the bulk of the sum), security costs, airport charges and other US charges. He should have been happy that, when rail fares are becoming so expensive, it is possible to buy a return ticket to Los Angeles for just over £500 but I suspect he had been misled by all the complaints about increased APD into believing he was paying far more tax than is the case.
If you book a hotel that costs £100 a night (ex vat) for five nights, you will pay £100 in tax. Is it so unreasonable that an air ticket costing a similar sum attracts a tax of £65?
Yes, I know there are plenty of arguments that say aviation is being unfairly penalised compared to other modes of transport. There is no tax on rail tickets and the network is subsidised but aviation actually gets an awful lot of tax breaks of its own (fuel being the most obvious). APD is a fairly blunt instrument because it taxes in bands rather than on the actual value of the ticket so there are plenty of cases where the percentage is disproportionate.
UK airlines and other travel groups organised a concerted PR campaign against the latest APD rises. They quoted shock figures so that newspapers could show just how much an “ordinary, hard-working family” would have to pay in APD for their summer trip to the Costas.
Yet almost every other non-essential item we buy is taxed and, in most cases, it is by more than airline tickets.
When the “anti-APD” campaign started there were a few wise figures in the travel trade urging caution. They pointed out that is was foolish to highlight the rises because most people only look at the total cost of a flight or holiday, just as they look at the total cost of a new mobile phone or laptop. Publicising large increases might simply put people off booking altogether they argued. Also, any attempt to draw aviation into a wider debate about “fair taxes” could end up proving that flights are, if anything, under-taxed!
The travel trade has been getting very excited about today.
They seem convinced that, the moment the Olympics end, people’s minds will suddenly turn to holidays. Every company has its post-Olympics specials lined up or, as one company stupidly calls them “post-London event super-savers”, as if the Olympics was a religious name which might offend minorities. This seems to be based on the Gerald Ford principle that people can only do one thing at a time. I just wonder if this is true – surely it is just about conceivable that even the most sports-minded person could tear themselves away from watching the television to think of a holiday.
The travel trade often run promotions over public holidays (August Bank Holiday is a regular period for airlines to launch Sales, for example) but I think parts of the travel trade are being rather optimistic about what they imagine will be a sudden rush of bookings over the next few days. It is quite likely that some of the supposedly special deals will not be as special as you imagine.
It might be worth looking at any deals offered next week especially carefully. I would not be surprised if many companies have to come up with rather better offers towards the end of August.
So, finally, the EU authorities have today agreed to IAG buying British Midland and saving the airline from the scrapheap. This is good news for the airline’s pilots and cabin crew, most of whom should transfer to BA without problems. Redundancies amongst office staff are likely but these would have happened with or without the involvement of BA or another airline.
To get the agreement, IAG had to offer to give back fourteen slots at Heathrow as opposed to the original ten that they said they would give up initially. Twelve of these are earmarked for domestic and European routes where BA would have a monopoly.
Since BA has also had to agree to specific terms to facilitate interlining of passengers from competing airlines to its domestic services, which was a major concern for Virgin, I wonder which airline is going to come forward and offer to start flying from Heathrow to Edinburgh or Glasgow.
BMI could not make a profit on those routes – even with the clout of Lufthansa and the Star Alliance behind them. I doubt that any airline would see much potential in such routes.
What about Virgin who claimed to be so concerned about the loss of the Scottish routes? Surely now is the time for Richard Branson to put his money where his mouth was…
In the last few years, virtually every consumer company you can think of has latched on to the idea of bundling products. From packages for mobiles with landline, “free” internet and satellite television or just simple “buy two get one free” deals in supermarkets, companies are fighting to give consumers more so they can increase their revenue.
Remarkably, airlines have been going the other way. They have unbundled their product to such an extent that on a budget airline everything costs extra.
They really need the extra revenue they get from these add-ons and it is amazing that so few airlines have come up with attractive packages that actually encourage their customers to buy, rather than making them pay what feel like fines.
Both Germanwings and Jet2 have produced worthwhile packages but easyJet has remained with its head stuck firmly in the clouds. Their latest wheeze of selling flexible fares at astronomic prices, often bearing no relation to what full-service carriers charge, shows just how far out of touch the airline still is.
BMIBaby has shown more sense and has now come up with two attractive packages which include several extras at an attractive price. The airline has realised it will only sell these packages if the price is sufficiently below the total cost of all the extras if purchased separately. FlyPlus is aimed at business travellers and includes baggage, credit card charges, seat reservations, ticket changes and the use of an airport Lounge. FamilyFly costs less but does not include the Lounge or change facility. Our only quibble is that the “FamilyFly” name is rather silly since the package is as attractive to individual passengers as it is to families.
The price for both packages looked interesting on fares we checked. Let’s hope that BMIBaby have a good response because it might show other budgets that one of the ways of increasing your revenue is to offer passengers more. That way the airline gets more income and the passenger gets more and still feels he has a good deal.
It does not seem to be hitting the travel industry much. The package travel companies might have had an up-and-down year but they are a declining business anyway. Everyone else seems to be doing pretty well if the paucity of bargains around at the moment is any guide.
Autumn is generally a good time for hotels and airlines because September sees rather wealthier tourists taking late holidays and visiting cities whilst the business travel market is just getting back into its stride. City hotels, in particular, can expect a really busy period from now right up until Christmas.
Even allowing for seasonal variations though, the travel companies seem very laid-back about their promotions. British Airways held their usual Bank Holiday Sale last weekend and the range of destinations and prices were much less appealing than on some previous occasions. Hotel loyalty programmes are always a good barometer of the market. Many of them constantly have some sort of promotion running but this autumn’s offerings look pretty meagre. No “stay two nights and get a free night at any other hotel” deals – just get a few bonus points after a number of bookings.
Of course, there will be a few individual bargains here and there but it could be that you will have to wait until the lean months of January and February to see the big airlines and hotel groups sharpening their pencils.
If you thought the video clip below was funny, you might be less amused to know that from Monday, Ryanair will add yet another surcharge of €2 per ticket to cover costs they have to pay under the EU 261 regulation which covers costs for delayed and bumped passengers.
Airlines are always anxious to add to their profits by selling extra services. There is no harm in that – provided the customer gets a fair deal but not all airlines are as honest or scrupulous as they should be.
Virgin promote a deal for advance booking for the Gatwick Express - they claim the offer is a for a “special 5% discount”.
That is certainly a special offer because tickets are sold on the Gatwick Express website at a standard discount of 10%.
Could Virgin be so tight that they are doing this deliberately – trying to screw an extra couple of pounds out of their passengers? Or have they simply not kept a proper check on the links and deals they offer? Neither possibility reflects well on the airline.
This is not new and we have pointed it out in Inside Traveller before.
By the way, members of Quidco get a £3 affiliate rebate for each booking made on the Gatwick Express. Virgin are presumably making more than that – plus the extra 5%.
We just received this remarkable reply from Virgin Atlantic. “It is not our intention to mislead people. We offer a 5% discount and if Gatwick Express sell it at a 10% discount, then that is up to them.”
Just so we are clear – the price for booking a day ahead of travel on the internet is 10% less than paying at the station on the day. If you book through Virgin, you pay 5% extra – and get told it is a special deal.
No, of course Virgin are not misleading anyone…