Category Archives: Airfares

Be careful what taxes you ask for

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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!

 

 

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Beware of special post-Olympic travel deals

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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.

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IAG approved to purchase British Midland

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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…

 

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Well done BMIBaby!

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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.

www.bmibaby.com

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So where is the double-dip recession?

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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.

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Ryanair have the last laugh

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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.

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Virgin Atlantic’s “Special” Offers

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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%.

PS

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…

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What are Ryanair up to?

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Ryanair are famous for making outrageous claims about what they will do next. In most cases, these are just cheap publicity stunts and should be ignored. However, when they hold a confidential briefing for some of their leading investors, their words should be taken much more seriously – deliberately misleading these people could have grave consequences.

On Wednesday they had an investors’ day and, whilst the airline has not commented publicly, some of those present have given brief details of what was said.

It is no secret that the airline intends to slow its rate of growth. Nor is is a secret that they will have to move into slightly different markets to keep up even a modest rate of expansion. They already fly from Gatwick and Madrid and are starting operations at Barcelona so  flying to other, similar airports (except Europe’s big four) is hardly a change of direction. Naturally, as services to these airports increase, there will be an impact on costs, as well as average ticket prices.

However, the airline also said their costs would be impacted by “service enhancements” and this really has got me confused.

The whole point of Ryanair is that it gets away with the minimum service possible. Surely they do not mean giving free drinks, increasing baggage allowances or making the seating more comfortable. What can they mean?

There are many who will not fly with Ryanair, either because they have flown  with them once and did not like it, or because they have been scared away by the bad publicity. However, there are many more who are happy to fly with the airline and appreciate its low fares and – generally – efficient service. Personally, I am in neither camp because, very often, I find their fares are too high for the level of service offered. I might fly with them for £35 (all charges included) but when the fare creeps up to £100, I can normally find an airline that offers better service for the money. Maybe the airline agrees and feels that if it is going to have to increase its fares by flying to more expensive airports, it will have to offer something in return.

This does not sound very much like Ryanair though, does it?

Maybe the mystery will be solved in due course but any suggestions as to what they mean by “service enhancements” would be received with interest!

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BA Cause Problems to Australia

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No, not British Airways but the Barmy Army!

We are indebted to a reader for pointing out that the English cricket team will be competing for the Ashes in Australia over Christmas and the New Year. This means that a few thousand cricket fans will be flying out at various times over that period which will have a serious impact on fares and availability. It will also mean that rooms will be expensive and scarce in Sydney and Melbourne when matches are being played there.

It is incredibly difficult to keep track of all the major sporting events, trade shows and pop concerts that can cause havoc with travel pricing.

Our normal advice is that if you see fares that are suddenly much higher than expected, try a quick search on Google for the dates and see if some special event comes up. Booking just a few days before or after a cricket or rugby match  or after a big trade show can avoid you paying more than necessary.

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Kiss failure – a surprise?

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The headline on last night’s BBC News was intriguing.

“The BBC has learnt that concerns emerged about collapsed travel firm Kiss Flights almost two years ago.”

The story went on to say that the head of Co-op Travel had suggested to the CAA that they were planning to sell flights too cheaply and the business plan was flawed. The CAA – who effectively insure such companies through the ATOL scheme – did not share the Co-op’s concerns and allowed the company to trade.

Any reader of Inside Traveller would hardly be surprised about the demise of Kiss because we warned two years ago that it was a “company to avoid”. We knew nothing of the Co-op’s concerns but we were aware of quite a lot of misgivings by people in the travel trade and we also felt that the company needed to be much clearer about certain issues if it wanted to have any credibility.

Now, you might wonder why little Inside Traveller can see things that other companies cannot.

The answer is simply that the many small tour operators who bought tickets from Kiss did not want to ask too many questions.

Nearly all the UK’s charter aircraft capacity is tied up by the big operators who have their own in-house airlines. This makes life very difficult for the small operators who have to scratch around to find blocks of seats for their packages. XL had previously been a major supplier to such companies but when they went bust, operators were left high and dry. The arrival of Kiss on the scene – at almost exactly the time XL went out of business – was an answer to their prayers so they chose to look the other way when anyone suggested the company might not be quite as strong as it should be.

When companies go bankrupt, there are many people who wisely shake their heads and say they always thought the company might run into problems. It is easy to be wise in hindsight but, in the case of Kiss Flights, there were plenty of people who all along have said the company either was not strong enough to survive, or if it was, had to do more to show its strength.

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