by Martin Lariviere
I guess I just have a fascination with airline fees. One of the biggest fans of these fees is Michael O’Leary, CEO of RyanAir (NASDAQ:RYAAY). The Irish carrier essentially has everything a la carte — to the point that some have taken beating its fees as a challenge (How (with the help of a 17-pocket jacket) I beat Ryanair at their own game, Jul 8, Daily Mail). In any event, in this BBC interview, O’Leary makes the case that fees are pro consumer:
As I argued before, there is something to using fees to shape consumer behavior and lower costs. That doesn’t apply to all fees, of course. RyanAir, for example, will let those who pay a premium board early. That’s just old fashion segmentation and extracting consumer surplus. Baggage fees that dramatically reduce the need for airport personnel are a different matter.
I would also add that RyanAir is at least honest. They are about nothing but cheap prices and consumers know that “extras” like checked bags are not free. The problem in the States is that traditional airlines want to have it both ways. They want to advertising Friendly Skies and We Know Why You Fly that hint at the luxury and pleasure of jet travel while still imposing Mr. O’Leary’s fees. That just doesn’t work. The supposed value their offering the customer is undermined by the niggling fees and poor service.