Ryanair CEO Michael O’Leary is brash and unfiltered, often called a ‘truth teller’ but the truth is he frequently exaggerates. He’s been talking for years about having passengers stand to fly, charging for the lavatory, and paying passengers to fly so he can charge them fees. Whenever he’s been out of the spotlight he says something outlandish and gets attention just how cheap Ryanair is, even if he never follows through (and, often, regulators would never let him anyway).
U.S. ultra-low cost carrier Frontier Airlines is adding European-style business class seating where extra legroom seats at the front of the plane will also allow a passenger to buy the seat next to them so that it stays empty.
- They call it “UpFront Plus”
- It’s a fee-based airline selling an option to passengers for an extra fee
- And it’s not unlike what other airlines do, since it’s common to allow passengers to buy extra seats
In fact, it is sort of brilliant because they can potentially sell the empty middle seat as an upcharge to both the aisle and window seat passenger in the row!
O’Leary, though, says it is stupid and predicts that it will not last – because selling the seat to someone that’s already flying means not only do you forgo the fare for that seat from another passenger, you forego all the fees you could charge that passenger too.
Bullsh*t! In fact, it makes no sense. Sell the middle seat. The idea of selling it for an additional cost is nonsense. We want to sell all the seats, the aisle, the middle, the window…If you sell all the seats you also have the opportunity of selling somebody a snack, a coffee, a sandwich, a scratch card. [Consider] the ancillary revenue. Last year our average fair was about €44 ($47.80), but our ancillary revenue per passenger was close to €21-22 ($22.81-23.90).
O’Leary’s airline will sell tickets for almost nothing to attempt to achieve completely full flights. And in the special case that flights are completely sold out he has a point to consider, since you’re actually trading off with filling that seat with another passenger.
However O’Leary is engaging in sloppy thinking.
- If you are filling your planes to capacity then selling extra seats just for the average fare doesn’t make sense. It generates net negative revenue.
- But if you have empty seats to sell it makes total sense! And you can control both when you offer those extra seats and also at what price.
- It is possible Frontier could make mistakes in revenue management but there is nothing inherently wrong with the idea. It generates incremental net revenue if managed correctly.
If Frontier sells this on flights that won’t be completely full then this is 100% incremental revenue. If they sell it on flights that will be full they have to price it at or above the cost of a fare plus fees, otherwise they lose money.
And Frontier has been quickly making changes to their products and route network precisely because they aren’t filling planes at high enough fare plus fees to earn a positive return. The margin they are currently on isn’t the one that O’Leary posits. This is just another ancillary fee, but one that sells a scarce resource so must be revenue managed correctly. And right now, for Frontier, it’s not even that scarce.
Blocking the middle seat also takes away one seat that could be used by a non-rev employee. So in effect, F9 is taking away one of their benefits.
“If you are filling your planes to capacity then selling extra seats just for the average fare doesn’t make sense. It generates net negative revenue.”
You’ll need to explain this further. This seems like one outcome, but I suspect it’s not the only outcome.
Blocking a seat uses less fuel due to weight savings. It also allows that weight savings to be used for cargo and, of course extra fuel for the cargo’s weight.
Used to fly Frontier from Austin with great rates UNTILthey pulled out the fabric seats and put in hard plastic seats a la 1960’s (orange and Turquoise chairs & melamine plastic dishes).
No matter how much you save, if you get off the plane crippled from sitting in a hard plastic seat for more than an hour it is NOT worth it AND, maybe they have changed those hard seats but lost lots of people like me who wouldn’t know about the change simply because we stopped flying Frontier.
I can’t imagine purchasing an extra seat just to keep it empty on ANY airlines! Logically, you should be able to bargain with the other person to pick up half that coast 🙂 Why not have an open raffle for people who DO purchase the seats ahead of time so that they can get back half their spend. To me, as Ludicrous as that sounds, it makes about as much sense as purchasing a middle seat to keep it empty!
@roundtree – if you sell an empty middle seat on a full plane, where you could have sold another seat,
* then the last ticket sold is likely at a higher fare
* but even if not, that’s when o’leary’s point holds that you need to consider the fare PLUS FEES and not just the fare
however consider that you may be selling this empty middle seat TWICE (to both the passenger in the window and the aisle)
As a Frontier Platinum member, I don’t like it because it removes the free front seats with extra space that, typically, middle seats weren’t taken to begin with. Now they’re trying to sell them as more extra room, which is smart business but not great customer experience. I’m not flying Frontier for extra space, but when I can get it, it makes up for the uncomfortable times I don’t.
Quite honestly I’d pay for this on some of the longer flights Frontier has….
If MO‘L says it’s stupid, it must be good!
It’s BRILLIANT but cheap people won’t see it that way. First off it’s only a test and they only are launching this for about 60 days to see if it works. Secondly I won’t fly frontier because the shoulder room is too tight. And the leg room. But if you can get a good deal on the Spirit Airlines front seat I’ll book it in a second.
What you are doing is by creating this new type of product you are introducing the ability for the typical first class traveler to possibly reconsider frontier again. It’s kind of like Airlines sell seats at a loss so that they at least get some of the fly once in awhile. Offering this type of product would get me to book frontier in a second if the price was right.
I usually get upgraded on American about 90% of the time so I stick with them but if I was going somewhere and I can get the extra seat next to me which is a place to set my laptop and other things and I knew I had more legroom I would take it in a heartbeat.
The beauty is that this is not a hard plastic divider or a hard product. They can sell as many or as few of these seats as they want. This is the exact same concept that British airways is doing in business class in Europe. I hope this new concepts sticks.
Let me reiterate that the only people that think this is not good are people who are always traveling in coach and are always buying the cheapest ticket. PERIOD.
I’m flying with Frontier tomorrow for the 1st time ever. Got an exit row seat for cheap so let’s see how this pans out.
Be careful…the CEO of the most profitable airline in the world, and the carrier that owns 94% of their aircraft, needs to be revered….
jacobin777—you’ll be sorry.
An empty seat does not check a bag! The marginal cost to the customer needs to be at least the minimum about of margin generated by the expected ancillary plus the next highest marginal price for the next unsold seat. Then have at it brah!
I am not a fan of the additional operational complexity of the offering! The FAs should be giving the hard sell on the credit card offering on the way into the plane. Instead they’re policing the first two rows.
And it’s eurobusiness folks. I think it’s more likely that this product is what they want to sell obese customers. I think that’s a brilliant idea actually. Seat and a half.
That’s why Ryanair makes money while Frontier doesn’t — O’Leary understands the economics of selling to the Greyhound crowd, who largely lacks basic numeracy skills and even flaunts this on TikTok.
Just out of curiosity, does O’Leary fly with Ryanair whenever he travels within Europe?
I don’t understand why Ryanair doesn’t have business class, nor do I understand MOL’s comments. Yes, you lose auxiliary revenue but you can make up for it with the fare you charge. So in Ryanair this would be the plus fare (bags included) plus fast track etc multiplied by 1.5 and then you can add extra 20€ and give the pax equal F&B credit on board. What is there to lose? Two people will spend as much, and probably even more, as three people would but your cost is lower. Plus, since you bundled it all together, you don’t risk the third seat to be occupied by a penny pincher who boards with a bag pack and doesn’t spend a cent beyond the fare itself. Not to mention the possibility of those seats remaining empty.
And the product is still gonna be cheaper than legacys in many cases. I never go for Ryanair’s current product, but if they gave me an all-inclusive fare with an empty middle seat for the price of KLM economy, I’m in.
While I do like extra shoulder and leg room, I’ll agree with O’Leary . . . and Yoda. “Do . . . or do not. There is no try.”
I don’t care about any upgrades, new business cabins or new planes. If Frontier doesn’t focus on their costumers, everything is useless. Their seats are worst than old stadium seats. I went from Vegas to Orlando (4hrs) and had back pain for two days, not to mention I couldn’t sleep one minute during the flight (night flight).
Horrible airline, horrible service, horrible seats, horrible customer service.
As the most valuable airline IN THE WORLD, I’d say Ryanair and O’Leary probably know what they’re on about. Don’t think they they’ll be too upset about armchair CEOs second-guessing them
@RyanHair – maybe explain why you think they’re right and I’m wrong, other then ‘they’ve had success in the past’