Originally Posted by
wadia13
That's interesting. But another way to look at it is that passenger revenue declined by EUR 14.1 mln while ancillary revenue increased by EUR 4.4 mln. The decline in the former in much greater than the increase in the latter. Just speculating, but perhaps if they didn't adopt these policies, passenger revenue would have been better. At some point (which they may have already reached), the flying customer will simply choose another airline if possible.
On the margin, I'm sure there are such effects. But it is probably weaker and slower than we would hope. While annoying to many, fewer take decisive action I think. Compare to banking fees or invoice fees - I feel the general public has just accepted such things as an annoying but unavoidable part of paying for stuff.
I say that because I've marketed a product and one ot the selling points were we didn't charge an invoice fee when the competitors did. And while that was positive for our brand, it wasn't enough to allow us charge more for the product. We took more orders but competitors took more revenue per order due to the fees. Depending on business one can make it work, but maybe airline industry is such that most people like to be "fooled" by low advertised price and are happy to pay fees for everything later on.
Another observation is that once a corporation separates revenue and costs into categories they are less concerned by cannabalising their own sales. Ie the eventual negative effects on passenger revenue from increased focus on ancillary revenue are ignored. I've seen that numerous times when someone is appointed manager of revenue stream from new product A - they are quick to sell it to existing customers and are praised for producing a year-on-year 10-20% increase while product B is cannabalised and has a much larger decline in absolute revenue. It is usually explained by poor performance by manager B and/or market changes outside of company influence, and not by the effects product A is causing.
So while I think Finnair brand and sales of main product is hurt by the focus on ancillary, I think it currently is not that big and that management is neither monitoring nor caring about such effects.