Tuesday, February 9, 2010

The Onion.

How many price layers has Michael O’Leary from Ryan Air discovered in his peeling of the airline onion?

You can buy a ticket on Ryan Air for one pound. Can you board the plane with just that ticket? Wouldn’t that be amazing?

We all know that extra fees are required before the plane will take off, with us onboard. The trick is figuring out the lowest number of onion skins we need to pay , to actually get to our destination. The fewer fees paid, the lower our expectations regarding service, food, onboard environment and even safety become.

The question remains, what will people really put up with at the lower end of the airline market?

I thoroughly enjoy Mr O’Leary ‘s thinking and his thoughts on subjects like bathroom convenience certainly make for emotive responses. He wanted people to realise, that if he could convince you to use the bathroom at the airport before that short hop to Majorca, then he could perhaps take out two toilets and replace them with six extra paying seats. It was never about paying a pound to pee but that sure made for hilarious feedback on his site.

Ryan Air wants the air ticket to be free, because there are a whole lot of emotions attached to that thinking. In the minds of the consumer free removes risk and buyer’s remorse, paving the way for extra sales. Dan Ariely, behavioural economist, calls this the “certainty effect”.

An experiment performed by Ariely with chocolate proved the difficulty in people saying no to free. People were offered a choice between a 14c Lindt Truffle and a 1c Hershey Kiss. People chose the truffle at a ratio of 3 to 1. When the price of each was lowered by 1c, the free Hershey Kiss was chosen 75% of the time.

Pity flying isn’t as easy or safe as eating a chocolate.

I have certainly reached an age of not compromising, so I’m not a candidate for the serious low cost carrier anymore. My nieces and nephews on the other hand have a totally different view and they remain well and truly in the sights of Michael O’Leary. As the next generation grows up with a low cost expectation, LCCs will prosper and propagate. Tiger Air and its ilk in Australia, have created their own demand and support and they are looking forward to the next generation of flyers who won't be swayed by loyalty programs or even safety records.

I look forward to the next O’Learyism on the airline onion.

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