Flair Airlines tinkering with ultra low cost model by eliminating carry-on fee

MONTREAL — Flair Airlines Ltd. is tinkering in Canada with the ultra low-cost airline model used in the U.S. and Europe by eliminating carry-on luggage charges in response to consumer demand.

Effective immediately, the B.C.-based carrier will remove its $30 carry-on baggage fee.

Spokeswoman Julie Rempel said the one-month trial will likely be extended indefinitely because of strong passenger demand.

“That was one of the main complaints that we had from passengers because it was an unfamiliar fee to a lot of them so we just made the decision to remove it,” she said in an interview.

Rempel said Flair is “redefining” the ultra low cost carrier model in Canada. The airline started last summer by taking over the operations of New Leaf.

“We’re just looking at it from a customer’s perspective and redefining how we look at ULCCs. There’s no rules in the playbook at this moment and we’re making our own and this is just one move towards that.”

Discount airlines keep fares low by charging a series of ancillary fees including baggage, seat selection, use of credit cards and food purchases. Some of the world’s largest airlines of this type earn as much as 46 per cent of their revenues from extra fees.

WestJet Airlines (TSX:WJA) said it still plans to charge carry-on fees on its low-cost Swoop subsidiary that is scheduled to launch service next summer.

Even with fees, Swoop is aiming to cut fares to around 30- to 40-per cent lower than average full-service carriers, said spokeswoman Lauren Stewart.

“The choice to pay for extras such as carry-on allows the price-sensitive traveller to make choices on what they value to keep the fare as low as possible,” she said in an email.

Swoop has yet to announce initial destinations or fees.

Canada Jetlines CEO and director Stan Gadek said it charges for carry-on fees but charges an ultra-low base fare.

So-called ancillary fees are generating increasing revenues for airlines around the world.

They are expected to generate US$82.2 billion this year, a 22 per cent increase in one year, compared to US$22.6 billion in 2010, according to IdeaWorksCompany, a U.S. research company that tracks airline revenue.

Air Canada (TSX:AC) ranked 10th in the world in collecting ancillary fees, bringing in US$1.179 billion in 2016. That equalled 10.4 per cent of its total revenues. Part of those fees come from its travel subsidiary Rouge and 45 per cent come from its frequent flyer program, said IdeaWorks.

European ultra low-cost carriers Ryanair and Easyjet were 6th and 7th on the list at nearly US$2 billion and US$1.355 billion, respectively.

IdeaWorks said WestJet collected US$302.2 million in fees last year.

Air Canada passengers paid US$26.29 per person in ancillary fees, the 15th most of any carrier.

That was well behind leader Spirit Airlines at US$49.89 but ahead of Ryanair and Easyjet. WestJet received US$13.77 per passenger.