Tuesday 17 March 2009

Pay for using the Loo in an Aircraft

Marketing has been a boon to consumers. It has given them more choices, better quality at lesser prices. However, with hardly any real new products coming up, most of the innovations have been not at the Core Product level, but at the Augmented Product level. Add ons are made to the existing product which gives additional features to the customers. For example, the mobile phone started as a way to make a voice call while on the move. As the product evolved, companies started augmenting the product by adding functional capabilities - SMS, MMS, Camera, Video Camera, Blue Tooth, Touch Screen, Organizer ........................ the list is endless.

The is fine. But the trouble is each value addition adds to the ultimate cost. The customer in the end pays much more than what he wants to pay. Most of the customers dont use majority of the add on functions, but have to pay for it neverthless. A basic phone costs KD 10 but an augmented phone costs KD 150. In effect customers pay KD 140 for features they dont use.

Ditto with Airlines. They have made so much value additions that the airfares have become exhorbitant. The core product is still flying people from one airport to another. Now you have as add ons - 'Free' Airport pick up and drop, Executive lounges, 45 kg baggage, 4 star food (most airlines compete with each other to find out how they can make the food lousier), in flight entertainment, pretty (and not so pretty) air hostesses and stewards (who rarely comes to your aid when you need them, and whose only job appears to be checking whether you have worn the seat belt).........................................................

Same is the story with 5 star hotels, high end restaurants, motor cars, computers, televisions (why the hell do we need Picture in Picture TVs is something I cannot understand) and so on.

This has resulted in many products being priced out of the market, leading to smart companies reverting back to the core product at must lesser prices to attract the customers. Thus we have the return of the Budget hotels, stripped down version of the cars, ASUS EEE PC and of course the low cost Airline.

I was watching an interview with the maverick CEO of Ryan Air, Michael O'Leary yesterday on BBC TV. He was looking at the Global Financial Crisis as an opportunity for his Airline to beat the high priced conventional Airlines like BA, Lufthansa and Air France. He feels people have become cost conscious, wants to reduce waste (meaning they dont want to pay for things that they dont use anyway) and would hence prefer good low cost carriers over expensive ones. Ryan Air is going great guns. Michael was telling that as a rule passengers should have the option of choosing what additonal service they want and then pay for it. Hence in his ideal world, no check in counters, no seat choices, no food, no check in baggage, no air hostesses and no loo. The aircraft will have a loo but you have to pay 1 pound to use it every single time. Though this sounded strange to me, I was taken in by his logic that we anyway have use and pay toilets all over the world, then why not in Aircraft too. This way, customers can choose and pay for the services they want. Makes sense.

You can watch his interview in this link provided you have a reasonably high speed connection
http://news.bbc.co.uk/2/hi/business/7914193.stm

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