(Bloomberg) – When airlines broke up their basic offering—the flight—into retail pieces that range from ticket price to Wi-Fi, they gave themselves a new challenge: How do you market extras to consumers who are wary of the basics?
Travel delays and airfare sticker shock—and more recently, fee creep—haven’t groomed a clientele eager to be up-sold. Still, with amenities such as streaming TV, in-seat power, and extra legroom (and new ones being devised all the time) airlines are keen to emphasize the virtues of their tricked-out cabins.
This business model has become a fundamental aspect of their financial health. U.S. airlines’ take from baggage fees alone rose more than 9 percent in the first quarter of 2015, to $864 million, along with $768 million in ticket-change fees, the Department of Transportation reported on Monday, during a period when net income totaled $3.1 billion. In a friendlier vein, major carriers are using mobile and social technology to “personalize” travel―wishing customers a happy birthday when they fly on that occasion, perhaps with a free drink, or remembering which wine varietals you and your spouse prefer.