A flight for 2 euros (or to be more precise, for 1.99 euros) is a gimmick and so are flights for 3 or 4 euros, which have become common in the landscape of low-cost carriers recently. “When I talk about a 15-euro flight to Italy, an affordable price by all accounts – it’s already perceived as expensive,” says Yaniv Lanis, founder of a group of secret flights.
Indeed, the low-cost Wise Air company announced this week the sale of 50,000 airline tickets on various routes in Europe and some from Israel at a price of 1.99 euros. Whoever really pays less than the price of a cup of coffee for a flight – will be a passenger who will not add anything: luggage, seating or meal, and will show flexibility for dates when the price is relevant. By the way, it is likely that on the return flight he will pay more, even 20 times, in the direction of 40 euros. This operation joined another operation that was valid last week, in which Wizz Air offered flights for NIS 9, for example on the Tel Aviv-Milan route.
Needless to say, this is a price that does not come close to covering any cost for the airlines, which only burden themselves with expenses through loans they have taken out, compliance with the epidemic procedures and in view of the rising price of fuel as activity resumes. The companies assume that they will at least minimize the damage of the cheap price by purchasing extras (seating, suitcase, etc.) that have been a more significant share in recent years in the revenue model of low-cost and legacy companies (traditional).
“The cheapest insurance available for flight cancellation”
Israir also entered the aggressive discounting game this week with a round-trip flight for $ 9 to Bahrain. The company has even added a rather unconventional condition that anyone who can benefit from this price will be newly vaccinated.
“When we locate flights for 2, 3 or 4 euros, there is an immediate response from surfers and tickets are hijacked,” he told Nice, noting, “however the intensity of the response decreases as there is a flood of such promotions that come by accident while we are in the Toto Red Countries era. “
“Among bookers, especially long-term, they assume that within the cheap price is embodied the considerable risk that they will not fly in the end. Buying a flight for 2-3 euros is the cheapest insurance available for flight cancellation,” says Lennis, who recommends quick decision-making. The promotions (usually promotions are limited to bookings) do not reserve extras such as luggage or seating even up to a few days before the flight date in order to minimize the risk of cancellation. “Even if it means paying a little more for it. It’s a shame to risk the entire amount on speculative travel,” he added.
All airlines want to fill planes
Nice confirms that the frequency of promotions has increased: “The promotions published in recent months are the most aggressive we have seen. Low cost companies do everything to use planes and keep active crews. The promotions are not only targeted at the Israeli market. “Relatively speaking, this is a way to make it happen.” Also in January, after the period of Black Friday promotions and the end of the year, Nice estimates that offers will still be offered at “slaughter” prices. “We are entering the winter season when there is less demand and the companies want to fill planes,” he clarified.
That extra cent always got me feeling some type of way. pic.twitter.com/fOStIXBIJR
– Ryanair (@Ryanair) November 18, 2021
Paulina Gusk, communications director at Wizz Air, does not hide the company’s interest in filling planes through a discounted price. “I live in Poland and the prices of flights between European countries are sometimes cheaper than the prices of train or bus travel within Poland. Low cost companies are by nature fighting to present the cheapest prices, that is our essence. Pricing of 2 euros aims to encourage passengers to fly at this time of year.” .
And how much does this pricing have to do with the epidemic and rising morbidity? Roi Cohen, CEO of Fetcherr, which has developed a model for the demand and pricing of airline tickets, believes that the connection is close. “We see this in the data. As there are restrictions more promotions pop up. The companies are operating with uncertainty and to cover the situation they are looking for a way to fill planes. A ticket for 2 euros is one way. “The starting point is that when you lower the price, you create demand, but in the end someone will have to pay for the cost of the flight, which only gets more expensive for the companies – it will most likely be the passengers who sat around who paid 2 or 3 euros.”
Recall that the pricing model of each flight is built from a virtual division into classes marked according to the ABC letters and symbolizing price levels not according to the seat location, but according to the demand calculation for each flight at varying time points. In this way a number of tickets are pre-allocated at a discounted price that will usually climb gradually. In fact, on a given flight it is possible that each passenger in economy class paid a different price, and the gaps between them can increase to hundreds of percent.
Gusk admits that many times the source of these promotions is a reaction to those put out by competitors. “When one company announces an operation, competitors are expected to respond. This is something that works for the benefit of passengers. Of course we closely monitor what our competitors are doing. “More operations than in the past. We hope that through the price people will understand that flying today is less complicated than they think.”
Destructive pricing or accessibility for the general public?
If the average plane has 200 seats, how much did they actually pay 2 euros per ticket? Cohen estimates that this is about 10%, but in the field the numbers may be lower. According to Gusk, “It varies between lines and demand. There is no uniform formula.”
Carsten Spoor, CEO of Lufthansa, has repeatedly spoken out against pricing he calls “destructive” to the aviation industry, which comes from low-cost carriers. “Offering a flight for 10 euros is irresponsible. It’s unhealthy for the market and nothing more than a gimmick, “he said at the World Aviation Organization conference.
50.000 tickets for 1.99 EUR ✨
It’s a great opportunity to go for a relaxing holiday or a sightseeing adventure. Book selected flights for just 1.99 EUR, travel anytime up until 28 February 2022. ???? https://t.co/AeMNWOJWFF pic.twitter.com/q6Mw1Iwon2– Wizz Air (@wizzair) December 14, 2021
“I do not agree with the fact that this is destructive pricing for the industry,” says Gusk. “We are not destroying but making flight fares accessible to a larger public. Before there were low cost companies not everyone could take their family and travel. In fact we serve an important task because flights should not only be for high income earners.”
Through price and in general, low-cost companies are also conquering the Israeli market. From the beginning of 2021 until the end of November, EasyJet, Ryanair and Wizz Air occupied a volume of 16% of all Ben Gurion Airport’s passenger traffic. On some days, the flight schedule includes more Ryanair flights than Israeli companies.
“Low-cost companies have returned to indices similar to 2019 in terms of flight hours,” says Uri Sirkis, Israir CEO, “They identify a built-in market failure in Israel in light of the fact that Israeli companies are restricted in activity at Ben Gurion Airport in the face of draconian restrictions that have not been imposed in European countries. So the challenging competition is more challenging. Reverse and cancel flights. The hand of low cost companies on the top, their strategy is to increase market share that is also done through such promotions. Israir can offer flights for 2 euros, only its it will cost much more. Low cost companies have a different back, they operate hundreds of lines and the allocation of 50,000 tickets at this price is negligible for it. “This campaign raises awareness of the use of low-cost carriers and allows future flights to be cushioned by customers who will take out and pay additional payments for rested luggage.”