EXCLUSIVE – Martin Gauss, CEO of airBaltic, has told Simple Flying how he supports the Lufthansa CEO Carsten Spohr’s views on ridiculously low fares. In an exclusive interview with Simple Flying in Riga, he revealed that the low fares do not give passengers an appreciation of the real cost of flights.
This story starts two months ago. Lufthansa’s CEO, Carsten Spohr, criticized low fares of below €10 as being ‘irresponsible’. He reiterated these claims around two weeks ago to a German-language newspaper. With this in mind, Simple Flying decided to ask airBaltic’s CEO for his opinion.
The best competition
airBaltic is a hybrid carrier. While they offer a low-cost carrier type product in the rear of their aircraft, they also have a small business class cabin. Simple Flying asked Mr. Gauss whether he had any concern about low-cost carriers moving into the region, given Lufthansa’s viewpoint.
Mr. Gauss started by telling us that his airline’s three main competitors, in order, are Ryanair, Wizz, and Norwegian. He added that this means his carrier has some of the best airlines up against them. However, this doesn’t concern him as airBaltic “keep taking market share from them in the Baltics”. He then mentioned that “ridiculously low ticket prices don’t make sense”.
The wrong impression
According to Mr. Gauss, the reason he does not agree with ridiculously low fares is that they do not give the correct impression of the cost of flying to the passengers who purchase them. He tells me that “it gives the impression to people that this is the cost of transportation, but it’s not.”
He goes on to add that a flight cannot cost €10 and that this ticket will end up being subsidized by other passengers paying more, or by being offset by other things. He adds that “the understanding of the traveling public should be there, that the cost of a flight is higher than a Euro or 10 euros. I think that was meant [by Spohr], and in this I support him.”
Looking at the example of London to Riga, Ryanair’s cheapest one-way ticket is £12.99, around €15. Meanwhile, the cheapest one-way ticket offered by airBaltic is €44.99, around £40.
All passengers are required to pay Air Passenger Duty when departing a United Kingdom airport. In the lowest class of travel, this would account for £13 between London and Riga. By charging £12.99, Ryanair is already making a 1p loss on tickets just from APD. This is before fuel costs, crew wages, and airport fees are even taken into account. With this in mind, Mr. Gauss’ reasoning certainly stacks up.
Nice for passengers
Mr. Gauss added, “if it [the ticket] is below 10 euros, I’m very happy for the individual, but the cost of traveling from A to B is higher“. However, he also said that is the freedom of each airline to set their own prices, but that the public should understand this is not the true cost of the flight.
Do you agree with this point of view? Let us know in the comments.