12. Clark, Ryanair...The Low-Fare Airline With the Sky-High Insurance Levy, 2006 (Price Strategy)

12. Clark, Ryanair...The Low-Fare Airline With the Sky-High Insurance Levy, 2006 (Price Strategy)

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Ryanair . .. the low-fare airline with the sky- high insurance levy Flyers pay a £3.15 surcharge but the budget carrier is coy about where the cash goes Andrew Clark , transport correspondent The Guardian , Monday 8 May 2006 08.53 BST Europe's largest budget airline, Ryanair, boasts proudly of offering the lowest fares in the sky. But the Irish carrier is quietly boosting the price of its tickets through an "aviation insurance levy" on every passenger which raises far more than it spends on insuring its aircraft. Ryanair's fares start at 79p. But when customers reach the point of paying, the airline adds a glut of taxes and levies including a fee to cover insurance of £3.15 a traveller. The airline has carried 34m passengers over the past year - which means the surcharge raises £108m on an annualised basis. Inquiries by the Guardian have established that Ryanair pays only a fraction of this in insurance. The rest is free to be used to boost the airline's earnings - and it appears to make up a significant slice of the carrier's profits. Consumer groups and rival airlines have called on Ryanair to explain where the money from its insurance surcharge goes and why such a large amount is added to the advertised ticket price. Simon Evans, chief executive of the Air Transport Users Council, said add-on charges imposed by low-cost airlines were becoming an issue of increasing concern. "For a long time we've had a bee in our bonnet about these add-on items," he said. "Why are they itemising these things if it's not to make headline fares cheaper? They're all just costs of doing business and they should be
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This note was uploaded on 11/02/2011 for the course MARK 11420 taught by Professor Cox during the Fall '11 term at University of Houston.

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12. Clark, Ryanair...The Low-Fare Airline With the Sky-High Insurance Levy, 2006 (Price Strategy)

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