“De-bundling” is a popular term, particularly in the airline industry, for the concept of variable pricing for airfare, baggage, beverages, etc. The airline industry runs on tight margins, and continuously seeks to increase ancillary revenue.
From a customer’s perspective, this translates to “hidden costs”. While there was much uproar over checked bag fees a few years ago, most customers have come to understand that this shift is an industry norm.
To the benefit of the customer, de-bundling gives the opportunity to pay only for the services desired. For example, Spirit Airlines charges a la carte for everything including carry-on bags and sodas, for which most customers have an expectation will be complimentary. To Spirit’s credit this also provides them the ability to present the lowest price base fare compared to other carriers because they attach the costs after the fact. Unfortunately for Spirit, they have very low customer satisfaction ratings because they take advantage of opaque pricing, and are not very forthcoming about managing customer expectations of hidden fees.
While the revenue enhancing element of Spirit’s practice has benefits to the organization, there are external costs borne by the customer service team, who often have to apologize for practices that outside the norms of air travel. Further, those customer relations employees are given very little autonomy to help customers because the nickel-and-dime-the-customer business model is the core practice of the airline.
Cruises
Very few industries operate on as tight margins as cruise lines. In fact, the price of the room may even operate at a loss. Cruises depend on ancillary revenue, particularly from the casino and alcohol sales. And, these are acceptable cultural norms for cruise providers and customers alike. For example, it is commonly known that all cruise lines enforce strict policies around bringing alcohol on board because selling drinks is the primary revenue stream for a cruise line. And, people have an expectation that the prices will be high, which is a tradeoff for low cost accommodations and free meals.
Norwegian Cruise Line is a pioneer in “de-bundling” in the cruise industry. They have branded themselves as offering “freestyle” cruising which has many benefits. The basic premise is not having a committed dinner seating. So, NCL is able to offer more dining venues, some with optional, nominal supplemental charges. This is a great way to enhance revenue for the cruise line and provide a better overall experience for discerning customers who want a more upscale or more private experiences while aboard.
On the flip side of cruise “de-bundling”, NCL has pushed some boundaries in other areas. For example, they are one of the first cruise lines to charge a delivery fee for room service… a traditionally free amenity of cruising. Also, they advertise enticing promotions like free Wifi, dining upgrades, drink packages, photos, etc. But, these promotions have complex terms and conditions, which catch people by surprise.
Just like Spirit Airlines, though, this type of creativity in pricing and breaking from typical expectations of travelers may have long term customer experience and reputational repercussions.
NCL Guest Relations
Hopefully you’ve found the opinions above to be objectively represented. Unfortunately, I did find myself in a “caught by fine print” situation. I have tried to resolve my issue 7 times with NCL guest relations. It has been my experience that NCL guest relations’ policy is to not respond to pre-cruise or post-cruise requests.
NCL and Dimed
in Norwegian Cruise Line
Posted
First, a Note on Airlines
“De-bundling” is a popular term, particularly in the airline industry, for the concept of variable pricing for airfare, baggage, beverages, etc. The airline industry runs on tight margins, and continuously seeks to increase ancillary revenue.
From a customer’s perspective, this translates to “hidden costs”. While there was much uproar over checked bag fees a few years ago, most customers have come to understand that this shift is an industry norm.
To the benefit of the customer, de-bundling gives the opportunity to pay only for the services desired. For example, Spirit Airlines charges a la carte for everything including carry-on bags and sodas, for which most customers have an expectation will be complimentary. To Spirit’s credit this also provides them the ability to present the lowest price base fare compared to other carriers because they attach the costs after the fact. Unfortunately for Spirit, they have very low customer satisfaction ratings because they take advantage of opaque pricing, and are not very forthcoming about managing customer expectations of hidden fees.
While the revenue enhancing element of Spirit’s practice has benefits to the organization, there are external costs borne by the customer service team, who often have to apologize for practices that outside the norms of air travel. Further, those customer relations employees are given very little autonomy to help customers because the nickel-and-dime-the-customer business model is the core practice of the airline.
Cruises
Very few industries operate on as tight margins as cruise lines. In fact, the price of the room may even operate at a loss. Cruises depend on ancillary revenue, particularly from the casino and alcohol sales. And, these are acceptable cultural norms for cruise providers and customers alike. For example, it is commonly known that all cruise lines enforce strict policies around bringing alcohol on board because selling drinks is the primary revenue stream for a cruise line. And, people have an expectation that the prices will be high, which is a tradeoff for low cost accommodations and free meals.
Norwegian Cruise Line is a pioneer in “de-bundling” in the cruise industry. They have branded themselves as offering “freestyle” cruising which has many benefits. The basic premise is not having a committed dinner seating. So, NCL is able to offer more dining venues, some with optional, nominal supplemental charges. This is a great way to enhance revenue for the cruise line and provide a better overall experience for discerning customers who want a more upscale or more private experiences while aboard.
On the flip side of cruise “de-bundling”, NCL has pushed some boundaries in other areas. For example, they are one of the first cruise lines to charge a delivery fee for room service… a traditionally free amenity of cruising. Also, they advertise enticing promotions like free Wifi, dining upgrades, drink packages, photos, etc. But, these promotions have complex terms and conditions, which catch people by surprise.
Just like Spirit Airlines, though, this type of creativity in pricing and breaking from typical expectations of travelers may have long term customer experience and reputational repercussions.
NCL Guest Relations
Hopefully you’ve found the opinions above to be objectively represented. Unfortunately, I did find myself in a “caught by fine print” situation. I have tried to resolve my issue 7 times with NCL guest relations. It has been my experience that NCL guest relations’ policy is to not respond to pre-cruise or post-cruise requests.