Ryanair scraps bag check-in fees for business travellers

DUBLIN Wed Aug 27, 2014 6:10am EDT

DUBLIN Aug 27 (Reuters) - Ryanair is watering down its austere approach to air travel by ditching charges for checked-in bags on some fares in an attempt to attract business travellers who have tended to shun the airline.

Europe's largest budget carrier said on Wednesday its new "Business Plus" tickets would also offer free flight changes, fast-track through airport security and premium seats near the exits.

"The customer experience had a few rough edges that needed to be knocked off and we've done that," said Chief Marketing Officer Kenny Jacobs.

The changes could spell further misery for traditional airlines that have never fully come to terms with Ryanair's meteoric rise from small regional carrier to continental giant.

Unable to fully replicate its ultra low-cost business model, most full-service airlines have been unable to cut prices far enough to stop an exodus of passengers and still turn a profit.

Business users have been among the few willing to pay more for the travel perks they offer.

"As Ryanair relentlessly increases capacity and gradually broadens its target markets, the legacy carriers will feel the pain," said Stephen Furlong, an analyst with Davy Stockbrokers in Dublin. "They are showing this market is not only the preserve of legacy airlines."

Ryanair shares were up 3.2 percent at 1000 GMT, compared to an increase of 1.8 percent on the Thomson Reuters Airline Index.

Ryanair needs to capture more of the business market to achieve its goal of flying 120 million passengers per year by 2022.

It estimates that around 20 million of its 83 million annual passengers are business travellers. To reach the target, it aims to increase that to between 30 million and 36 million.

Ryanair's charges for baggage check-ins broke with standard industry practice when they were introduced in 2006. The fee has since grown from 2.50 pounds to as much as 75 pounds on some flights, and similar charges have been adopted on short-haul flights by many other European airlines.

The charges have helped keep ticket prices low, so scrapping them for bags weighing up to 20 kilograms will come at a price for customers.

The company's new business fares will start from 59.99 pounds ($99.4) - 40 pounds over the usual minimum of 19.99.

The changes are part of a broader effort to improve Ryanair's poor image - last year it was voted the worst of the 100 biggest brands serving the British market by readers of consumer magazine Which?

It has since slashed charges for extra baggage and reprinting boarding passes and said passengers could carry a small second bag onto its planes.

Rival easyJet, which Ryanair Chief Executive Michael O'Leary has praised for its success in attracting business travellers, has a "flexible fare" from 54.99 that also includes 20 kg of checked-in baggage, free date changes and fast-track security screening.

Ryanair says there are limits to its transformation and it has no plans to extend free luggage to other fares or to introduce free food or lounge access to business passengers.

"Customers aren't that interested in bad coffee, soggy sandwiches and a curtain across the aircraft," Jacobs said. (1 US dollar = 0.6034 British pound) (Editing by Tom Pfeiffer)