How budget airlines make their money: The art of bumping a 2 cent ticket up to $120

So, how do they do it? How do all those European budget airlines make a profit charging less than a Euro per seat?

Last summer, Times journalist Mark Frary decided to find out for himself by purchasing a 1 pence Ryanair ticket from London’s Stansted Airport to Berlin. Sounds like a steal, right? Not exactly. Like so many other deal seekers on budget airlines, Frary ended up paying far more than that initial 1 pence. How his final cost netted out at £61.84 ($121.15) provides fascinating insight into an amazing business plan that is succeeding despite naysayers predicting otherwise.

Interestingly enough, the wild price of Frary’s final bill did not come from the most common source of increased ticket prices on budget airline: baggage fees. This is where the airlines really clean up. Passengers on Ryanair, for example, can check up to three bags. The first, however, costs £5 ($9.80) while each additional bag is £10 ($19.60). In addition, there is a 15 kg (33 lbs.) checked bag allowance. If a passenger exceeds this weight, they pay £5.50 ($10.78) per kilo–which can add up very quickly. And don’t even think of transferring your heavier items to your friend’s baggage at the airport either. Ryanair’s Terms and Conditions clearly state, “No pooling or sharing of baggage allowances is permitted, even within a party traveling on the same reservation.”Frary was smart and kept his baggage to a minimum. He did fall prey to, however, to a variety of other fees and services–some of which can easily be avoided (e.g., don’t order food onboard) while others can not. Despite all this, budget airlines are still a great deal cheaper than normal airlines, providing you have the brains and discipline to avoid be taken advantage of.

The Ticket
The ticket itself: £0.01 (2 cents)
Credit card charge: £ 1.75 ($3.43)
Flight change: £ 24.00 ($47)

Taxes and Fees
Government passenger duty: £ 5.00 ($9.80)
Airport passenger service charge: £ 7.30 ($14.30)
Insurance and wheelchair levy: £ 3.48 ($6.82)

Checked in suitcase: £ 7.00 ($13.71)

Food and Drink Onboard
Bottle on water (500ml): £ 1.80 ($3.53)
Pringles and Mars bar: £ 2.60 ($5.09)
Ham and cheese baguette: £ 4.00 ($7.84)

Two lottery scratch cards: £ 2.90 ($5.68)

TOTAL £61.84 ($121.15)