07 October 2008

American Introduces A la Carte Pricing

In their exhaustive and never ending search to lower YOUR travel costs - American is happily going to move to a la carte pricing. Thus you too will save money and the airline will be happy to help you pay for all those extras your previously enjoyed at NO CHARGE.

The success of the Tango/Tango Plus model at Air Canada and the extra yields that have come from the LCC's unbundled the cost of the airline ticket is driving AA to this remarkable decision.

So here is the formula:

Full Service Network Carriers - all frills = UPC - Unbundled Pricing Carrier.

Now all airlines can have the same nomenclature and peace is restored to the world.

So no more LCCs FSCs, Network or Legacy carriers, Hybrid (HVCs) or any other type of airline - now everyone is UPC.

Here are 2 articles from yesterday's newspapers on the subject:


(Only read one - they are really the same).

Now there are of course issues here.

1. Government is being hit with a withdrawal of taxes. In the case of United it will be moving $52.5 million of potential tax receipts away from the ATFF.
2. Good luck getting a refund on these new charges
3. Good luck in understanding. One of the articles talks about credit being given for AC illustrating what the customer can do.

So I beg to differ on the issue of ease of understanding. For AC's transparency i submit a display Vancouver to Toronto. For how difficult it is compared to someoneelse's I submit Southwest's display LAX-Houston Hobby.

Same dates - as an experiment try this yourself at home. time yourself on how long it takes you to find the lowest fare on the page and the most expensive fare on the page for each carrier (IN COACH!!!).

It isn't easy... There is a famous quote by the Revenue Management guy at Air Canada who was heard bemoaning his worst problem was there were not enough letters in the alphabet!

So go figure...

This is going to be more obfuscation on airline pricing and more customer confusion, less government revenues and the GDS's dont have a prayer in keeping up.

Result - unhappy campers all round and more loss of airline brand equity.

Just the Professor's humble opinion.


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