airline pricing

Does your pricing strategy have cobwebs? Was it developed at a different time in a different market context? Could it use some ‘spring cleaning’, disposing of practices that don’t make sense anymore? Or replacing obsolete policies with more updated ones? Perhaps, now is the time for a thorough review your pricing and revenue management practices.

There is a lot that is new in the travel marketplace. Perhaps you should be rethinking your pricing in the context of the following:

1.  Pricing rules

Many rules become obsolete over time – Saturday night stay is the best example of an industry practice that no longer exists. On the other hand, the convention today is for some fully refundable fares, some fares subject to change fees, and some non-refundable fares. Many fares have advanced purchase or length-of-stay requirements. Are these industry stratifications working for you? Or, in your markets, do these conventions leave money on the table – offering too many customers a way to purchase low fares or, alternatively, too restrictive for you to get your share of more price sensitive passengers?

2.  Ancillary service fees

For many airlines, ancillary was a tactical reaction to competitor moves and not a well-integrated corporate strategy. Ancillary continues to grow across the industry and there have emerged a few distinct approaches. Most airlines, nevertheless, seem satisfied with 7-10% ancillary, awaiting competitive moves before taking unilateral action. Are you just matching your competitors or have you designed your ancillary offerings around your unique customer needs? Is ancillary a ‘me-too’ offering or a means of differentiation?

3.  Channel-specific opportunities

Lufthansa has led the industry with a customer fee for booking through third-party channels. Although still controversial, they have declared some success in moving customers to direct channels. How much do you rely on third party channels? Do you have a strategy for moving more customers to lower-cost channels? Should you be taking advantage of Lufthansa’s lead and implement a similar fee.

Read rest of the article at: Eye for Travel