Here’s a notion you might find difficult to stuff in your overhead bin: Airlines haven’t gone near far enough when it comes to "à la carte" pricing. In the airline world today, "à la carte" means experimenting with delivering products and services for an additional fee with the ultimate goal of growing revenues. And when network giants like Continental forecast netting $100 million from its checked bag fee, airline CEOs see an experiment worth pursuing.
Airlines have long sought the opportunity to charge passengers for the Cokes they drink, the bags they check and the pillows they use, but none dared take the plunge for fear of a customer backlash. But due to recent soaring fuel prices, ancillary revenue fees are now a matter of business survival for most players. They have also given carriers the chance to push the envelope. The new fees cause passengers to grumble and blogs to sound off, but they are teaching airlines what passengers will pay for. At Continental and other carriers right now, it’s checked bags. At United, it’s apparently not $9 salads over the Atlantic.
The business intelligence gathered today, airline CEOs believe, will lead to better, higher value products tomorrow as the experimenting moves beyond the cabin. They’re on to something. In addition to a window seat with leg room, how about a parking spot in A-Lot, adjacent to the terminal? Would you pay $5 for expedited check-in or a special pre-screened security lane? How about $20 or maybe $50 for a day-pass to the platinum flyer lounge for that layover in Chicago?
Beyond short term survival, the quest for ancillary revenue is a huge opportunity for airlines to listen to consumers, understand where there’s value and how to deliver it best. And there’s no shortage of partner opportunities with other service providers that touch the flying experience.
Ultimately, over time, airlines will take à la carte pricing to extremes. But it will evolve from today’s perceived “nickel and diming” to differentiated product offerings that give customers choice, value for their money, and service that meets their individual needs.
Airline Futurist • Miami • www.us.amadeus.com