I try to avoid political commentary, but sometimes I just can’t avoid it. The airline industry has always been a tough place to make money, but since 9/11, terrorism fears, long delays in security, and surging oil prices have really made the market a place with little pricing power and lots of cost exposure. Pricing [...]
Back in August, I wrote a post titled “What Other Fees Can Airlines Charge?” Well, as several alert readers pointed out, The Onion has the ultimate answer. When it comes to airlines’ pricing power, the good news is that the economic meltdown has slashed the cost of fuel and should lead to lower costs as [...]
Bitten by rising fuel costs and a weak economy, airlines are struggling. Naturally, they have turned to their creative pricing departments to design new fees. These fees include checking bags, water, and the extra leg room in exit row seats. Where can they go next? Here are a couple of ideas: the ultimate in usage [...]
In last week’s post How to Raise Prices, I referenced two interesting articles on techniques for raising prices, and also suggested using unbundling to differentiate between customers who want maximum value and customers who want minimum price. Today, let’s look at three interesting price increases– Oracle’s list price increases, Apple’s iPhone price “decrease”, and airline [...]
With high fixed costs and perishable products, airlines have long been the poster child for “yield management”, “revenue management”, and other sophisticated statistical methods for optimizing profit. Or minimizing losses. While travel is up, airlines are still looking for ways to maximize the return on their investment. One approach is to unbundle products and services [...]
That may not sound like progress to some people, but an alert reader sent in this article on a company called StratBridge, which helps professional sports teams optimize ticket prices. Unlike the massive yield management systems in place at the airlines, however, their StratTix software is more of a data visualization and analysis tool. It [...]
Back in August, we noted an interesting website called Farecast, which makes predictions about whether airfares will move up, down, or stay the same. This could let buyers lock in low rates if fares are about to increase, or wait if it looks like fares will fall. In addition to the current price, predicted direction [...]
With passenger loads up, major US airlines are again trying to push through a small fare increase. We noted a failed attempt at a price increase back in August, when oil prices were higher, but important business traffic was probably softer. Despite the slide in energy costs, airlines says that their fares still have not [...]
In routine move, 3 major airlines announced small fare increases, but retracted them when competitors did not follow. This is how prices get “coordinated” across the industry. The interesting piece from the WSJ article is the quote from Morgan Stanley analyst Jamie Baker: “Since 2005, there have been 17 broad failures to raise ticket prices [...]
An alert reader forwarded this post from the On Travel blog, about how online travel site Orbitz could be charging more to users who are logged in and therefore perhaps less price sensitive. An alternative explanation is that the lower fare somehow vanished during the user login process, but became available again when the traveler [...]
