Why Is Airline Pricing SOOOO Different?

As we know, in recent years, the airlines have made an already complicated pricing system even more complex. Their pricing model is quite different from other retailers.
Consider this observation from an article by Scott McCartney for the Wall Street Journal: “Imagine if airlines ran restaurants. We’d live in a world where a half sandwich, the equivalent of a one-way ticket, might cost two times as much as a whole sandwich. The airline way of doing business is unique — few other businesses have as many rules and restrictions, taxes and fees, frustrations, and disruptions. Not many other businesses have such varied and ever-changing pricing for their products. And rare is the business that hits its customers with penalties of hundreds of dollars. Why so different? Airlines face a unique set of challenges, including easy world-wide comparison shopping, high equipment costs, complicated contract work rules, vulnerability to oil price swings, and heavy government regulation. And most everything happens outdoors, whatever the weather. The business has gotten far more complex in recent years as the joys of flying have diminished. Simplified pricing schemes have been tried and have failed. Fees and penalties that have generated revenue have been pushed higher and higher. The result: a $200 fee to change a domestic reservation.”
Click the image for a WSJ video clip.

 

Art by Michael Witte

 

This entry was posted in Part 2: Ownership, Strategy Mix, Online, Nontraditional, Part 3: Targeting Customers and Gathering Information, Part 5: Managing a Retail Business, Part 6: Merchandise Management and Pricing, Video Clips (non-career) and tagged , , , , , , , , , , . Bookmark the permalink.

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