Similar pricing strategies disguised

Northwest Airlines implemented a premium pricing strategy for Coach seats by charging a fee (up to $25) for the more preferred Coach seats except for their most frequent flyers who get them for free. When first implemented, this fee was criticized by some as a price gouge. Southwest Airlines, which has prided itself on being a no fees airline has actually done something very similar, but it is disguised.

On Southwest Airlines the earlier you board the more likely you are to get the seat you prefer. They have offered Business Select fares for some time that assure you a boarding pass usually within the first 15. ‘A’ List flyers (those people who fly Southwest a lot) board next. (Similarly to Northwest that allows their most frequent flyers access to the better seats earlier and at no extra charge.) These are followed by people who get boarding numbers based on the time they check in.

Recently Southwest has added a new “added fee” service to allow you to get a better seat. You can pay $10 or so to “check in early.” Since boarding sequences are done by time of check in, the ability to check in early gets you a lower boarding number and therefore a higher likelihood of getting the seat you want. Similar strategy to Northwest except implemented a different way.

There is one strategy the Southwest flyers can implement that can’t be replicated on any other airline. The best seats are available to passengers who continue on a direct flight which has made an intermediate stop. Once the other passengers have de-boarded the “through passengers” are free to move to any seat they want.

Maximizing your ability to be paid for the value you provide is the best pricing strategy, no matter your business model.

Mitch

This entry was posted in airlines, Pricing and tagged , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s