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Airlines Experiment With Creative Pricing Schemes

Airline tickets over the keyboard of a laptop

As airlines turn away from offering perks and premiums to elite flyers, more and more of those “upgrades” are being bundled as part of entirely new airfare classes.

Skift predicts that 2016 will be “the year of experimental airfare pricing.” Even though North American airlines are enjoying record-breaking profits, the analysts predict that the industry will turn to experimental airfare pricing as a way to squeeze extra revenue from flyers. According to the report, perks previously reserved for elite flyers will likely be offered as part of a whole new fare structure.

Recent moves by Delta Air Lines seem to confirm those predictions. The airline announced that rather than offering free first class seats to passengers with Delta SkyMiles status, the legacy carrier will instead begin selling upgrades at prices that will entice passengers to purchase available premium cabin seats.

“We want people to be able to use those miles not to fly for free but to control your experience,” Glen Hauenstein, Delta’s incoming president, told Business Standard.

On the opposite end of the spectrum, more legacy carriers have announced plans to offer ultra-low fare “basic economy” tickets that come with a rock-bottom price tag and a host of restrictions. American Airlines and United Airlines recently joined Delta with plans to offer low price/highly restricted tickets on at least some routes. These non-refundable, non-transferable ultra-low fare tickets will further complicate the status quo fare structures, with surcharges for previously included conveniences such as choosing seats or bringing carry-on items onboard.

Airlines aren’t just experimenting with airfares. Skift analyst Grant Martin notes that perks previously only enjoyed by elite flyers may soon be available at à la carte prices. For $25, Virgin America now offers a “Plans Change Pass” that will allow even infrequent flyers to re-book itineraries penalty-free. Other legacy carriers have toyed with selling annual passes that would allow passengers without status to check bags for free.

It remains to be seen whether this will truly be the year of experimental airfare pricing. One thing is clear, however. Fare structures certainly aren’t becoming any simpler.

[Photo: Getty]

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Centurion March 17, 2016

American is playing mind games with customers. To prove it yourself go through the motions on a very expensive ticket. The last page will say in bold letters PRICE CHANGE...the price will be a cheaper to make the customer believe they may loose this price drop if they do not continue the purchase.