Hold on to your wallet - earnings call presages growing ancillary fee revenue
Jul 27, 2018, 9:17 am
#1
Original Poster
Join Date: Jan 2001
Posts: 2,837
Hold on to your wallet - earnings call presages growing ancillary fee revenue
Good summary by Dominic Gates of the Seattle Times from earnings call:
"Chief Commercial Officer Andrew Harrison reiterated the plan announced this past quarter to introduce a basic economy “Saver” fare before Christmas, along with new ancillary fees.
The Saver fare is expected to add $100 million per year, as many passengers choose to pay more to “upgrade” to tickets that allow more flexibility.
And Harrison said the airline expects to earn a further $50 million by adjusting change-fee policies, offering exit rows for sale and changing Premium Class pricing according to who is buying the ticket and the person’s history of prior purchases."
https://www.seattletimes.com/busines...-expectations/
The Saver fare is expected to add $100 million per year, as many passengers choose to pay more to “upgrade” to tickets that allow more flexibility.
And Harrison said the airline expects to earn a further $50 million by adjusting change-fee policies, offering exit rows for sale and changing Premium Class pricing according to who is buying the ticket and the person’s history of prior purchases."
https://www.seattletimes.com/busines...-expectations/
Jul 27, 2018, 11:05 am
#3
Join Date: Nov 2010
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Wondering whether it willl be "You've been loyal, so here's a better price" or "You've been loyal, so we think you'll pay more"...
Jul 27, 2018, 11:30 am
#4
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But the "history of prior purchases" part makes me think they are trying to be clever and squeeze more out of people based on prior willingness to pay.
What's next? Perhaps sell each ticket for $1 and then charge a "customized" seat assignment fee for every traveler that depends on what they think the passenger should pay?
Jul 27, 2018, 11:54 am
#5
Join Date: Nov 2010
Programs: AS MVPG, HH Diamond
Posts: 232
If "who the person is" was really "what elite status the person has" (with a lower cost for elites), and it was transparent, I'd be okay with differentiated pricing.
But the "history of prior purchases" part makes me think they are trying to be clever and squeeze more out of people based on prior willingness to pay.
But the "history of prior purchases" part makes me think they are trying to be clever and squeeze more out of people based on prior willingness to pay.
Of course even if the anonymous search got a lower price, it would still be possible to see a "The price has changed during the booking process. Your new price is..." pop up when entering your MP#, otherwise this new "priced based on who you are" scheme would be easy to circumvent.
Jul 27, 2018, 1:08 pm
#6
Join Date: Feb 2015
Location: Seattle
Programs: AS
Posts: 2,293
Customer experience does not get much attention in these calls. This may be the one thing to go by the wayside as AS marches forward. Phrase "self-destructive greed" is beginning to sound like more than a whisper.
Jul 27, 2018, 2:39 pm
#7
Join Date: Oct 2016
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Looks like they've revised the Premium Class quote in the article:
"And Harrison said the airline expects to earn a further $50 million by adjusting change-fee policies, offering exit rows for sale and changing Premium Class pricing according to demand."
This article has been updated to correct a description of Alaska’s Premium Class pricing.
"And Harrison said the airline expects to earn a further $50 million by adjusting change-fee policies, offering exit rows for sale and changing Premium Class pricing according to demand."
This article has been updated to correct a description of Alaska’s Premium Class pricing.
Jul 27, 2018, 5:53 pm
#8
Join Date: Nov 2010
Programs: AS MVPG, HH Diamond
Posts: 232
Looks like they've revised the Premium Class quote in the article:
"And Harrison said the airline expects to earn a further $50 million by adjusting change-fee policies, offering exit rows for sale and changing Premium Class pricing according to demand."
This article has been updated to correct a description of Alaska’s Premium Class pricing.
"And Harrison said the airline expects to earn a further $50 million by adjusting change-fee policies, offering exit rows for sale and changing Premium Class pricing according to demand."
This article has been updated to correct a description of Alaska’s Premium Class pricing.
Now let's just hope the error didn't give someone a bright idea...
Jul 27, 2018, 8:25 pm
#9
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Neil
Jul 28, 2018, 12:12 am
#10
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stated differently, it’s offering the base price ticket with additional restrictions, and encouraging pax to pay more to avoid those restrictions
Jul 28, 2018, 2:28 am
#11
Join Date: Feb 2015
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my takeaway is don’t pay for premium, it’s really not worth the price. If you can move into those seats at the upgrade window then go for it, but don’t pay for it. You might as well pay the difference to buy the lowest F available on any carrier.
Jul 28, 2018, 7:01 am
#12
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Jul 28, 2018, 7:40 am
#13
Join Date: Apr 2003
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Except that you said AS management is being honest about it. In actual fact they are hoping to deceive people into believing that paying more for the same product will be a better value proposition. In many West Coast markets-especially within and from/to California, people that are price sensitive are paying one way fares less than $125. Thus their tickets are already non refundable and non changeable. If they don’t pay extra for a better seat now, they are already sitting towards the back of the plane. They already have to pay extra fees to check a bag. The legacies are also rolling back the no carry on in the overhead bin rule for basic economy. Thus, what do you actually get in exchange for paying a higher fare? 500 miles on a flight from LAX-SFO? For the casual traveler, this also doesn’t matter. All you get is the privilege to pay a higher fare to find that you still need to pay another fee to get a better seat, and yet another fee to check your bag, and another fee to buy food,and you find out that whoops your ticket is also non refundable and non changeable because it was less than $125 and the change fee waiver for changes 60 days out was also cut. For most West Coast trips outside of AK and the PNW, the casual traveler may as well take WN, transcon people from CAL can take B6 for a better value proposition and lower fares with a better product, and road warriors should take a legacy carrier as high value customers get a much better value with a revenue based model and UA from California has a ton flights and international partners so you can more easily use the miles earned.
This is another case of ALK management grasping at straws thinking that people will fork out more momey while not increasing the value proposition of their product offering.
This is another case of ALK management grasping at straws thinking that people will fork out more momey while not increasing the value proposition of their product offering.
Jul 28, 2018, 8:32 am
#14
Join Date: May 2013
Posts: 3,361
Except that you said AS management is being honest about it. In actual fact they are hoping to deceive people into believing that paying more for the same product will be a better value proposition. In many West Coast markets-especially within and from/to California, people that are price sensitive are paying one way fares less than $125. Thus their tickets are already non refundable and non changeable. If they don’t pay extra for a better seat now, they are already sitting towards the back of the plane. They already have to pay extra fees to check a bag. The legacies are also rolling back the no carry on in the overhead bin rule for basic economy. Thus, what do you actually get in exchange for paying a higher fare? 500 miles on a flight from LAX-SFO? For the casual traveler, this also doesn’t matter. All you get is the privilege to pay a higher fare to find that you still need to pay another fee to get a better seat, and yet another fee to check your bag, and another fee to buy food,and you find out that whoops your ticket is also non refundable and non changeable because it was less than $125 and the change fee waiver for changes 60 days out was also cut. For most West Coast trips outside of AK and the PNW, the casual traveler may as well take WN, transcon people from CAL can take B6 for a better value proposition and lower fares with a better product, and road warriors should take a legacy carrier as high value customers get a much better value with a revenue based model and UA from California has a ton flights and international partners so you can more easily use the miles earned.
This is another case of ALK management grasping at straws thinking that people will fork out more momey while not increasing the value proposition of their product offering.
Jul 28, 2018, 8:45 am
#15
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Airlines charge whatever they can, irrespective of fuel costs. Fares in any market reflect competition more than fuel costs.