October 7, 2008
According to the Associated Press, American Airlines is planning to follow the Air Canada a la carte pricing structure as early as next year.
Air Canada�s so-called unbundled approach is tiered to allow travelers to select different airfare structures. Tango is the no-frills, with only a portion of frequent flyer miles offered, higher change fees and a fee for advance seat selection. Tango Plus gives 100% status miles, complimentary seat selection, and lower change fees. Latitude and Executive Class follow this pattern with more flexibility and higher prices.
Once an Air Canada traveler selects the fare, they have the option to pay for additional features or, as Air Canada’s cleverly markets, to “customize your flight”. This includes baggage check in, prepaid food vouchers, and seat selection.
When Air Canada launched this pricing structure five years ago, they were rebuilding their brand after entering bankruptcy and having some serious service issues that opened the door for their competitor WestJet to gain share.
And, while Air Canada passengers certainly recognized that previously free items were now charged essentially the unbundled structure was transparent and gave travelers choices. Air Canada met the challenge with what I believe is a best practice website in terms of conveying information to help travelers choose.
If, in fact, American Airlines is planning to un-bundle fares, I expect it won’t be long before we see this across US carriers (assuming Air Canada’s GDS issues with their pricing structure won’t be duplicated).
Unbundling in the US would happen in more challenging marketing environment; driven by cynicism and frustration after months of fare and fee increases, it will be a tougher — though imperative — marketing message to communicate this is about traveler choice.