For very frequent flyers, benefits like priority boarding, free checked bags and bonus miles are part of the typical travel experience. These extras come with having earned elite status on loyalty programmes run by the airlines. But what about everyone else? The occasional traveller can benefit from these offerings as well, assuming the airlines give them that opportunity.
For many airlines a branded credit card is the gateway to free bags or getting closer to the front of the boarding line. American Airlines is pushing beyond credit cards, rebundling the unbundled services and introducing them directly into the booking flow. In many cases passengers can save some money and get benefits quite similar to elite status on an ad hoc basis.
American’s new ‘Choices’ programme adds two new bundle options to the lowest economy fare – Choice Essential and Choice Plus. The three options all carry the same underlying fare basis, but they vary in price up to $44 each direction. The additional fee gets passengers a variety of ancillary benefits.
Purchased separately the one checked bag and priority boarding would come to the same price as the Choice Essential option. American’s approach, however, puts the pricing directly in the booking path rather than having the customer find the details elsewhere. Additionally, American is pushing the package via its global distribution system (GDS) and Direct Connect partnerships; it will be bookable through third party channels such as corporate booking agencies.
The Choice Plus option is only $10 more in each direction and the pricing is no longer linear to the specific benefits offered. The bonus miles would normally cost about $30/1000. With 50% bonus miles on the distance flown for only $10 extra pretty much any trip makes that a decent buy. The ability to have same-day standby fee waived is one of the benefits normally reserved for elite status holders in American’s AAdvantage programme. And the free drink is a benefit offered to Executive Platinum members, the highest tier in that programme. All elite members also receive bonus miles in the AAdvantage programme; the Choice Plus option adds that in for paying passengers as well. Of course, the opportunity to buy additional miles has been available for some time through the Mileage Multiplier option but, once again, the Choice bundles add visibility and will likely increase the purchase frequency.
Two specific benefits included in the Choice bundles that are not available even to AAdvantage Elites are fee-free itinerary changes and confirmed same-day changes. Those might be enough to entice the elites to buy the options. Otherwise this programme is mostly about making a pseudo-elite tier accessible on a per-trip basis. And, much as the ancillary fee approach can frustrate customers, the bundled packages often make them easier to stomach.
January 13, 2013 at 4:26 pm
Here’s a concept, why not just raise fares a bit, position yourself as the “premium quality” airline and bring back “Something special in the air” by returning to free baggage, a meal, etc. It’s all still absurd and has zero to do with anything other than that the US carriers have discovered Americans will put up with anything.
January 14, 2013 at 2:57 am
Airlines have tried that, Alex. It does not work.
AA had their More Room Throughout Coach days. Passengers would not pay extra for it. Midwest had a roomier seat layout back in the day. Passengers would not pay extra for it.
Despite the efforts of some carriers in limited circumstances the general driving factor of ticket purchases is fare and schedule. Everything else is a very distant consideration. And so the airlines are competing on base fare and then doing what they can to make it up elsewhere.
January 31, 2013 at 4:28 pm
More Room Throughout Coach doesn’t relate. First, they were not competing against “no service” vs. “full service”. Second, a year into it only a tiny fraction of their fleet had been modified, resulting in a lot of ticked off customers expecting more.
Right now people ARE paying full “Full Service” at a nickle-and-dime version that shows up as imaginary “ancillary revenue” due to accounting breaking it out.
25-bucks to check a bag is about 5X what it costs American to carry one. 7+ bucks for a sandwich that’s cold and stale: biz travelers that can hit two or more cities in a day (or harried families that can’t pack a lunch or hit the usually awful choices at most airports) have just paid more than the old “free” lasagna cost American.
Adding a mere 2% to the ticket price would pay for all the annoyance, insult to the experience – and many, if not most of the treasured business traveler community would go for it.
Now accounting has to total up “Bagel at {some vendor} + coffee {another}” and as that is to make up for the lack of anything in the air, it’s more work, and comes out of the per-Diem for the traveler.
Message to road-warrior from US airlines “S*rew you.”
Sorry, you miss the point and it’s sad that someone in the industry (and I spent 20+ in it), can’t see that.
February 7, 2013 at 3:05 pm
You’re correct Alex, that certain things are sold at a price above the cost to deliver them; that’s called profit margin. And the reality is that simply raising fares 2% rather than going with ancillary fees does not work. Show me an airlines which consistently prices itself above its competitors and is profitable. They don’t exist.
The traveler may prefer that, but when the corporate policy says lowest fare is what you fly then that’s what you get.