Saturday, March 28, 2009

Airline Merchandising: Trouble Getting Into the Spirit (Airlines)

Some analysts, according to The New York Times point to Spirit Airlines as the go-to, nouveau airline-business model.

But, as model airplanes go, this one gets me unglued.

Spirit reportedly was the first airline to make consumers pay for checked bags, the carrier charges for advance-seat assignments, and even collects (credit cards only) for snacks.

Largely because of this new push and an alleged lack of transparency about some of the moves, the airline's rating on, while far short of a scientific poll, falls short of two stars.

Undoubtedly, the fee frenzy will accelerate among U.S. airlines. Major U.S. carriers seem to have found their footing with capacity reductions and merchandising tactics.

Some estimates peg the revenue haul from ancillary services at around $5 billion per year.

All of that bundling, unbundling and re-bundling of products will be at a fever pitch as airlines create new fare brands and seek to turn almost every ancillary service into a new fee opportunity.

However, in the midst of the current economic nightmare, I believe there will be business opportunities for airlines that opt to go against the grain and endeavor to add to the travel experience instead of merely subtracting from it.

The merchandising thrust for many U.S. airlines is too loaded with new fees for things that consumers previously got for free. Give me some airlines whose missions are not centered around gouging travelers.

If airlines are going to ratchet up their merchandising, then at least provide services that make the trip more pleasant instead of charging for services that previously came with the price of a ticket.

I like some of Sam Shank's ideas in a post on his Dealbase blog, when he cites ways airlines might gain incremental revenue by providing things like discounts for lounge access. Hotels, too, Shank says, can get into the merchandising act with easy-to-book room upgrades or late checkouts that would be available on hotels' websites and through metasearch solutions.

The U.S. needs a healthy airline industry that's making money. But, that won't happen in the long term if carriers further alienate their passengers with less service for more money.,

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