Every strategy expert advocates a holistic formation of strategy, resulting in the integration of operations, commercial, pricing, and branding. Each function is linked and inter-dependent, and so every decision must be aligned with an overall consistent customer positioning within the chosen marketplace. This prescription applies to airlines too, of course. And pricing, as with other commercial functions, needs to be aligned with all other dimensions of an airline’s strategy.
On the other hand, when airlines pursue similar commercial and operating strategies, pricing does not tend to be a differentiator. Mega-airlines, pursuing similar commercial and operational strategies, also have a standard approach to pricing. These global carriers, with hundreds of planes in multiple fleet types and numerous seating configurations, serving over a hundred destinations out of various hub airports, with strong frequent flyer programs and corporate partnerships, all have similarly complex pricing and sophisticated revenue management systems - they seem to match each other on ancillary pricing and e-merchandising. Pricing almost appears mechanical and there is limited price differentiation.
Smaller carriers pursuing different corporate strategies than their mega-carrier competition, require unique pricing that aligns with those strategies. Many of these smaller carriers choose a lower cost operating strategy – point-to-point services with high aircraft utilization, for example.
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Full Article: Mercator News Room
Source : Mercator News Room