Classes of Service / Consumer Behavior / Credit Card / Gas Pricing / Transaction Costs / Unbundling

An Alternative To Unbundled Pricing – Service Reduction

Are there cases where a business can simply eliminate a service component instead of unbundling it and charging separately for it? There is a very nice Italian  restaurant called Trattoria La Siciliana in  Berkeley, CA. Their offering is premium – authentic sicilian cuisine, great wines and  great service. This is also a small place and … Continue reading

Airline / Baggage Fees / Behavioral Economics / Consumer Behavior / jetBlue / Reference Price / Segmentation

Unbundling the Airline – Measuring Customer Utilities for freebies

The last experiment I conducted was on pricing freebies and how Airlines or any other marketer can improve their customers’ perception of unbundling pricing by focusing on the reference price. The logical next step in the unbundling research seemed to me to find out the relative value of the components of the monolith and what … Continue reading

Airlines / Baggage Fees / Behavioral Economics / Consumer Behavior / Economic Model / Unbundling / Uncategorized

Unbundling the Airline – Charging for Water, Coffee and Soda

In August 2008 US Airways unbundled its in-flight service and started charging for soft-drinks. It charged $2 for soda and bottled water and $1 for coffee and tea. After six months, US Airways decided to stop the practice. US Airways took pride in its unbundled pricing model. The service did bring in revenue according to … Continue reading

Airline / Baggage Fees / Consumer Behavior

Extreme Form of Airline Unbundling Pay-As-You-Fly

A newly launched South African airline, Airtime Airlines, is introducing the next leap in airline unbundled pricing:  Pay as you fly.  To be precise the minutes are fixed between cities, it is not necessarily based on a running meter. For instance the Durban to Johannesburg is 75 minutes of airtime.  Instead of buying specific tickets … Continue reading

Ariely / Behavioral Economics / Consumer Behavior / Predictably Irrational

Consumer behavior On Unbundling – Valuing Free

 United Airlines used to run an Ad showing their early days when a business man hitches a ride on a two-seater. The pilot asks, ” let us see, you want to have coffee, while we are in the air?”. As far as we can look back air travel always included the entire package, from free … Continue reading

Airline / Consumer Behavior / Fair Price / Fairness

Fairness Questions on Unbundled Pricing

There is a scathing opinion piece in The Econonist web-only edition on the Airline fees. Titled, “Come fly the fee-filled skies“, the article frames the entire unbundled pricing as a fairness question wondering whether the passengers will be asked to pay for reclining in their seats or using the bathroom. And in the midst of … Continue reading