Ancillary revenue pricing
Type
conference paper
Date Issued
2014-07-17
Author(s)
Oberlin, Nicole
Abstract
The airline industry has evolved from a system of long-established state owned carriers operating in a regular market to a dynamic, deregulated industry. This development - especially the emerging competition of Low Cost Carriers - had a major influence on the price setting behavior of airlines. Profitability of airlines is limited and pricing systems are reconsidered. In order to stay competitive traditional full service carriers consider the implementation of ancillary revenue systems (similar to Low Cost Carriers). This paper investigates challenges of an
ancillary revenue pricing approach for full service network carriers. A qualitative means-end approach was used to find attributes which are of importance for air
passengers and influence their ticket buying behavior. In addition, the study provides an insight into the perception of an ancillary revenue system in the full service network carrier market. The findings provide 18 ticket purchase attributes and 15 behavioral terminal values shown in hierarchical value maps. Based on those values it became evident that most passengers appreciate if some services are included in the price and not offered as ancillaries. Benefits of ancillary revenue systems are the individual ticket creation, customization, improved price-performance ratio, flexibility gains and progressive idea. Main drawbacks are complicate and complex booking process, feeling of uncertainty, branding problem, deformation of competitive behavior, similar system like Low Cost Carriers, feeling of paying extra for every service, perceived loss in service and quality.
ancillary revenue pricing approach for full service network carriers. A qualitative means-end approach was used to find attributes which are of importance for air
passengers and influence their ticket buying behavior. In addition, the study provides an insight into the perception of an ancillary revenue system in the full service network carrier market. The findings provide 18 ticket purchase attributes and 15 behavioral terminal values shown in hierarchical value maps. Based on those values it became evident that most passengers appreciate if some services are included in the price and not offered as ancillaries. Benefits of ancillary revenue systems are the individual ticket creation, customization, improved price-performance ratio, flexibility gains and progressive idea. Main drawbacks are complicate and complex booking process, feeling of uncertainty, branding problem, deformation of competitive behavior, similar system like Low Cost Carriers, feeling of paying extra for every service, perceived loss in service and quality.
Language
English
Keywords
Airlines
ancillary revenues
full service network carriers
pricing strategies
HSG Classification
contribution to scientific community
Refereed
No
Book title
18th Air Transport Research Society World Conference 2014
Publisher
Air Transport Research Society (ATRS)
Start page
17
Event Title
18th Air Transport Research Society (ATRS) World Conference
Event Location
Bordeaux, France
Event Date
978-1-5108-0372-5
Subject(s)
Division(s)
Eprints ID
243853
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14Wittmer.pdf
Size
505.74 KB
Format
Adobe PDF
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