Airline Pricing Strategy

A major commercial airline

A major commercial airline was considering bundling convenience features with ticket fares to complement its basic “no-frills” offering and capture greater market share. By bundling ancillary features/benefits, such as free checked baggage, lounge access, and priority boarding, the airline hoped to earn additional revenues from those passengers willing to pay for such services and features.

RSG applied discrete choice modeling conjoint techniques to estimate consumer willingness-to-pay for various features. TURF analysis was then used to identify combinations of products that, bundled together, offered the greatest perceived value to consumers. Based on these insights, RSG recommended a tiered bundling approach, optimized on consumer willingness to pay, allowing the airline to increase market share while managing capacity constraints.

The airline restructured its product offering and pricing strategy, incorporating the modeled solutions into their revenue management tools. Several years following the successful implementation, the client again partnered with RSG to refresh their feature bundling strategy as the competitive landscape evolved.

Email us to learn more