JetBlue, Frontier, Northwest and United are among the airline leaders in the art of upsell. This practice allows the airlines to keep a low price available in sales channels to entice customers to buy, then they offer upgrades for larger seats, inflight entertainment and food.
Is this new practice of advertising the lowest price and then adding in extras, bait and switch or similar to a GM car salesman adding options to the basic Chevy? What about hidden fees like baggage?
All four airlines are running various forms of upsells. JetBlue, that always had good legroom, now sells an additional four inches of pitch. Frontier sells three levels of service after advertising its lowest-price seats. Northwest, the pioneer with its sales of exit rows and up-front aisle seats, does its upgrades at check-in kiosks. United is beginning to sell upgraded seats right on the plane with their flight attendants carrying portable credit card machines that can sell the better seat even after the flight has taken off.
Though Frontier tried to raise airfares several times by as little as $5, they immediately saw a drop in bookings. Once prices dropped, sales returned to pre-increase levels. The upsell path has been surprisingly effective.
Frontier has been seeking to improve its performance by revenue raising measures for the past 12 months as it aims to exit Chapter 11 this year. Hiking fares was not possible as it “would have bled traffic to Southwest and United”, its main competitors at Denver, says Young. “Over the summer we did strategically try to raise fares on some markets. But the minute we put $5 on the fare we saw demand fall off and the minute we took it off bookings would go back up again,” says Young.
The Frontier solution was to create three different levels of service. Travelers can pay $20 more for its Classic class, offering extras like Frontier’s in-seat TV service and seat assignments, or they can opt for Classic Plus with in-flight food and priority boarding, plus all of the above for $50.
The upsell has been far more successful than the 15-20 percent the airline has expected for offering.
United Airlines is taking the upsell a step further. It is the first airline to equip their flight attendants with credit card scanners and have them upgrade passengers after they have boarded.
Remember the old days when an empty seat was fair game once the aircraft doors were closed? Those days are fading as passengers who choose to move can now be easily charged extra.
There has been some push back from the flight attendant union. However, once the system is in place, I expect point-of-sale upgrades to continue.
There has been a lot of talk in congressional transportation circles about requiring airlines to advertise “inclusive prices” that include basics like luggage, landing fees and taxes. But, these upgrades and the new point-of-sale upsells have not yet been addressed. I expect these programs to continue to expand.
Pingback: A Rant on Upselling « Justin Nachod’s Blog