US Senator Charles Schumer called on 21 domestic airlines to pledge not to charge passengers for carry-on luggage over concerns other airlines will follow Spirit Airlines' lead (Syracuse.com, 26-Apr-2010). American Airlines, Delta Air Lines, JetBlue, United Airlines and US Airways have committed to keep carry-on luggage free. Spirit Airlines stated it has written to US senators who have proposed legislation that would forbid airlines to charge for carry-on items (philly.com, 26-Apr-2010).
US Senator calls on carriers not to charge carry-on luggage fees
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Frontier to celebrate ULCC transition with an IPO: intensity grows in the US competitive landscape
After toying with the idea of engaging in an initial public offering for more than year, the US ULCC Frontier Airlines now intends to go public as its major shareholder, ULCC specialist Indigo Partners, sets its sights on Argentina. Frontier has arrived at and passed many ULCC milestones, including producing unit costs excluding fuel below the USD6 cent benchmark for the ULCC model, placing it on par with its fellow ULCCs Spirit Airlines and Allegiant.
Frontier markets its product differently from other US ULCCs, giving passengers the options to purchase product in a bundled form or a la carte, but it still maintains ultra low fares. However, Frontier couldn’t escape the pricing pressure that permeated the US market in 2016, joining the majority of the country’s airlines in posting distinct yield and unit revenue declines.
Obviously, despite the pricing pressure and changing dynamics in the US market, Frontier remains bullish on the opportunities for ULCCs in the market place, concluding that numerous markets exist for it to operate profitably with low fares.
During the past several years Frontier’s network focus has been somewhat murky. Now Frontier’s network strategy is targeting high fare, underserved routes. And like its rival Spirit, Frontier also singles out medium sized markets that offer some protection from larger competitors.
Branded fares: a philosophical shift to preserve premium product pricing for large US airlines
The Basic Economy trend sweeping the US airline market is fostering speculation about the exact results that American, Delta and United hope to achieve by introducing new tiered pricing structures into the market place. On the surface, the pricing structures are tools for those airlines to compete more effectively with ULCCs in the market. But more strategically, new pricing segmentation provides the large three US global airlines an avenue to execute their revenue management more effectively, preventing pricing dilution of their more higher end offerings.
Even the rivals that American, Delta and United are targeting with their bare bones product offerings believe that ultimately their new pricing schemes could create pricing stability in the US market – which appears on a fragile path to recovery. The logic for that conclusion rests on the ability of the Big 3 for product upsales that drive up pricing for all fares in the market.
One challenge the large US airlines face in the expansion and roll out of their new tiered pricing structures is ensuring the correct product attributes are communicated correctly through distribution channels outside their respective websites. Proper execution is key in order for American, Delta and United to realise the billions in potential revenue that they believe exists from the overhaul of their pricing structures.