{"id":131,"date":"2012-04-01T14:59:52","date_gmt":"2012-04-01T12:59:52","guid":{"rendered":"http:\/\/www.aviationadvocacy.aero\/blog\/?p=131"},"modified":"2019-07-23T11:50:51","modified_gmt":"2019-07-23T09:50:51","slug":"131","status":"publish","type":"post","link":"https:\/\/www.aviationadvocacy.aero\/blog\/?p=131","title":{"rendered":"Is unbundling the answer?"},"content":{"rendered":"In this month’s Aviation Intelligence Reporter\u00a0 <\/em>we talked about the seemingly headlong rush by airlines to unbundle their product.\u00a0 It is most unusual for normal businesses to want to go down that road, but you must remember at all times that aviation is different.\r\n\r\nWhat is wrong with unbundling?\u00a0 It has been very successful for Jetstar in Australia, there is no question of that.\u00a0 But, it reduces the ability to charge a premium.\u00a0 All you are doing by going back up the ‘add extra items’ line is that you are getting back to square one.\u00a0 As we said in the\u00a0 Aviation Intelligence Reporter <\/em>this month, that leaves you with the risk of passengers that do not get all they want, or expect and you lose the passengers that want to concentrate the pain of paying and spread the pleasure of your experience.\u00a0 It also seems to challenge most of the current airline booking engines.<\/em>\r\n\r\nWhich is where the comparision of airline websites and Amazon comes into play.\u00a0 Amazon sells the experience, not the pieces.\u00a0 Airlines are like vending machines, and their websites have all the subtlety of your average vending machine.\u00a0 There is little opportunity to up-sell and cross-sell.<\/em>\r\n\r\nThe second issue with unbundling is that there is no control group.\u00a0 It is not clear that this works anyway.\u00a0 Apart from Qantas\/JetStar, it is very difficult to think of an airline that has tried to be both at the same time.\u00a0 Little sister airlines of big legacy carriers, apart from JetStar, like Buzz, Go and Ted, have all failed.\u00a0 Successful airlines are totally stand-alone.\r\n<\/em>\r\n\r\nThere is hope for the airlines in this model, but they have to be careful.\u00a0 One case study is Dow Corning.\u00a0 Dow started a low cost line – Xiameter – in 2001.\u00a0 It sells 250 products, Dow sells 7.000.\u00a0 There is no overlap.\u00a0 Service standards are lower; delivery takes 7 days, prices in only a handful of currencies, changes to orders only at a fee; that sort of thing.\u00a0 Dow’s combined sales went from 2.4B in 2001 to $3.9B in 2005.\u00a0 A $28M loss in 2001 became a $500M profit by 2005.\r\n\r\nThere is hope, but perhaps the moral is to always be sure to be able to charge a premium.\r\n<\/em>\r\n\r\nFor more information about the Aviation Intelligence Reporter <\/em>please go here<\/a>.","protected":false},"excerpt":{"rendered":"

In this month’s Aviation Intelligence Reporter\u00a0 we talked about the seemingly headlong rush by airlines to unbundle their product.\u00a0 It is most unusual for normal businesses to want to go down that road, but you must remember at all times that aviation is different. What is wrong with unbundling?\u00a0 It has been very successful for […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-131","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/posts\/131","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=131"}],"version-history":[{"count":3,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/posts\/131\/revisions"}],"predecessor-version":[{"id":870,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/posts\/131\/revisions\/870"}],"wp:attachment":[{"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=131"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=131"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=131"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}