Air Canada last month began unbundling flight options through its Web site, allowing travelers to customize bookings by "buying added services or, conversely, to save money by declining benefits normally included in their selected fare type."
While several large carriers in the United States indicated no immediate plans to follow such an unbundled booking model, some in the industry expect selective merchandizing of airfares to accelerate, as carriers seek to differentiate and monetize offerings. Worldspan, the third largest U.S. global distribution system, said it is seeking new technologies to enable carriers to further merchandize their products.
For Air Canada, its newly unbundled flight options—which vary by fare category—only are available through its Web site. Some examples of add-ons that travelers can select at the time of booking include lounge access for upper-class Latitude customers for C$25 (US$22.35); seat selection for Tango customers for $15; $5 inflight meal vouchers for lower-bucket Tango and Tango Plus customers; a $5 reduction for Tango, Tango Plus and Latitude travelers who do not check bags; and a $3 savings for turning down frequent flyer miles.
"Air Canada is making it easier for customers to choose only the products and services they want with pricing that is transparent and clearly understandable," said vice president of marketing Charles McKee in a statement. "By coupling our branded fares with a la carte options on our revamped Web site, we are providing an unprecedented ability to find the best value for the travel dollar through flexibility and product selection."
Air Canada has sought to shift bookings to its Web site, which it said includes functionalities not offered by the global distribution systems. When the carrier in May shifted bookings of Tango fares to its Web site, Air Canada said it did so because GDS technology "does not support the new features of Air Canada's simplified fare products."
Air Canada vice president of sales Marc Rosenberg, prior to Air Canada's fare unbundling, told BTN that GDSs also do not support its Corporate Pass bulk-purchase product, but perhaps they would in the future
(BTN, Oct. 23). "GDSs have not yet come to the table with a solution, but they are quite keen on looking at them and trying to solve for it," he said. "If your booking tool has a GDS backbone to it, then it doesn't work. Companies that purchase flight passes now are in a decision tree as to whether they want their TMC involved."
Ninan Chacko, COO and senior vice president of Worldspan, recently told BTN, "The Internet has been the great leveler from a price standpoint, and we've never had this much price transparency in the travel business," he said. "While Web sites, agency Web sites and GDSs, for that matter, have greatly accelerated the commoditization of travel, they haven't really allowed consumers and users to distinguish from one product versus another from anything other than price. The whole philosophy and science of how now to approach those things other than price—some call it unbundling, I broadly term it merchandizing—lets the consumer configure their own product. That, for us, is really where the emphasis and focus will be."
American Airlines vice president Frank Morogiello told BTN the carrier plans to keep its offerings simple, but may reconsider unbundling depending on the next-generation technology the GDSs bring to the table.
"If we wanted to jury-rig some of the offerings they might come out with, we could do it now if we wanted to charge you for, you know, an aisle seat for $10 more," he said. "We could just change it in our pricing offer."
While Continental would not comment on whether it would seek to unbundle amenities or fares, vice president of North American sales Monisa Cline said, "Other carriers have experimented with charging for meals and taking those amenities off. We've stayed the course in continuing to offer those amenities that business travelers value."
Delta COO Jim Whitehurst recently told BTN that Delta already offers one-day memberships in its lounge program, but the carrier draws the line when it comes to seat selection. "There's a real cost to that, but we shouldn't necessarily charge every customer for access to lounges," he said. "Things like an aisle seat or an exit row are just basic things we can use to show a little bit of thanks for our loyal customers. We want to ensure our product is right before we even consider nickeling and diming."
Northwest Airlines in March began an open-ended test to see if travelers would pay a premium for reserved aisle and exit row seats. Its Coach Choice concept, on 5 percent of its U.S. inventory, allowed customers to reserve favored assignments 24 hours prior to departure for $15 per flight. The concept, however, is a checkin option—not a booking option.