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Air Canada Unbundles Fares
OCTOBER 27, 2006 --
Air Canada today said it is 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."
The options vary by fare category. Some examples of add-ons that travelers can select at the time of booking include lounge access for Latitude customers for C$25 (US$22.35); seat selection for Tango customers for $15; $5 inflight meal vouchers for Tango and Tango Plus customers; a $5 reduction for Tango, Tango Plus and Latitude travelers who opt not to check bags; and a $3 savings for turning down frequent flyer miles.
"Air Canada is making it easier than ever 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 people an unprecedented ability to find the best value for their travel dollar through flexibility and product selection."
Air Canada has aggressively sought to shift bookings to its own Web site, which it said includes functionalities not offered by the global distribution systems. When the carrier in May shifted bookings of lower-bucket 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 last week told BTN that GDSs also do not support its Corporate Pass product-but perhaps 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-many do for obvious reasons." He added: "It is not a direct connect in that it is not linked right now to the third-party software, but over time that will happen."
Some in the industry forecast the unbundling or selective merchandizing of airfares to accelerate, as carriers seek to monetize and differentiate their offerings. Ninan Chacko, COO and senior vice president of Worldspan, one of the largest global distribution systems in the United States, said the company is seeking new technologies to enable carriers to further merchandize their products.
"The Internet has been the great leveler from a price standpoint, and we've never had this much price transparency in the travel business. Unfortunately it's aided the commoditization of travel," 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, allows the consumer to configure their own product. That, for us, is really where the emphasis and focus will be."
American Airlines vice president Frank Morogiello earlier this week told BTN that the carrier at the moment is planning on keeping its offerings simple, but may reconsider unbundling depending on what GDSs bring to the table in terms of next generation technology.
"If we wanted to jury-rig some of the offerings that they might come out with, we could do it right 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."
Delta COO Jim Whitehurst recently told BTN that it 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."
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