A la Carte Pricing Might Be More Normal in The Future

(12/12/2012) Buying airline tickets now need to pay attention to a lot of add-on fees: bag fee, early boarding fee, aisle-seat fee, etc. I think a la carte pricing might be more normal in the future. We used to buy flight tickets only by its class. Want more room and better service? pay more money for a higher class seat. A la carte pricing came to existence in recent years as airlines struggled to make profit. They started to 'invent' these add-on fees. It is a disaster to consumers. As consumers will not know what is the final price (s)he may end up paying, there is plenty of room that airlines can confuse consumers to pay more than they originally wish. The Department of Transportation wants to solve this issue which the airlines and third-party sites are battling, but it seems the problem is more complicated. Recently, Southwest Airlines will charge $40 for those B/C group passenger to get an A class boarding pass.

A la carte pricing is nothing new (relatively new in the airline tickets). Our cellphone bills, home phone bills, cable bills, ... are obvious examples. Do you really understand all items and the compositions of your bills? Most consumers don't understand at all. In business, we call it "revenue management." Through proper arrangement of the service packages, consumers often need to select several service items to fulfill its needs. Each item may not cost much, but combining them together may turn into a stunning sum when the consumer receives the bill. In economics theory, it is based on "price discrimination" or "price differentiation." Through proper pricing scheme, the supplier can maximize its profit and consumers with various needs can find the right 'product/service' that fulfill their needs.

On 9/11/2013, NBC News says that the airlines collected $27B in various fees in 2012. It is obvious that these fees keep many airlines afloat. Without those fees, many airlines will have been in deep financial troubles. Note that the passengers are not forced to pay those fee.