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airline commoditization

It’s kind of funny. As technology continually advances, our expectations also change. We are living in an interesting age of requiring immediate results and instant buyer satisfaction. If we don’t see what we want, we can find it somewhere else. It might not surprise you that this is prominent in the travel industry. As consumers, we have any hotel and their reservation system at our fingertips. There is complete control over when and where we stay, and usually with some persuading discount. Same can be true with flights. We can decide when, where, negotiate on price and even pick our exact seat. However, some people believe there is still room for improvement.

The everyday traveler mainly uses travel booking websites to research and book future itineraries. We decide when we want to travel and where; and these sites help us find the cheapest fare. The search functions are primarily price and date. You decide when you want to travel and they find the best deal. But what if we want more? Robert Albert from RouteHappy wonders if perhaps consumers want more options. Albert explained during the Skift Global Forum in New York City last September that this commoditization is a big problem with airlines.

For example, think of that last flight you had with a low-price, low-value airline. Yes, your original booking price was low, but factor in the carry-on luggage fee, food and drink fee, and the minuscule leg room and you were left feeling cheated. Yes, it’s the best price, but was it worth feeling used and spit out? Not likely. And more and more people are seeing this.

As our buyer behavior and expectations continue to evolve, our expectations become more defined. While other industries, like hotels, have design overhauls to capture emerging buyers, shifting airline brand messaging or selling points is harder to do. It’s easier for a boutique hotel to pinpoint a demographic niche and jump on it, than the mammoth airline industry. In essence, there this room for opportunity to capture the growing needs of demanding airline passengers, but the industry may be too far behind to catch up.

As Albert said in his Skift Forum presentation, the biggest trend in the airline industry right now is the focus on ‘commoditize to differentiated.’ It most likely started with offering checked baggage options. Cabin upgrades came next. But is it enough?  Albert found an interesting niche in the travel booking world. Why have online travel booking be based solely on price? He has found that consumers are willing to pay extra for these upgrades. Flyers no longer want the cheapest price, but would rather see the value in the money they spend. Try booking based on amenities, travelers scores, plane type, legroom, and duration of flight. It’s an innovative look at travel booking in a seemly stagnant industry.

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