Airline ‘feeling lucky’ on variable pricing

Airline start-up- ideaAs fuel prices soar across the globe, airlines are scrambling to come up with ways to cover any losses as best they can.

 

One example of this is US airline Allegiant Air, which is thinking of introducing a variable pricing model.

 

Under the proposal, Allegiant Air has created two airfare categories – a locked-in rate and a lower rate that could fluctuate before the flight takes off. Consumers electing for the fluctuating fare would be informed their rate could either increase or decrease.

 

According to Allegiant, the proposal “strikes an appropriate balance between the interests of consumers and of carriers” due to the fact that carriers are forced to bear all the risk of fuel price volatility and subsequent cost increases.

 

Although the company is yet to confirm whether it will actually introduce variable pricing, it certainly raises questions as to whether the concept could take off (no pun intended) in Australia.

 

It’s something that online technology retailer Kogan has dabbled with, with consumers allowed to purchase products at varying stages of their construction, with the price changing at each stage.

 

The concept wouldn’t have to stop at airlines or TVs – any number of products and services could work within this pricing model such as cars, clothing and even accommodation.

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