American Switching to A-La-Carte Pricing in 2009


The AP reports that American will initiate a move toward a-la-carte pricing in 2009. The airline is said to be examining the pricing structure used by Air Canada, which offers four fare classes ranging from low-priced, bare-bones tickets to more expensive, all-inclusive fares. Whether or not American adopts a similar approach, the airline will certainly be breaking down its fares so passengers pay for only the amenities they want.

The move toward a true a-la-carte pricing structure has seemed inevitable this year, considering the industry's somewhat erratic unbundling of various amenities over the past few months (a few beverages here, some baggage fees there). So if pay-for-what-you-want pricing really is where the industry is heading, we're all better off with clear, simple airfare menus detailing exactly what we get for our money. That American is studying Air Canada's example is reassuring, because Air Canada's pricing structure is easy to understand and because it's relatively flexible, allowing passengers on less-inclusive tickets to add and subtract charges as they see fit.

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Under this model, determining value will require some serious homework on the part of consumers. When comparing a no-frills ticket to an all-inclusive one, customers will have to compare the base fare plus the cost of any necessary add-ons (checked bags and an onboard meal, for example) against the price of an all-inclusive ticket (which may offer protection from expensive headaches down the road, such as last-minute change fees). No-frill tickets will almost certainly be nonrefundable, which is another consideration.

Beyond that, there is an ever-growing sense that customers are being nickel and dimed to death. Air Canada's fare structure has the look of pricing transparency, but isn't it also a neat and tidy way of selling customers a raw deal in which every little extra "perk" comes with a price tag attached? That may be a cynical (if more or less true) viewpoint, but regardless, American's move toward a similar pricing structure signals, at least to me, that this is where we're heading.

So let me throw out some ideas for making a-la-carte pricing truly customer friendly. I'd like to see American make its base fares for no-frills tickets cheap enough to be on par with fares at actual a-la-carte carriers like Spirit. Otherwise, what's the point? Also, how about including a serious extra in the middle tiers, such as complimentary meals or a free checked bag? Air Canada's second tier, Tango Plus, throws in free advance seat selection and lowers some of the fees associated with Tango. That's not a bad start.

Tell me what you think about a-la-carte pricing by leaving a comment below. Do you think it's good for customers? How do you think American should structure its fares levels?

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