After the gradual unbundling of airline perks and services so they could be priced and sold separately, it was only a matter of time before the airlines began selling them not just as one-offs but on a subscription basis.
United took that step this week with the roll-out of one-year subscriptions to Economy Plus seating and fee-free checked-bags.
For a year’s worth of Economy Plus, subscription prices range from $499 for flights within the continental U.S. to $699 for global access for a single traveler, with add-on charges to include travel companions as well.
For bag-fee waivers, the subscription fee starts at $349 for flights within the continental U.S. and rises to $799 for systemwide flights.
In theory, the subscriptions amount to volume discounts. In reality, the savings are only realized if the service is used more than enough times to offset the subscription price.
For the checked bag subscription, you’d have to incur 14 $25 bag fees before the annual subscription fee of $349 generates a cost savings.
Because the surcharge for Economy Plus seating is so variable, it’s more difficult to establish a breakeven point, where it makes economic sense to buy a subscription versus buying one flight at a time. But if upgrading to Economy Plus costs around $40 on a domestic flight, it would take 13 flights before the subscription cost makes economic sense.
And therein lies the problem with United’s subscription model and pricing. If you travel often enough to justify paying for a subscription, you’re most likely already an elite member of United’s MileagePlus program. And United elites receive upgrades to Economy Plus and bag-fee waivers on a complimentary basis.
So whom is United targeting with these new products?
According to the analysis above, almost anyone purchasing these subscriptions would have to be either mathematically challenged or in a state of denial about his actual travel frequency.
In other words, the gullible and the deluded.
Reader Reality Check
Do United’s subscriptions make economic sense to you?
This article originally appeared on FrequentFlier.com.
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