Pricing Strategy Case Study: Air France Aviation Industries

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1. SOLUTIONS
1.1 PRICING & PRODUCT OPTIMIZATION
Air France is currently confronting problems in its pricing policies, especially in its LCC subsidiaries. Pricing issues hinder its LCC subsidiaries’ competence inside a market of intensified competition, since customers of LCC are relatively more price-sensitive than those of schedule airlines, and the scenario leads to a loss in the revenue. When this issue is combined with brand equity building and internal communication, it also incurs a negative impact on the group’s brand equity and internal conflicts such as strikes. The first step to cultivate a healthy and profitable LCC subsidiary is to resolve this issue.
1.1.1 Lower Price with Intensified Cost Control
An easy and effective approach …show more content…

It contributes to maximising revenues for the airlines and decreasing the cost per seat; however, all at the expense of the service quality. Players have been implementing the method. For instance, LCCs’ A321 usually accommodates 220 persons while their scheduled airline rivals hold around 185.
De-seasonalization
De-seasonalization of the winter-summer schedule is another approach that helps to save costs when not achieving high yields. LCCs have much more flexibility with fares as a direct response to demand levels and can establish better price structures with this approach.
Fleet cost control
Fleet cost is one of the major costs for LCC players, thus fleet control is very effective in reducing cost. By including more fuel-efficient aircrafts, grounding underperformance planes, and introducing fleet homogenization, LCCs achieve lower maintenance and fuel cost
1.1.2 Ancillary Price Options & Hybrid …show more content…

Ancillary fees exclude cost for extra service from the unit ticket price thus leading to a lower price for consumers in a price sensitive market, while customers can choose extra service they want by paying extra. For instance, in 2010 the US airline Spirit introduced an overhead bin fees as an effort to unbundle every aspect of an air tour, so customers can decide which service they want to pay for and become satisfied. Spirit has the historically highest growth rate of revenue in ancillary that year.
Embrace wifi
The world population are getting more used to technology. People will be appreciated if they can use on board WIFI. It will be instrumental in targeting a variety of consumers, from the tech-savvy to business travellers. Heavy investment in on-board facilities means that on board WIFI may become an industrial standard. According to a report, some 38% of all domestic flights in the US offer Wi-Fi, 9% are in the process of introducing it, while some 53% of flights remain Wi-Fi free.
Ancillary fees for service from third

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