If Jeff Smisek, Continental Airline’s CEO, was a gambler, he probably wouldn’t play roulette. Why not? The odds are stacked too far in favor of the house.
Mr. Smisek’s risk tolerances came to light at an investors’ conference earlier this month. He made it clear how Continental would handle the risk of being fined up to $27,500 per passenger* by the Department of Transportation for excessive tarmac delays.
“Guess what we are going to do? We are going to cancel the flight.”
Continental is absolutely right. Do the math and you’ll see the DOT could levy a 3-5 million dollar fine – per flight. Newsflash: No airline can afford to gamble that much money.
Bigger newsflash: No flight operations manager is going to play job roulette in the face of such sanctions.
The net result? Continue reading
Here’s an interesting twist on the reverse auction strategy of getting suppliers to under-bid each other for the buyer’s business. Instead of a buyer initiating the reverse auction, have the supplier do it.
It’s not a silly as it sounds. In fact, it is being done successfully by Air New Zealand, according to this article in Tnooz. Called GrabASeat, the business model is simple – list a limited number of seats on a route, decrease the price every so often, and let shoppers decide when they want to buy the seat.
It’s revenue management juiced up by the buyer’s fear of losing Continue reading
Continental Airlines will charge for meals this fall. It’s about time. And money, and choice.
Lots of travel managers and many more travelers will hate seeing this movie.
“You shouldn’t do this – it’s going to cost me more money!” “You’re just like all the other airlines – unbundling every little thing to make more money”…I can hear the wailing all the way up here in the back seats of this movie theater.
And there, my movie-going readers, is the lesson you already know. Customers want choices. Continue reading