Low cost airlines are the masters of dynamic pricing, bundling and pricing psychology.
Every customer who makes an online booking presents them with some new data to plug into their dynamic pricing algorithm. They also analyse the best way to present the various upgrades available to purchase before the final checkout, to maximise the customer's spend.
I've just taken a look at budget carrier JetStar's booking experience and its use of various pricing techniques and psychology.
After you've searched and selected your flights you'll be presented with a choice. Look at how unattractive they make the "Starter fare" default option ...
The "Plus bundle" at $106 is the one JetStar wants you to pick. The "Max bundle" at $753.49 is just there as an anchor price, to give you the impression that the middle one is good value. The "Starter fare" is the one they want you to avoid. They do this through the selective use of negative and positive language and the colours of grey, green and blue.
The Starter fare
Comfortable leather seat
This is patronising ... is there so little going for this bundle option that they have to mention that you actually get a seat, as opposed to standing in the aisle?
7kg carry on baggage
Strict size and weight limits apply
Negative tone. 7kg is not enough for most people's needs.
Checked baggage not included
Repeated, negative tone.
Starter fares are non-refundable
... compare this to the most popular option, the option JetStar wants you to choose ...
The Plus bundle
No change fees
2,225 Qantas points
Free money. Only $30 credit off your next fare, but its better than nothing.
Free standard seat selection
The power of free.
More included stuff.
20kg checked baggage
Notice they don't mention that a strict size and weight limit also applies to the 20kg baggage.
People are scared of change fees
Most people when seeing the starter fare option will get the impression that if they need to change their flight for any reason, perhaps due to a flight delay, they are in trouble. In fact, JetStar covers you for flight delays and will make the necessary arrangements and additional bookings free of charge. But they only mention this in the fine print.
Most people want checked baggage
You also get the impression that you have to choose the plus bundle or max bundle if you want checked baggage. Actually, you can choose the starter fare, and then later on in the process you can optionally pay for only the specific amount of checked baggage that you need, at a rate of $46 for 15kg, $50 for 20kg and $62 for 25kg. Most customers likely don't know that these cheaper options are available, and will just choose the plus bundle, paying $106, when all they needed was checked baggage. You can select the Starter fare, then pay separately for 20kg checked baggage ($50), a meal ($15) and a reserved seat ($6) and the total will be just $71, a saving of $35 on the Plus bundle.
Noone wants to be randomly assigned a seat
When it comes to selecting a seat, its a bit disingenuous for JetStar to claim this ...
"You have not selected a seat. If you do not wish to pre-select a seat one will be assigned for you randomly from what is still available at check-in."
When you check in at many airports, assuming you get to the airport early and the plane isn't sold out, you'll still be able to select what type of seat you want - the check-in staff are usually more than helpful and should be able to provide your choice of a window or an aisle seat.
If you're a family with children, the airline will try to assign an adult family member to be sitting close to each child in your family, even when you didn't pay to reserve a seat. If you can't be accommodated at the point of check in, you would likely be able to work something out after boarding by speaking to the cabin crew.
Also, remember this inconspicuous bit of writing at the bottom ...
"Jetstar will attempt to accommodate your seat preference, however due to operational considerations cannot guarantee that your seat allocation will be as your selected preference."
So in other words, they ask you to pay for a seat preference, but cannot guarantee it.
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