Airline Pricing — A Better Way

Don't mess with an analytical mind. My wife and I never gave each other case interview questions on our first date, but we probably came close. Lisa's recent analytical dissection of why current airline pricing models are wrong is worth more than a quick look. She argues that current pricing models -- even those that charge for checked bags -- are not the best solution (for airlines or passengers). I won't dissect her argument, but I will jump to the punch line. Instead of current models, Lisa proposes that airlines should adopt a bulk freight model where "the fare is tied to a passenger's total weight or cube -- body weight, carry-on weight and checked baggage weight. Bulk items or oversized luggage would be part of this strategy. Premium fees are of course levied for business and first class but essentially passengers pay a consumption fare." There are examples of this approach throughout the commodity markets world, including the metals markets. So why not air travel? Of course, you could always just try flying in the cargo section like a kitty that was left for dead for three weeks on United...

- Jason Busch

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