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Medium Profitability Revenue Growth Pricing Strategy

New Flight Plan

#Airlines #Transportation #Travel
ProHub Comment

This case teaches a sophisticated pricing and segmentation strategy where the airline must simultaneously serve two distinct customer segments with opposite priorities. The key insight is recognizing that price-sensitive vacationers and quality-focused business travelers require fundamentally different value propositions, and that unbundling combined with seasonal strategies can maximize overall profitability rather than pursuing a single-price approach.

Estimated Time 15 minutes
Difficulty Medium
Source Queen's
50 / 100
Your client is an airlines. As you may know, competition is fierce among the major airlines, with ticket prices being driven steadily downward. After a year of weaker than average growth, they have hired our firm to devise a set of strategies for growth. Assume management’s goal is profitable revenue growth, rather than cost cutting.

Clarifying Information

  1. We charge clients for the price of a seat, including first, business, and economy class as well as the time to fly – all inclusive in one ticket price
  2. We will get to specifics later, but broadly speaking we serve two types of customers: Vacationers and Business Travelers
  3. There are over ten competitors in the market, each holding a small share – no dominant player in the market. That said, some flight routes are controlled by only one or two competitors
  4. The client has not specified a growth target
  5. The client is more interested in finding ways to increase profit, not any specific number