As much as I try to keep this blog as industry specific and as unbiased as possible, sometimes I have a momentary lapse. But today is not that day, as I plan to reference positively the functionality of a competitor product. Before I start, let me set the scene. On a dark and stormy night back in April 2009 I wrote
It’s not often that I hear the phrases Ancillary Revenue and Revenue Management used in the same conversation, so it was interesting at first to see the term ancillary revenue used in the short announcement yesterday on JetBlue Airways appointing the former Amercian Airlines and more recently United Airlines executive Dennis Corrigan to serve as vice president of revenue management.
Since then I’ve been reasonably quiet on JetBlue with the obvious exception of being very impressed with the edgy attitude coming across in their blogging efforts. Today though, I’m more focused on a comment made recently by JetBlue CEO David Barger
He also referred to the pricing structure of the airline’s Even More Legroom or EML product. “Now we’re able to offer 11 price points for EML based on customer demand on a particular route rather than length of haul,” said Barger. “This initiative is on track to generate an incremental $10 million in the second half of this year.
I’m sure we will see much more of this revenue management of ancillaries in the months and years ahead. Only last week I was talking to a colleague who was looking at some very innovative ideas behind linking customer data to revenue management to website personalization and more, so there are definitely some extremely interesting things happening in this space at the moment. The opportunity is massive, the upside for airlines is obvious, and the downside from negative customer perception is minimal to zero if the process is well managed. Think about it: who complains about revenue management of airfares in order to maximize airline revenue, but unfortunately the same cannot be said about checked bag fees - a point that Southwest has used nicely to their advantage.