Disruptive Pricing Units

During a miserable week of domestic air travel during June, I noticed new fees suddenly appearing for checked baggage and in-flight soft drinks.  That caused an announcement about a new airline to catch my eye – an airline offering a radically different approach to pricing.  It re-raised a topic that we explore with many clients: shifting the basis of competition by changing pricing units. On June 6th, 2008, a new airline called Derrie-Air started advertising fares based on total passenger weight,  with the slogan “Pack Less. Weigh Less. Pay Less.”  A flight from Philadelphia to Los Angeles was priced at $2.25 per pound – with each passenger paying based on body weight plus luggage.  Thus a supermodel carrying only a…

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