Fare Play: Unpacking Travel Pricing

Hello and welcome back to Power to the Pricing People. In this edition, we’re packing our bags to explore the world of travel pricing. So, fasten your seatbelts and ensure your tray tables are up, as we’re expecting some turbulence.

Airline Revenues Soar to $1 Trillion

According to the International Air Travel Association airline revenue is expected to reach a record of one trillion dollars. But at its annual convention, the industry body warned that costs including jet fuel were leading to high altitude prices for consumers. Compounding the fuel challenge, many airlines are operating older less fuel-efficient fleets as a result of the pandemic manufacturing shutdown, as well as paying a high cost for scarce sustainable aviation fuel. But there’s no doubt that the grandmasters of dynamic pricing will be making full use of their pricing powers to claw back profits through the summer months.

Europe’s Revenge Travel

Despite high flight prices many sun seekers aren’t being deterred. Europeans are continuing their revenge travel leading to sustained growth in tourism, particularly in the south thanks to lower local prices in destinations like Turkey. But things aren’t looking so sunny in the US, with consumer confidence taking a nose dive. According to McKinsey, the biggest decrease in quarterly spending over the summer months will hit international flights, hotel and resort stays, and cruises.

Fresh Surge Pricing Tactics

For those lucky jet-setters who do take flight, surge pricing could be creeping in new areas including tourist taxes. This month, Iceland’s Prime Minister told CNBC he was considering ascension fees for tourist hot spots that would see higher taxes or fees at busier times. While over in Japan, some restaurants and attractions are implementing a two-tiered pricing system for locals and tourists due to a big uptick in travellers attracted by the weak Yen. One restaurant in bustling Shibuya is offering a ¥1,000 discount for residents to avoid passing on the higher costs of imported food and labor to locals. Meanwhile, UNESCO World Heritage site Himeji Castle is considering quadrupling the entry prices for foreign tourists.

More and more businesses and industries are starting to realize the benefit of agile pricing, and as they do, the complexity this creates needs sophisticated pricing systems to ensure those strategies deliver. This is where Flintfox can help, if you want your pricing to reach new heights, get in touch to find out more.