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Price may be important for consumers but that doesn’t mean they always choose the lowest fare. Tom Bacon outlines what this means

Airlines that offer fare families, or branded fares, are experiencing a wide range of results. Some are achieving dramatic upsell, as many customers select a higher fare rather than the lowest, bare bones fare. At Frontier Airlines we were pleased when we achieved 35% upsell (Frontier was the first airline in the US to offer branded fares and 35% of the passengers presented with these chose a premium fare over the lowest fare). Some airlines, however, are seeing much less upsell. 

Factors that can drive relative success are said to be:

  • The ‘right’ number of fares. Most airlines present three economy fares as part of their standard fare family display. More than three fares can complicate the customer decision process; fewer fares may not provide the choice customers seeking. We offered three families initially at Frontier.

  • The ‘right’ fare differences. A high fare premium for the first sell-up is a deterrent, even if the higher fare includes many valuable ancillary features. The first sell-up at Frontier was about $25.

  • The ‘right’ features in the lowest fare. If the lowest fare has too many amenities, there is obviously less reason for passengers to pay for more services. Many airlines find that if the lowest fare doesn’t include a checked bag, there is a higher likelihood of sell-up. At Frontier, the lowest fare did not include a checked bag.

Although these are important structural elements of a successful fare family programme, probably the most important factor is the competitive environment.

  • Pricing matters. All pricing is in the context of a competitive environment – most airlines cannot dictate pricing across their broad network. Thus ‘bare bones’ features and the initial sell-up fare both must be designed in the context of the airline’s specific competitive environment. 

  • Checked bags. With many international airlines still offering free checked bags, global competitors may not be able to exclude this feature in their lowest fare.

  • Discount differentiators. jetBlue launched its branded fares after having differentiated itself as a customer-oriented airline that did not charge for checked bags. So, when it began charging for checked bags, it feared it would lose some of its loyal passengers. When it introduced branded fares, its first sell-up included a significant discount on the new bag fee, making the new fee somewhat more palatable.

Finally, there are two more key factors that impact customer’s propensity to buy the higher branded fares:

  • Revenue Management focus. There are two quite different approaches to revenue managing branded fares. One is to offer the same availability for all fares: the customer sees multiple fares, associated with different levels of service, at all times. The second RM approach is to explicitly prioritise (or ‘nest’) fares of different families. The first maximises availability and choice, while the second requires individual forecasts for demand by family and limits inventory of the fares with the fewest amenities. The latter drives more sell-up by directly blocking out the lower fares as total inventory is depleted.  However, Frontier achieved high upsell despite offering the same availability for each of the fares across fare families; we considered it important to offer maximum customer choice rather than limit the availability of the bare bones fares. In this sense, Frontier decided sell-up percentage was not the only objective for its branded fares.

  • Website wares. Fare families may simplify the buying process for a given bundle of services but it complicates the basic purchase decision. The basic purchase decision is still driven by the base fare and the flight time – that’s what the customer is focusing on initially. So, the website needs to continue to provide this basic information while also offering transparency with respect to ancillary service fees. 

In the end, branded fares must be part of an integrated strategy that incorporates competitive positioning, customer choice, distribution, and ancillary pricing.  Although all airlines should consider the use of branded fares in their travel e-merchandising, the ‘optimal’ branded fares are likely to be unique to each carrier.

Tom Bacon has been in the business for 25 years as an airline veteran and now an industry consultant in revenue optimisation. Email Tom at or visit his website

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