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American’s New Choice Fares: “Simpler – With Options”

American’s New Choice Fares: “Simpler – With Options”

American today rolled out a significant change to its pricing, and to the way fares are displayed on the AA.com website. The promise: “Simpler — With Options.”

First up, the options.

Choice Fares

Domestic coach fares are now grouped into three categories, as follows:

Choice Fares – The basic discounted coach fare

Choice Essential – Add one free checked bag, Group 1 priority boarding, and no change fees for an additional fee of $68 round-trip

Choice Plus – Add a 50 percent AAdvantage mileage bonus, free same-day confirmed flight changes, same-day standby, and a premium beverage for $20 above Choice Essential, $88 above Choice, round-trip

The new fares are now available for sale on American’s website, and will be available on third-party travel sites that are capable of displaying them. That’s no small hurdle, given the industry-wide convention of showing a single fare product for a given itinerary. For the time being, if you want to book a Choice Essential or Choice Plus fare, you’ll probably be limited to doing so on AA.com.

The Price of Simplicity

What American has done, according to American’s chief of digital marketing, Rick Eleison, is add a third dimension, product, to the traditional two-dimensional pricing matrix of price and schedule. In this case, “product” means the array of extras (waived bag fees, priority boarding, extra miles) that add value to the core service.

As a rule, simpler is better. And by prepackaging add-ons, American is arguably improving on current standard pricing practice, which is to display the base fare and a complicated menu of extra-cost services from which the customer must custom-tailor a fare that meets his needs, complaining all the while of being “nickel-and-dimed.”

But simplicity has a price. In this case, simplicity dictated a set fee for the extra benefits, regardless of the cost of the basic Choice fare. That makes the $68 surcharge for Choice Essential a much better deal when buying a Choice ticket costing $600 than when buying a $200 ticket. The bonus miles earned for a longer flight are more valuable than those earned for a shorter flight, even though the surcharge is the same. And so on.

In the end, though, American’s new Choice fares are simple and transparent. For some, the more expensive fares will be worth the extra cost. For others, the best fare will remain the cheapest fare. Either way, the options are clearly communicated: The choice is clear.

Reader Reality Check

Is this a step in the right direction, or just a clever way to make extra fees palatable to travelers?

Other Posts of Interest

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  • Alex C.

    Is a bag fee really “waived” if you are paying 68 extra dollars round trip?  

  • Alex C.

    Is a bag fee really “waived” if you are paying 68 extra dollars round trip?  

  • http://twitter.com/schmeeps Eric

     It’s not really simple, and it’s not a waived fee.  They’re simply bundling things that they would otherwise sell separately in order to make more money.  For example, that $68 RT fee, would come out to $34 one way.  That $34 can be broken down into $25 for a bag, and $9 for priority boarding, and no change fee in the unlikely event that you need to change your flight.

    It’s a genius money grabbing plan since very few people actually pay for priority boarding, or need their flights changed.  Basically, they’re selling you all this stuff you’re never going to use just to check a bag.

  • http://twitter.com/schmeeps Eric

     It’s not really simple, and it’s not a waived fee.  They’re simply bundling things that they would otherwise sell separately in order to make more money.  For example, that $68 RT fee, would come out to $34 one way.  That $34 can be broken down into $25 for a bag, and $9 for priority boarding, and no change fee in the unlikely event that you need to change your flight.

    It’s a genius money grabbing plan since very few people actually pay for priority boarding, or need their flights changed.  Basically, they’re selling you all this stuff you’re never going to use just to check a bag.