Chapter 11: Price
The Battle of the Business Class Airlines
Business and First Class airline seats can be prohibitively expensive for the majority of airline travellers, especially on popular destinations such as the US and the UK. However, a new business-only class airline has entered the US-UK market that could revolutionize pricing structures, just as easyJet, Ryanair and South West did for the low cost sector.The US-based MAXjet started services between London’s Stansted and New York’s JFK on 1 st November 2005. Flying Boeing 767’s aims to offer its 102 business class passengers comfort and style for a fraction of a normal business class ticket on other intercontinental airlines. Fares range from UK £380 to over UK £1,000 per person (depending upon rules and restrictions). As with many airlines low cost tickets (economy or business) tend not to be refundable in full. However, it will be interesting to see how the major carriers respond to this new airline.
As depicted in the textbook, there may be additional costs added to the net retail price of a product or service. For instance, there may be local taxes such as tourism taxes. In Australia restaurants can surcharge dinners on public holidays. Such a surcharge may be imposed to pay for the additional costs of staff who are employed on that particular public holiday. However, it could be argued that the restaurateur should ‘absorb’ the additional employee costs. After all it is likely that the restaurant will be busy on such public holidays. Moreover, a restaurant not surcharging may entice more customers. Of course, this is a fine balancing issue. What do you think should be the case and why?
In Chapter 11 the unethical/illegal practice of Bait and Switch was considered. The Hong Kong Tourism Board highlights this unscrupulous activity in order to protect visitors. They state:
“Unscrupulous retailers showcase a product at an ambiguous price, but after getting a deposit, they claim that it is out of stock. They then try to sell an often-inferior item at an inflated price. Always look for the clearly marked prices, shop around before you buy, know the product you want to buy, check for the included accessories and shop where you see the OTS sign.”
The ‘OTS’ sign refers to a scheme organised by the Hong Kong Tourism Board to assist visitors in finding shops and restaurants that they can trust. These outlets have passed stringent annual assessments demonstrating that they have:
- Provided genuine products with clearly displayed prices.
- Clearly displayed product information and /or menus.
- Ensured superb customer service with front-line staff possessing extensive product knowledge.