RETHINKING THE PRICING DYNAMIC

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Pre-pandemic, air travel in the USA was relatively expensive compared with travel on similar sector length international routes. The airline profit/loss airline cycle has deteriorated with ever more fees and resulted in consolidation in the US and the creation of the Big 3 (UA, AA and DL) with virtual monopolies at their major hubs. The next tier of airline players may be significant in geographic regions but do not provide a comprehensive US wide network and may not have international airline partners. 

As such they are not options for customers that need a domestic and international sector.
One can consider a scenario where any of the Big 3 carriers identifies a mutual win-win-win by not playing competitive pricing games in the other airline’s major hubs. The Big 3 would price aggressively in all non-hub markets. Effectively using hub-dominance to generate excess revenue to support lower fares on non-hub routes and negatively impact the revenue stream of the next tier of airlines.

The anti-trust regulations may not have been violated, but effectively the airline consolidation process has negated the original intent of the anti-trust regulations.
As airlines emerge from the pandemic, it may be an opportunity to establish a new network and pricing dynamic.

#pricingstrategy

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