Interesting news from @Alaska Airlines launching a subscription model called “flight pass”. Good to see a leading airline trying something new to help customers get back to travel. Does it mean that we will more of these passes in the future?
👉 I listed the subscription model one year ago in my White Paper (proposal #9) as a benefit of a retailing model, focusing on customer value more than on transactional bookings.
👉 Kudos to the team at ( caravelo ( who made this new product possible. What a journey since you won the IATA Hackathon in 2016 🚀
👉 First, let’s do the maths for the pass at $49 monthly for 6 round-trips per year on the West Coast, booked two weeks in advance. The offer amounts to 12 flights (6×2) a year, or 1 per month, at $49 each. I’ve just looked up flights from SEA to SJC for example, leaving in two weeks, the average price is about $80. Meaning that the offer looks like a good deal for the customer who likes flying with Alaska.
👉 I can see this subscription product appealing to usual customer segments like “visiting friends and relatives” or commuters. The new “remote workers” who work for a Seattle-based company but live somewhere on the West Coast may want to use this subscription to gather with colleagues every other month.
👉 Once the customer has subscribed, they are unlikely to buy from a competitor on the same routes in the next 12 months, which is the Netflix effect. It is a much stronger form of loyalty than the traditional loyalty programs. There is clearly a premium to the first player in the market, provided that the product remains of good quality (good series on Netflix, or good service on the airline)
👉 There are a few reasons why an airline may ignore this new model. The airline management’s mindset may be more “wait and see” than “test and learn”. The revenue management team may fear a revenue dilution or simply be unable to handle the model in their systems. The local media may claim that flight subscriptions have a worsening impact on the environment.
👉 I bet that a few more airlines will want to test the subscription model in 2022. With the right offer, on the right market, at the right time, with the right communication and the right solution, it will make a difference in the comeback of air travel 😊