Too many hurdles to get this implemented, least of which is getting regulators to agree to it. Related, it could open up space for some new pricing startups, similar to Autoslash, though that didn't sit well with competitors.
Allegiant would let travelers choose whether to lock in a set, higher fare or pay a lower ticket price in exchange for shouldering any changes in fuel prices before their travel date. Those dice-rolling fliers would, based on fuel prices, pay an additional amount or receive money back if energy costs fell in the period between booking and flying.
Unlike the major airlines, Allegiant is disproportionately dependent upon leisure travelers…It has virtually no last-minute-full-priced business travelers…That’s one reason Allegiant is willing to risk regulatory resistance and consumer confusion with a “variable pricing” mechanism aimed at recovering some of its fuel costs.
Allegiant would need six to 12 months to build the technology into its website and potentially longer than that to persuade regulators about the wisdom of this pricing model.
Skift Daily Newsletter
Get the travel industry’s daily must-read email 6 days a week
Tags: allegiant air, pricing