“Pay-As-You-Go Airline Charges by the Minute”

January 7, 2009

in marketing at work

This from one of my fav magazines, Wired.
 
When I saw the headline, I thought to myself, "Great, now they have run out of things to charge us for, since they are asking the passengers to pay for everything including tiny bags of pretzels and water, they are going to charge us for sitting on the runway too?"  Luckily for travelers, the upstart airline, Airtime Airlines based in South Africa, will not be charging their passengers more for time spent by the plane idling and waiting in line to take off.  Whew. Now that's a relief.
 
This reminds me of the "Onion-esque" unveiling of the fictional airliner Derrie-Air threatening to charge by individual passenger's weight: "the more you weigh, the more you'll pay. After all, it takes more fuel—more energy—to get more weight from point A to point B…"  (It's a shame really. That would be one urgent reason for me to finally follow my default annual New Year resolution of getting on a diet…)  Only that Airtime Airlines is not fictional, it is a real airline, or, well, almost a real one, as soon as they get their hands on real aircraft that can fly real passengers… 
 
"Taking a cue from the cellphone industry, an upstart South African airline is selling flights by the minute and allowing customers to buy tickets and book flights via text message…  passengers will buy minutes instead of a traditional point-to-point ticket. They can buy a "starter pack" of prepaid minutes and top off their accounts by purchasing more minutes — by text message — at the going rate of 5 Rand (about 53 cents) a minute. Flight times have been mapped out in advance, so sitting on a runway for three hours won't triple the cost of your ticket.

Topping off accounts is where things get interesting. The cost for Airtime minutes can fluctuate, presumably according to promotions and market factors, so topping off becomes an exercise comparable to fuel hedging. Buy a big block of minutes when you think they're at their cheapest and you look smart, unless the price drops again the next day. Then again, it might go up. The price recently rose from 3 Rand to 5 Rand, meaning the cost of a round-trip flight from Durban to Cape Town climbed from about 750 Rand ($81) to 1,250 Rand (about $134). Still that's cheaper than the $200 it would cost on South African Airlines."

Read the entire article here.

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