Fairness Questions on Unbundled Pricing

There is a scathing opinion piece in The Econonist web-only edition on the Airline fees. Titled, "Come fly the fee-filled skies", the article frames the entire unbundled pricing as a fairness question wondering whether the passengers will be asked to pay for reclining in their seats or using the bathroom.

And in the midst of this malaise, airline executives have been casting around for new ways to make money—including charging customers more for “extras” that were previously embedded in a basic ticket price.

Fairness in pricing is definitely a factor that marketers should consider when unbundling. In the case of airlines, there is also considerable history behind th outrage. With the practice of "yield pricing", almost everyone views airline pricing as not "fair".

Combined with it when customers do not get the value for the price they pay, the fairness issue is going to cause outrage. For example, when United charges $50 for the second bag and still manages to lose it (albeit temporarily) the customer sees no value for the cost incurred.

Unbundled pricing is not about wringing the last dollar out of every customer without providing value. It is about identifying those with higher Reservation Price for certain components and delivering them value that is well above what they would get with bundled pricing.

This topic on fairness and consumer behavior have a much larger significance in the success of unbundled pricing. I will revisit these in the future.