Fare segmentation is now a staple in the airline business worldwide, and US airlines have enjoyed solid upsell rates from their basic economy offerings. The country’s fourth largest domestic carrier, United Airlines, believes there’s room to leverage even more buy-up opportunities as segmented fares become more prevalent in a larger number of distribution channels.
- United Airlines, believes there’s room to leverage even more buy-up opportunities as segmented fares become more prevalent across distribution channels;
- The US major’s upsell rates from basic economy have ranged from 60% to 70%, but sees NDC delivering new opportunities;
- The strongest buy-up rates are on its United.com, but it is non-United sites where it hopes to see an increase in upsell rates.
United’s upsell rates from basic economy have ranged from 60% to 70%, and the company believes, “there’s going to be, particularly with NDC [IATA’s New Distribution Capability], other ways to move that up”, company EVP and chief commercial officer Andrew Nocella recently told investors. “…buy up rates are not equal across all of our distribution channels.
The strongest buy-up rates are at United.com, said Mr Nocella, who explained United has worked hard to refine the display for upsells. “…we are hoping those other sites come along so we can drive a better buy up rate over the longer term”.
Refining the presentation of branded fares in non-airline sites will evolve over time. “…we do expect that the other travel sites will get more sophisticated in this, and that is a material percentage of our business”, Mr Nocella concluded. “ So if the buy up rate is going to move materially higher than where it is today, it’s going to be based on I think non-United sites that help us get to the final equation.”
United is the only large US global airline that charges for a carry-on bag in its basic economy fares, and for now, there’s no plans to change its offering. Mr Nocella remarked charging for carry-ons allows United log more on time departures, noting there is less luggage in the cabin and at the gate.
On time departures are “really important to the airline in terms of our reliability and so this is, it’s not just a fare issue, it is an on time issue,” Mr Nocella concluded.