Price and Value

Scott McCartney wrote an interesting article in last week's Wall Street Journal about the cost of air travel. Specifically, he notes that Southwest Airlines isn't always the lowest priced carrier on any given route. I think it's a compliment to the marketing folks at Southwest that it's presumed that they always have the lowest fares, but I think it also demonstrates that the concepts of price and value are increasingly becoming disconnected.

(from Ack Ook on Flickr)

I travel somewhat regularly, and I fly on Southwest almost exclusively. I always book early, try to fly on off-peak days, and the fares I find are usually very fair.

McCartney writes that Southwest's rivals sometimes match or even beat their fares. On a dollar for dollar basis, I don't doubt that it's true. Unfortunately, the article barely gets into a discussion of value. Southwest doesn't nickel and dime passengers to check bags, they let you change or cancel a flight without charging a penalty, and they're at least as reliable as any of the other airlines. This is all worth something, but it's not something that you can easily put a price tag on.

It's too bad that some people see price through a narrow lens. A good deal means getting something of value for a low price. Getting something cheap for cheap doesn't necessarily equal a good deal, and the market for air travel is a great example of how price can be deceiving. A lot of airlines have engaged in a race to the bottom by pricing their fares low but offering little value. Fortunately, there are enough people who can see that there's more to it than that.

1 comments:

    On June 10, 2011 Rana said...

    There is a slightly different picture here in Europe.

    Here, Ryanair, just like Soutwest in the US, has succeeded in a fabulous marketing strategy convincing the public that they are always the cheapest carrier. They have achieved this on the back of constant promotions offering flights across Europe for ten pounds, five pounds, sometimes pennies. Yet when you go to book that flight you often find that none of those available and cheapest flights are actually at comparable prices to the established airlines.

    Yet unlike traditional airlines, service really sucks. Aoart from additional charges for booking for checking in, for baggage, for food and water, there are apparently plans to remove seat pockets, any seat reclines, even mooted charges for using the toilet!

    Yet I emphasise again that good marketing has trumped poor customer experience, in my opinion. Understandably given what I've said above, it's the fastest growing most profitable airline around.