Comments on: The true reason behind El Al’s “Low Cost Economy Class” http://www.betterwings.net/2009/07/why-inferior-economy-class-could-be-a-good-thing/ An Airline Marketing and Management Blog Mon, 12 Apr 2010 22:15:25 +0000 hourly 1 http://wordpress.org/?v= By: Jeremy http://www.betterwings.net/2009/07/why-inferior-economy-class-could-be-a-good-thing/comment-page-1/#comment-56 Jeremy Tue, 08 Sep 2009 16:05:50 +0000 http://www.betterwings.net/2009/07/why-inferior-economy-class-could-be-a-good-thing/#comment-56 First of all, Predatory pricing is not allowed, but price competition is. Some regular economy class might be tempted to trade down, but there are other factors in place to prevent them from doing so en masse, for example: limited availability of the low cost class seats, strict fare rules, very visible service level difference, etc. First of all, Predatory pricing is not allowed, but price competition is.

Some regular economy class might be tempted to trade down, but there are other factors in place to prevent them from doing so en masse, for example: limited availability of the low cost class seats, strict fare rules, very visible service level difference, etc.

]]> By: BlackberryAddict http://www.betterwings.net/2009/07/why-inferior-economy-class-could-be-a-good-thing/comment-page-1/#comment-55 BlackberryAddict Tue, 08 Sep 2009 15:11:44 +0000 http://www.betterwings.net/2009/07/why-inferior-economy-class-could-be-a-good-thing/#comment-55 Surely what you've forgotten in scenario 1 is that the mere fact of putting a lower yield class on the aircraft will actually increase in the breakeven load factor, as some of El Al's own passengers will trade down. In fact they might as well lower their fares to attract cost-conscious passengers - as you point out the cost reduction from IEC won't cover the expected difference in fares. They either have to really move their costs down to the level of a true low cost airline, or offer a better service and command a premium over the low cost which pays for their higher costs. Your second scenario is called 'predatory pricing'. Although hard to prove, it is usually not allowed by competition authorities. Surely what you’ve forgotten in scenario 1 is that the mere fact of putting a lower yield class on the aircraft will actually increase in the breakeven load factor, as some of El Al’s own passengers will trade down. In fact they might as well lower their fares to attract cost-conscious passengers – as you point out the cost reduction from IEC won’t cover the expected difference in fares. They either have to really move their costs down to the level of a true low cost airline, or offer a better service and command a premium over the low cost which pays for their higher costs.

Your second scenario is called ‘predatory pricing’. Although hard to prove, it is usually not allowed by competition authorities.

]]> By: New Gadgets | Why “Inferior Economy Class” could be a good thing … http://www.betterwings.net/2009/07/why-inferior-economy-class-could-be-a-good-thing/comment-page-1/#comment-5 New Gadgets | Why “Inferior Economy Class” could be a good thing … Sat, 25 Jul 2009 14:34:59 +0000 http://www.betterwings.net/2009/07/why-inferior-economy-class-could-be-a-good-thing/#comment-5 [...] Original post by Better Wings [...] [...] Original post by Better Wings [...]

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