Airlines pricing strategy
The pricing strategy that airlines utilize by charging fees for additional services separately can be labeled as “optional product pricing” (“Pricing Strategies,” n.d.). The tactic of unbundling is being used, i.e. additional services which were previously included in the price of the ticket are now excluded from it, and charged for separately.
It might be possible to charge fees for various additional services that can be provided for the passengers of aircraft. For instance, airline companies might consider charging extra money for seats near which there is a PowerPoint (so that clients would be able to charge their laptops, for example). Another possible option is to charge fees depending upon the location of the seat in the cabin: for instance, as was stressed in the case, seats near the aisle may be more convenient to those who are tall because there might be extra legroom; it is possible to charge money for a seat near a window (“Pricing Strategies,” n.d.); reserving several seats located near one another (so that one could sit next to e.g. their friends) can also cost additional money. Fees for larger seats can also be proposed, etc.
Pricing strategy Southwest Airlines
Given that the named airline company “prides itself” for not charging extra money for baggage checking, it might be possible to assume that they will keep not doing it for at least some time in the future. This is because not charging fees for bag checking might provide Southwest Airlines with an additional competitive advantage in comparison to their rivals, attracting additional clients. However, if the company finds out (e.g., via research) that this advantage is not profitable (i.e., they would earn more money by charging for bags checking than by not charging for it), they will likely start charging money for baggage checking separately.
It should also be noted that using bundled pricing for bags checking gives Southwest Airlines another advantage: it includes fees for baggage in the ticket of every passenger, whereas unbundling this option might mean that many passengers will not pay for baggage; in fact, unbundling allows clients to handpick the options they desire, and not to pay for that which they do not need (Tjan, 2010).
This might be partially considered a niche advantage to a certain extent, due to the scarcity of the product offered (free bag checking which is not proposed by any other airlines). On the whole, however, this is a cost leadership strategy, because it allows clients to purchase the service (bag checking) for a lower price (which is included in the ticket) than in competitor airlines.
Pricing strategy in different industries
It is possible to offer a variety of unbundled pricing options in different service industries. For instance, hotels could charge extra money for such services or features as the beautiful view from the window, the level on which the hotel room is located, the presence of additional facilities such as a TV, a computer, a refrigerator, a fan, heater or conditioner, and so on, in the room. Hotels might also charge extra money for the availability of food, drinks, condoms, soap, etc., right in the room. Additional blankets, pillows, etc., can also be charged for.
Restaurants can charge for reserving places in a particular area inside the establishment (e.g., tables in the corner, away from traffic, or near the window might cost more). It is possible to charge for the immediate arrival of the waiter (instead of a lag of several minutes). Charging for sugar or pepper would probably not be a good idea because it is a common practice in restaurants to provide these for free, and a restaurant charging for these would unpleasantly surprise customers, thus gaining a disadvantage.
Cruise liner businesses might charge their passengers for many of the services which were described previously when discussing hotels. Perhaps some liners could offer clients binoculars for looking at distant objects, or small telescopes for looking at the starry sky at night. Rides in a small boat in the open sea might probably also be offered.
References
Pricing strategies. (n.d.). Web.
Tjan, A. K. (2010). The pros and cons of bundled pricing. Web.