As much as I'd like this to happen, I bet they would sell fewer tickets. A certain number of travelers sort ticket results based on price. If they added even just a few dollars to each leg to pay for perks, they would push themselves down on the results page and sell fewer tickets.
A great example of why the funnel is often a completely incorrect, inadequate, and even misleading metaphor for measuring conversion.
Example: "I'm having trouble optimizing the last step of my funnel." Did the first four steps of your funnel consist of showing pictures of naked women while the last step prompted the user to refinance his house?
Unless the steps of your funnel are real, meaning they actually represent bounded, uni-directional escalations of qualification and purchase intent (think a 3-step shopping cart checkout), then thinking of the 'flow' that way is defeating.
What Chris is talking about here makes a lot of sense, and to my mind boils down to something like this: the airline's win comes through offering the greatest perceived value to the customer, so tread carefully as you unbundle low-cost, high-perceived-value features for a small (unguaranteed) marginal gain.
Setting false expectations is pretty egregious as well, and in addition to losing the good will that would have been generating by offering the DirecTV for "free," the airline generates ill will that could, of course hypothetically, result in angry blog posts being written and shared.
Here's the funnel for an airline: be amazing, underpromise and OVERdeliver, and book flights like a mofo.
Loyalty is no longer post-purchase.
The next time I fly across the Atlantic I will fly Virgin, the next time I make a restaurant reservation it will be Bondir, the next CSS I write will be in Sass, the next phone I buy will be a Samsung, the next vehicle I buy will be a Toyota, the next time I go to NYC I will take a Bolt bus.
I am 100% sure about these purchase decisions, and I have never flown Virgin, never eaten at Bondir, written in Sass, used a Samsung phone, bought a Toyota or taken a Bolt bus.
How do I know these are the right purchase decisions? Because I trust my friends' experience, and a delighted customer turns into a priceless evangelist faster than we often realize.
Or sell tickets $3 cheaper than your competitors, advertise "Watch DirecTV on our flights (quiet voice: for a small fee)", differentiating on ticket prices versus in-flight amenities.
I may be mistaken, but I was under the impression that's what lead to airlines charging for drinks, meals, etc: it allowed them to lower ticket prices.
The problem was that it was presented in such a way that it seemed like a hustle. People would rather do without than think they've been taken advantage of.
Just announce the price before passing out the headphones. That's all. Conversion will increase without spending another nickel.
Continental could have already tested this, of course.
Most people will take free headphones, including those who initially have no intention of paying for TV. Most people will be too embarrassed to ask for headphones when bored during mid flight, especially if they've already refused them and told the air hostess they have absolutely no intention of paying such an outrageous fee.
Not telling people the price until they've decided they want something is just savvy marketing.
I think you touched on both issues. The $6 after the fact (the fact being I already purchased my ticket) seems like such a petty way to make money. I've been on Continental on longer flights (Houston to Quito) and I've thought to myself "If they raised my ticket by $6, I would be fine, but asking for the money afterwards is so annoying." There's this mental block that I have, and I'm sure others, too, that after I've paid for my flight, that's it, no more charges or fees, I'm done.
As others have mentioned though, when it comes to searching for flights, we as consumers have brought this upon ourselves because more often than not, we don't distinguish based on features, we select based on price, so we have given airlines every incentive to pull these kinds of tricks. Once enough of "us" start buying the 4th, 5th or 6th most expensive fare because we like that airline's pillows/movies/flight attendants, then maybe things will change.
>> we as consumers have brought this upon ourselves because more often than not, we don't distinguish based on features, we select based on price, so we have given airlines every incentive to pull these kinds of tricks.
True, but at the same time, there is very little way of distinguishing between features. Policies like extra baggage charges are extremely poorly labelled for most major airlines such that charts like this one (http://www.airfarewatchdog.com/blog/3801089/airline-baggage-...) are not uncommon to make sense of all the different policies. Furthermore, policies like the charge for extra headphones or TVs seem to vary not from airline to airline, but airplane to airplane, depending on the media equipment that the plane is outfitted with.
I think consumers do want those extra perks and would be willing to pay more for them, but simply do not have the means to make sense of the byzantine airfare purchasing 'system' that we have. Hence, consumers go with the lowest price as the one thing of which they can be sure. This is why I think Hipmunk is so important as a startup. It's the first attempt by a flight search engine to rank and display flights not just by price, but also by some of these other features.
Flight search engines rank by price, not by amenities. Add $3 to your fare, and you are instantly at the bottom of the search results.
I think airlines should just let you use frequent flyer miles for this. "Watch DirecTV in flight and earn 700 miles instead of 1400 miles." But this, I imagine, would be bad for load factors.
I think the telling thing in this article is the author doesn't mentioned how he chose that flight. From his narrative, it seems he only learned about the DirecTV as he boarded.
If he went to a travel site and chose the cheapest one, then he already knows why this is a bad idea.
As much as I hate the nickel-and-diming that the airlines are doing right now, I can't see any alternative. The aggregator web sites (such as kayak.com) don't indicate to the buyer that the higher price comes with added value.
Until that happens, price will be the only criterion, and it will be in the airlines' best interests to make it as low as possible.
I believe this very issue was the reason that American Airlines pulled its fares from Orbitz. AA is trying to escape from the race-to-the-bottom price war and focus on delivering different value offerings to buyers at ticket purchase time.
I don't know of a travel site that presents pricing the way The Economist did in the example from the TED talk. As a traveler I've never seen mention of TV options (paid, free, or otherwise) before booking.
The only way this works is if I already know about amenities. For example, I know Jet Blue has free TV, even though I've never flown on a Jet Blue flight. But that has more to do with word of mouth marketing than it does funnels or pricing pages.
For many people (sometimes myself included) the choice for keeping yourself occupied on the plane is to buy some magazines, books or games before getting on the flight. This not only costs more than $6, it's often not as satisfying as watching TV to boot. In the realm of "last ditch get something to keep yourself occupied for 4 hours", $6 for TV is a great deal.
A similar approach is being piloted in the UK on certain train lines - on demand media streaming called Volo (http://www.volo.tv/). Its expensive, you have to pay for headphones and their content is mediocre. Train prices have consistently raised from year to year.
"We've also made it easier to pay. No need to login, simply buy your ticket for £1.75 from the ticket office, by telephone or from the comfort of your seat!"
It says you pay £1.75 for a ticket. So this sounds like a way to get a seat if you're on board a busy train even if you've not booked in advance. Last I looked you paid £1 each way for a seat reservation which makes the marginal cost 75p, cheaper than buying a newspaper.
