American Airlines coupons with 25% off can tell us if a price reduction can lead to a resumption of travel

Gary Leff at 13. February 2021.

Alaska Airlines is probably the most aggressive airline using promotions for discounts and travel sales, with fairly frequent buy-one-get-one offers and 10% discount codes.

American Airlines does something different. They target discounts to try to get more business. They launched a targeted discount campaign a few months ago and are now sending codes to select members to get 25% off, including travel in premium cabin (purchase before February 20 for travel through May).

25% reduction in driving income they would not otherwise receive

The goal, of course, is to generate revenue for the airline in times of uncertainty. From the customer’s point of view, the thought of traveling can be an incentive to book, and the cost of changing airlines is usually insignificant – so if plans change, the worst case scenario is that you get a credit from an airline that can be used in the future.

American is aggressive in its pursuit of revenue from ticket sales, even when the flights themselves are opaque, and seems to be making schedule changes that are closer to the competition.

Can the discount now generate revenue for the airline?

The 25% discount is an excellent discount (although less than the implied Alaska buy one get one discount), but will it encourage travel that wouldn’t otherwise occur – or will it just encourage someone who would have bought the ticket anyway to buy the same ticket at a lower price? It’s the magic question that determines whether a discount makes sense.

  • If the main barrier to travel is not price, but uncertainty about where you can travel, what you can do once you get there, whether these conditions will even change between booking and the actual trip, and health concerns, then discounts may not matter much. In late March, even $13 for a long-haul flight couldn’t fill the planes.
  • On the other hand, most travel these days is a vacation, and vacations are generally very price sensitive. Low prices stimulate demand, at least for places people want to go (e.g., warm-weather beaches, skiing, resorts).

Destination discount answers question : Does this discount lead to the purchase of additionaltickets? You have a test group (who benefit from the discount) and you can appoint a control group from your other customers and compare the results.

It’s harder to answer the question of whether offering discounts leads to more travel, not just more participation (discounts draw customers away from competitors), although you can do this by looking at the results of your loyalty program’s elite members compared to general members, hub customers, and relative performance on already competitive routes, to name a few examples.

If we see Americans continuing this practice, it would be a good sign that at least price can drive demand.

More information about thewing

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