PBTA Education Day Business Travel Coalition April 21, 2010 Philadelphia Airline Unbundling: Historical Footnote or Business Model Step-Change?
Like A Rocket Checked baggage Seating Upgraded meal Complexity Cost Data
Airline Industry Background
Financial Risk Profile
Balance Sheet Analysis Losses last 10 years of $63B domestically Underpriced product by 11% $21B in new costs is coming on line Airlines are $50B in the hole Ten years ago airlines had 28% equity vs. 4% today
A Closer Look At Unbundling
Phase 1: Basic unbundling Phase 2: New added-value services Phase 3: Expanded 3rd party services Phase 4: Rebundled packages of services Phase 5: Door-to-door innovation Phases Of Unbundling
New Business Models
No Slam Dunk Consumer backlash Government intervention Loss of corporate support
1. Full content 2. Not undercut the value of corporations’ contracts 3. No discrimination 4. Respect managed travel efficiencies 5. Avoid “free-rider” problem Policy Standards
Technical Standards
Two Paths
PBTA Education Day Business Travel Coalition April 21, 2010 Philadelphia Airline Unbundling: Historical Footnote or Business Model Step-Change?