Rafi Mohammed

How are GM and JetBlue Attracting New Customers? A New Pricing Plan…of Course

Posted on August 19th, 2009 (0 Comments)

A new pricing plan can activate a product’s dormant customers – those who are interested in a product but refrain from purchasing because the current pricing plan doesn’t work for them.

Many auto purchasers don’t enjoy the often high pressure process of negotiating over price. That said, most cars are sold via face to face negotiation. Go figure. To target the large number of customers who don’t find the “hold on, I have to check with my manager” routine humorous, General Motors is now seling cars on eBay. Customers interested in a car can accept the “Buy it Now” price (…please don’t) or make a lower offer electronically. GM hopes that this pricing initiative will activate dormant customers who aren’t enamored with the current pricing plan of negotiation.

JetBlue recently garnered headlines by offering an all-you-can-fly pass. From September 8 to October 8, $599 buys a passenger the opportunity to fly as much as they please. With the period after Labor Day being traditionally slow, there’s not much cost to JetBlue (planes have to fly anyway) and only a limited number of these passes are available. This all-you-can-fly plan is attractive to business travelers who might otherwise not fly on JetBlue. This airline is not well-suited to business travel (limited number of destinations, passable frequent flyer plan, no first class, and no elite levels loaded with perks for road warriors). $599 for unlimited travel is a great value for frequent travelers who often spend thousands of dollars on air travel every month. The airline is betting that after experiencing the pleasure of flying on JetBlue, business travelers will become converts. A friend regularly exclaims that when he flies on JetBlue, he arrives at his destination rested and relaxed. I agree, it is a great airline.

JetBlue isn’t the first airline to sell unlimited air passes. In the 1980s, American Airlines briefly sold unlimited lifetime first class air travel for $250,000 (a companion ticket could be added for an extra $200K). Billionaire Mark Cuban and computer entrepreneur Michael Dell reportedly purchased these non-transferable passes. In 2004, American’s unlimited air pass was offered again through Neiman Marcus for $3 million.

One of the most famous unlimited air pass customers was radio disc jockey Tom Joyner. Mr. Joyner had a morning radio talk show in Dallas and an afternoon show in Chicago. On every weekday, he chose to commute to Chicago after his morning Dallas show and then return to Dallas that evening. Surprising, American also awarded frequent flyer miles for air pass holders and Tom earned 7 million miles during his bi-city radio career.

Add Comment
Send to Friend
Email Signup
RSS Feed