Branded Fare Background
Discover more from Airline Revenue Economics
When I started my aviation career in 2007, one of the first thing that Qatar Airways asked me to do was evaluate some proposals to implement fare families in the Qatar market. A group of consultants had advised that this was the latest thing, the question was whether or not it was a good idea. It looked good, so a few weeks later all the travel agents in Doha were introduced to ‘Flexi’, ‘Standard’ and ‘Saver’ fares.
Fast forward to the present and now branded fares are the latest thing, across all cabins – Emirates have used them to unbundle business class lounge access and Finnair are using them to unbundle elements of the onboard service. But some people are asking me – where did branded fares come from, how do they work and how are they different to fare families? This article explores these questions.
Jumbo generations
Once upon a time air fares were simple and highly regulated – passengers paid one fare for the route and agents could use hefty paper manuals to look up the right amount in tables. They were also expensive, so when large aircraft like the Boeing 747 entered service in 1970 there were simply not enough passengers willing to pay the determined fares who would fill the plane.
In response airlines introduced cheaper fares called ‘Savers’ and ‘Super Savers’. Typically the less expensive fares required passengers to suffer penalties for changes and cancellations that the most expensive fares did not. Travel agents would tell their customers what the differences were. These were the first fare families.
Fast-forward to the late-90s and airlines started to build Internet Booking Engines (IBE) on-top of legacy selling platforms. To distinguish between the different fares they hard-coded the penalties associated with each fare family at the booking class level. Airlines who cared preferred to show a version of the fare rules that customers could easily understand rather than a large amount of technical text. So for example a business class cabin with four booking classes (J-C-D-I) might show:
J: “Make as many changes as you like without any charges. If you cancel there is a full refund”
C: “Changes are £100 each. If you cancel there is a 20% charge for a refund”
D & I: “No changes permitted. If you cancel there is no refund”.
Changes and market variations required the IBE to be coded manually – a time-consuming and expensive process that led passengers to claim that they never heard about charges to change their ticket.
Suffixes signify
Airline fares are each given a name, an eight letter combination of letters and numbers known as a fare basis code (FBC). Airlines realised in the early 2000s that their IBE could read the FBC just as well as the booking class. It turned out that using the end of the FBC was both more efficient and more flexible for managing fare families than using the booking class alone as an indicator.
When the first fare families were implemented at Qatar Airways we used:
‘Flexi’ = suffix FEX, e.g. J1FEX
‘Standard’ = suffix STD, e.g. C1STD, D1STD
‘Saver’ = suffix SAV, e.g. I1SAV
The IBE was programmed to state the terms and conditions associated with each fare family on the basis of the suffix. This allowed us to change terms and conditions at will without having to recode things manually. For example if we wanted to change booking class D from ‘Standard’ to ‘Saver’, all that was required was to file new fares named D1SAV rather than D1STD – the IBE would do the rest.
On the other hand if we wanted to introduce flexibility to change or refund without penalty at a lower price we could introduce I1FEX, D1FEX or C1FEX. While the rules associated with fare families were consistent, we no-longer had to apply the same fare family to each booking class to every destination.
What was harder though was offering multiple price points for customers to choose using the same booking class to the same destination. If we had I1FEX = $1,000 and I1SAV = $750 for example, it was so difficult to allow the passenger to choose between them that it was not worth the hassle. Fortunately there is now a solution.
Option overhaul
A few years ago Washington-based ATPCO, who manage most fares data, introduced new possibilities which they called branded fares. These were in many ways similar to fare families, except now not only charges for changes and refunds could be clearly added or taken away from a price, almost anything could. There is a large table of what ATPCO call ‘optional services’ that you can view here. It includes everything that ATPCO reckon an airline might want to offer – even aircraft models.
Another ATPCO product, which they call Next Generation Storefront (NGS), makes it much easier for passengers to choose a specific product, even within the same booking class. Now airlines like Finnair can take one class, I class say, and offer fares that are fully flexible, semi-flexible or non-flexible, with a meal or without a meal, with a model plane or without a model plane, whatever they choose.
This are the two differences between fare families and branded fares. When the price and conditions are largely driven by booking class this is the fare family environment. When the price and conditions are independent of the booking class and can incorporate changes in the onboard/airport product and service they are branded fares.
If you would like help understanding the power of branded fares, get in touch.
oliver AT ransonpricing DOT com