Alex Cosmas Expert Associate Partner McKinsey & Company

Alex Cosmas Expert Associate Partner McKinsey & Company

Private information about my Airline’s fares, products, My cards cards schedule

Competitor's itineraries Community Public information cards in play schedules, fares available at cards time of purchase

All “breadcrumbs” left from Opponent’s Belief of opponent’s strength of customer interaction with airline cards hand

Action: call or fold Action: correctly bundle and Opponent’s information is encrypted price an ancillary package and revealed through “tells” (signals) TICKET PURCHASE SEAT SELECTION LUGGAGE BOARDING GROUND TRANSPORTATION • PNR Data: Origin, dest., • Premium seat purchase • Number of bags • Priority purchase • Mode routing, etc. • Weight • Boarding time • Destination

PRE-FLIGHT FLIGHT POST-FLIGHT

SEARCH CHANGES CHECK-IN AIRPORT ACTIVITY ONBOARD ANCILLARY REVIEWS • Kind of tickets searched for • Change dates • Check-in platform • Travel path • Wi Fi • Official complaints (refundable, one- way) • Change types (class, • Check-in time • Purchases • Food/beverage • Social media/blog • Available fares at time of routing, etc.) reviews purchase Ticket info viewed A COGNITIVE MODEL OF THE AIRLINE CONSUMER

• Willingness-to-pay • Desired • Buy-down probability destinations • No-show probability • Desired product • Change probability • Desired aircraft configuration • Desired ancillary purchases

Fare differential Itinerary Quality Market/Freq. Share Product Quality

Incentivize booking of higher Incentivize booking of less Incentivize booking of less Incentivize booking away from fare on similar quality itinerary desirable routing popular carrier competitor’s higher quality product

Valuation of passengers’ disutility is dependent on each individual’s cognitive model • Lives in Singapore • Purchases WiFi whenever it is available/rarely books flights without WiFi • Joseph is searching for a ticket on SQ’s website. No WiFi-enabled flights are available. Incentivize Joseph to travel with bonus miles so that he does not Joseph book with a competing carrier

• Lives in Dallas • Appears to fly American only to cities not served by Southwest • Target Alice with discounts or bonus offers on flights to Southwest cities Alice

• Lives in Dubai • Needs to fly from DXB to BOM • Always purchases business class fares for business travel • Charlie is searching for an itinerary where business class is sold out. Charlie Incentivize Charlie to travel with an upgrade certificate to be used on future personal travel