However, despite the potential to increase revenues, few airlines have investigated the viability of directly offering opaque
products themselves. Conceptually, it should be clear that the ability of airlines to offer an opaque product directly to
customers has several benefits, most notably, the ability to tailor products to potential customers and the ability to increase
brand awareness. Two airline applications of opaque products offered by airlines reported in the literature are overviewed by
Post (2010) and include those by Freedom Air, a former subsidiary of Air New Zealand, and Germanwings, a wholly-owned
subsidiary of Lufthansa. In the context of Germanwings, Post (2010) notes that ‘‘the customer can select a group of possible
destinations, any one of which she is prepared to fly onto a particular departure and return date. A penalty fee is charged for
each destination that she deletes from the group, thereby making the group smaller and reducing the uncertainty. Only after
payment is made is the customer informed of her flight itinerary.’’ Post (2010) continues, noting that this type of opaque
product has resulted in increased load factors at Germanwings by 1.5%. Further, a detailed examination revealed that these
new passengers are almost completely incremental, i.e., they represent new customer demand (Mang et al., 2009).
However, despite the potential to increase revenues, few airlines have investigated the viability of directly offering opaqueproducts themselves. Conceptually, it should be clear that the ability of airlines to offer an opaque product directly tocustomers has several benefits, most notably, the ability to tailor products to potential customers and the ability to increasebrand awareness. Two airline applications of opaque products offered by airlines reported in the literature are overviewed byPost (2010) and include those by Freedom Air, a former subsidiary of Air New Zealand, and Germanwings, a wholly-ownedsubsidiary of Lufthansa. In the context of Germanwings, Post (2010) notes that ‘‘the customer can select a group of possibledestinations, any one of which she is prepared to fly onto a particular departure and return date. A penalty fee is charged foreach destination that she deletes from the group, thereby making the group smaller and reducing the uncertainty. Only afterpayment is made is the customer informed of her flight itinerary.’’ Post (2010) continues, noting that this type of opaqueproduct has resulted in increased load factors at Germanwings by 1.5%. Further, a detailed examination revealed that thesenew passengers are almost completely incremental, i.e., they represent new customer demand (Mang et al., 2009).
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