Would You Buy An Annual Travel Subscription With Air Peace Nigeria?

Would You Buy An Annual Travel Subscription With Air Peace Nigeria?

I mentioned a travel subscription in my 2021 Outlook video. Yes, the idea is that you can pay a flat subscription fee for, say Arik and Air Peace in Nigeria, and fly as much as you want locally [that does not exist in those airlines as I write]. Is that a nice idea? Some are already on that redesign: “Costco has partnered with WheelsUp to offer a yearly private jet subscription”.

The pandemic wreaked havoc on the travel industry in 2020: international travel all but halted for many countries; airlines filed for bankruptcy protection; traditional tourist hotspots have become coldspots. In response, the travel industry has been forced to rip up big chunks of its playbook and start fresh. One idea gaining traction? Travel subscriptions. Costco has partnered with WheelsUp to offer a yearly private jet subscription for $17,499.99. Tripadvisor is launching a yearly subscription service called Tripadvisor Plus for $99, which offers access to travel deals and other perks.

The idea is not really bad. It all depends on the price. If the price is fine, many will go for it. For the airlines, they will have a more predictable revenue model,  and that could be a good thing for them. Largely, even during lockdowns and pandemic, the revenue is locked for good!

Yet, there is risk for airlines: people can just buy the subscription and decide to be sleeping on air. After all, Nigeria remains the only place I know where people found peace, doing a wedding reception in a rented aircraft in the mid air, as a sign of affluence! So, some will tour if you give them an open annual subscription.

So, it comes down to the right equilibrium point. Yes, finding the optimal pricing point would be the secret sauce in this latent business model.

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3 thoughts on “Would You Buy An Annual Travel Subscription With Air Peace Nigeria?

  1. It’s very possible, they already have a good data to help them make good predictions.

    There are different ways to do the price modelling, one could be to mark down the price by forty percent, then make it four per month, forty-eight per annum.

    If a one-way ticket is N30k, and with this annual package it beomes N18k or N20k, you are adding more people into the flying space. Instead of flying twice for N60k per month, you now do four for N80k; the revenue to the airline is N80k, not N60k!

    Airtime promos have shown that you don’t spend less by getting bonuses and freebies, rather you spend more.

    Many of the aircrafts are not fully booked at departure, that’s a lost revenue, by marking down the price via annual subscriptions, you could be having a queue all year round…

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  2. Insightful write up as always.

    I would like to know for further reading on this discuss just for knowledge sake, is pricing models the best Google search ?

    Thanks.

    Reply

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