Branded fares are a great way to upsell airline services but also to stand out against the competition, writes Tom Bacon

Branded fares, also known as ‘fare families’, are often viewed as a great sell-up opportunity and many such innovative carriers report tremendous revenue gains from offering bundles of ancillary services. 

However, the two most recent additions to the ‘branded fares’ arena remind us that, ultimately, they must operate in an airlines’ unique competitive environment. To structure branded fares most effectively, an airline must balance its notion of sell-up (can we get this passenger to pay a bit more) and competitive positioning (how does the whole package compare to fares offered by the competition).

A year ago, jetBlue was lagging US airline industry revenue performance. In this context, Wall Street analysts continually questioned jetBlue’s long-standing policy of no-bag-fees; bag fees had grown to be a significant revenue source for most US airlines so the analysts felt jetBlue was leaving something on the table. So, last month, jetBlue announced its new bag fee policy.

jetBlue had to be very careful, given its competitive position. Its brand stood for ‘maverick’ and ‘more customer oriented than other airlines’. So, assessing a new bag fee could, for one, reduce its attractiveness in markets where it had been the only carrier without a bag fee. Secondly, and perhaps even more dangerously, the move could impair its brand with its loyal customers.

So jetBlue appropriately tread very carefully into the bag-fee world with the following approach:

• Its new bag fee is lower than most other airlines.
• If you buy the bag as part of a new ‘branded fare’, the fee is only $15, or 60% of most airline bag fees.

In essence, the way jetBlue chose to implement branded fares was as a way to appear more customer friendly while implementing the dreaded bag fees. In fact, if jetBlue and its competitors have the same base fares, customers who check bags will end up paying less on jetBlue with its lower bag fee.

Lufthansa, another carrier that recently announced new branded fares, has a very different competitive environment to deal with. Unlike jetBlue (whose primary competition has charged bag fees for six or more years), Lufthansa’s legacy competition has not yet implemented unbundled their fares. In fact, many traditional European carriers still offer a free checked bag with their base fare. So, as Lufthansa is unbundling its fares, it is simultaneously launching a version of branded fares. Branded Fares can make it more transparent for customers to see what features (checked bags, refundability, change fees) are included in a particular fare – this is important for Lufthansa given that its passengers are not accustomed to unbundled services. Lufthansa will manage its branded fares in the context of the competition: potentially the no-frills fare will be set to be lower than the bundled fares of its competitors.

Which brings up another point about branded fares: the optimum offering changes over time as the market responds – both customers and competitors. American Airlines and Frontier Airlines, two pioneers of branded fares in the US, have radically changed their bundling and pricing philosophy since they were launched. Airlines that offer branded fares need to monitor results and adjust their approach accordingly over time.

The bottom line is that branded fares are not simply a sell-up tool. No airline can regard passengers who search its flights as a given and focus exclusively on sell-up. Branded fares are certainly a tool for sell-up – but above all they are a way to position an airline against its competitors.  All airlines need to design their branded fares around the unique competitive environment they face.

Tom Bacon has worked in the airline industry for 25 years and now consults the industry on airline revenue optimisation. Email Tom at or visit his website for more insights