In response to these problems, China Eastern Airlines announced in the evening of June 18 that the demand for products is too hot, which has exceeded the companys expectations, and is arranging technicians to repair the network in an emergency. For scalpers sold at a higher price, China Eastern Airlines will ask the price hiker to refund the amount after the user reports.
In the latest announcement, China Eastern still hasnt explained how many sets are limited, but said that it will continue to carry out Limited sales, and China Eastern never disclosed the sales volume of the products from the beginning to the end, still holding the pipa half covered, which undoubtedly increases the mystery of the products.
On Weibo and Zhihu, Xinfei has also been widely discussed. A big V listed the advantages and disadvantages of Xinfei product design, pointing out that Xinfeis product terms, such as limited segments, did not make consumers feel Xinfei, and the netizens in the comment area below also gave different opinions on the product terms. Although the product terms are controversial in terms of public opinion, the public opinion itself is to bring goods to freefly.
Careful thinking hidden in the terms
Compared with the traditional discount promotion of air tickets, the discount of free flight is not obvious, but also limited by many conditions. Therefore, in the eyes of the target customers of Xingfei, this product is worth a lot of money, while for the non target customers of Xingfei, this product is more vulnerable.
In terms of no show, China Eastern Airlines requires passengers not to take no show more than three times, which will be invalid. At the same time, China Eastern Airlines also makes strict requirements on the time of booking and refund. According to the rules of use, the exchange shall be 5 days (including) before the flight departure date. If the flight cannot be completed, the refund shall be made at least 4 days (including) in advance. If the passenger fails to take the seat after three times of booking and exchange and fails to handle the refund within the specified time, the exchange shall be cancelled If the ticket is cancelled, it will be regarded as no show.
The time limit for ticket refunding is too strict, and flying at will has been criticized by many netizens. Because of the uncertainty of what will happen in the second half of the year and the strict time limit, there will be more accidents in the middle, but the no show regulation will reduce the room for maneuver.
On the other hand, no show is a part of overbooking management of airlines. Normally, no show is restricted to ensure more seats to be sold and maximize flight revenue. However, at present, only 65% of China Eastern Airlines flights have seats on average. The effect of restricting no show to sell seats is not obvious, but it makes consumers feel that there are some holes.
In terms of segment, only three unused tickets can be found in the same electronic card, and only one unused ticket can be found in the same departure place on the same date, which limits frequent transfer and return flight on the same day. In actual travel, flying at will cant really follow ones heart.
In terms of free time, from the time of purchase to December 31, free economy class is only available on Saturday and Sunday, without Friday afternoon and evening time. Its not very convenient for people who want to enjoy the two-day life in the city. In the second half of the year, there are more than 20 weeks left. For most office workers, its difficult to fly every month. Its hard to say whether they can fly back to the city.
In terms of age limit, children under the age of 12 are not suitable for flying at will, while children over the age of 12 are subject to academic pressure, so it is not cost-effective for families with children to travel frequently in the second half of the year.
Image source: China Eastern Airlines app
From the time of release, the reason why China Eastern Airlines chose to launch this product in 618 is obviously considered. The products sold in April may may be cold. Although the Qingming holiday has mobilized the travel needs of passengers, but just after the covid-19 epidemic, people are still in a state of panic and most choose to travel around. After two months of macroeconomic rebound, the demand for long-distance travel also rebounded, and the risk of failure to launch this product in the current environment will be much smaller.
In spite of all kinds of disputes on terms and design, product designer China Eastern has already tasted the sweetness and innovated the competition way first. Will other airlines be more successful if they follow up?
From the perspective of industry comparison, Huaxia Airlines also sold unlimited number of flight packages at the same time, with a price of 2999. From the date of ticket purchase to October 24, the package tickets of Huaxia Airlines have no restrictions on Saturday and Sunday, which is more convenient than that of China Eastern Airlines in terms of time, but do not get the same popularity as that of China Eastern Airlines. In addition to the short period of validity, the lack of publicity and less route resources also make the package tickets of Huaxia Airlines not set off a big splash.
All for cash flow
Major airlines have to rack their brains to promote sales. For a while, the aviation industry has fought a fierce price war. The desire for cash flow is behind the continuous screen swiping of tickets with tens of yuan and more than 100 yuan on the ticket booking interface.
In the pricing strategy of airlines, customers are usually divided into price sensitive, convenience sensitive, relationship sensitive and cost-effective sensitive. Airlines generally rely on a large number of historical data to identify the type and proportion of consumers of specific routes and flights, so as to determine the pricing scheme of maximizing profits.
All in one discount promotion can only please price sensitive and value sensitive customers, not convenience sensitive customers. It can also send a signal of lack of money to investors, which will attack the confidence of investors in the capital market. Convenience sensitive customers care more about time arrangement and convenience, and are less sensitive to price and cost performance.
The free flight of 3322 yuan, for Xian to Shenzhen long-distance routes, two round trips can be worth the fare, an average trip of three months, not only to ensure the cost-effectiveness, but also to be more convenient in general. After excavating the customers with cheap pictures, it also flatters some customers with convenient pictures. Through extensive publicity, China Eastern can also make a group of impulsive consumers buy products. In this group of customers, China Eastern is sure to make no loss.
The purpose of discount is the same as that of freefly, which is to boost sales and get cash flow, but the effect is different.
The essence of free flight belongs to prepaid card. Consumers are equivalent to paying a large amount of cash in advance to China Eastern Airlines, while booking a ticket is only paying the money for one-time ticket purchase to airlines. From the perspective of cash turnover, free flight is undoubtedly superior.
The discount is generally for specific flights, which is more targeted than free flight. By reducing the single passenger kilometer income of specific flights, the passenger rate can be increased, so as to achieve the increase of the passenger kilometer income. However, at present, some airlines lose blood too seriously, discount too extreme, and even have a discount of 0.9% on some flights. In this case, it is impossible to achieve the optimal balance of the above three data.
In general, there are advantages and disadvantages in discount and free flight. Only when they cooperate, can China Eastern Airlines make full use of its idle seats and capacity resources and improve its profitability as much as possible.
Chart source of financial and operation information of China Eastern Airlines: financial report of China Eastern Airlines 2020q1, operation announcement in May
In March this year, China Eastern Airlines issued more than 2 billion yuan of ultra short financing bonds with an interest rate of 1.32% to replenish blood urgently, which is the same as the essence of ultra short financing and low interest rate loans. The nature of the advance receipts anchored through flying at will is a cash liability, which is a financing method from the financial perspective.
If the local epidemic control continues to maintain a stable and positive trend, the demand for public and private travel of passengers will continue to increase, transportation capacity will increase, ticket prices will rise, and all profit indicators of non free flights will turn better, then the benefits of free flights will form a certain pressure on profits. However, China Eastern Airlines has plenty of route resources and fleet resources, and the cost of free flights will be shared among them His flights, the formation of the pressure to ease profits. If the local epidemic situation is not ideal again, China Eastern Airlines will make even more money. All in all, from the perspective of China Easterns finance, this product can be attacked or retreated. In the future, it may be better or worse. For the aviation industry, every cold winter is an opportunity for expansion. The top airlines will take advantage of the epidemic situation to enhance their scale advantage and lead the competition in the future. Will Wangfujing be granted a tax-free operator license? Why is it an exception? Miss Dongs live broadcast has just set a sales record. Grees shareholders want to sell 42 million shares. The largest shareholder wants to auction abdicated shareholders: and this kind of operation? Source: 36 krypton editor in charge: Chen Hequn_ NB12679
If the local epidemic control continues to maintain a stable and positive trend, the demand for public and private travel of passengers will continue to increase, transportation capacity will increase, ticket prices will rise, and all profit indicators of non free flights will turn better, then the benefits of free flights will form a certain pressure on profits. However, China Eastern Airlines has plenty of route resources and fleet resources, and the cost of free flights will be shared among them His flights, the formation of the pressure to ease profits.
If the local epidemic situation is not ideal again, China Eastern Airlines will make even more money. All in all, from the perspective of China Easterns finance, this product can be attacked or retreated.
In the future, it may be better or worse. For the aviation industry, every cold winter is an opportunity for expansion. The top airlines will take advantage of the epidemic situation to enhance their scale advantage and lead the competition in the future.