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PBTA Education Day Business Travel Coalition  April 21, 2010  Philadelphia

Airline Unbundling: Historical Footnote or Business Model Step-Change ?. PBTA Education Day Business Travel Coalition  April 21, 2010  Philadelphia. Like A Rocket. Checked baggage Seating Upgraded meal. Complexity Cost Data. Airline Industry Background.

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PBTA Education Day Business Travel Coalition  April 21, 2010  Philadelphia

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  1. Airline Unbundling: Historical Footnote or Business Model Step-Change? PBTA Education Day Business Travel Coalition  April 21, 2010 Philadelphia

  2. Like A Rocket • Checked baggage • Seating • Upgraded meal • Complexity • Cost • Data

  3. Airline Industry Background

  4. Financial Risk Profile

  5. Balance Sheet Analysis • Losses last 10 years of $63B domestically • Underpriced product by 11% • $21B in new costs is coming on line • Airlines are $50B in the hole • Ten years ago airlines had 28% equity vs. 4% today

  6. A Closer Look At Unbundling

  7. Phases Of Unbundling • Phase 1: Basic unbundling • Phase 2: New added-value services • Phase 3: Expanded 3rd party services • Phase 4: Rebundled packages of services • Phase 5: Door-to-door innovation

  8. New Business Models

  9. No Slam Dunk • Consumer backlash • Government intervention • Loss of corporate support

  10. Policy Standards Full content Not undercut the value of corporations’ contracts No discrimination Respect managed travel efficiencies Avoid “free-rider” problem

  11. Technical Standards

  12. Two Paths

  13. Airline Unbundling: Historical Footnote or Business Model Step-Change? PBTA Education Day Business Travel Coalition  April 21, 2010 Philadelphia

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