Advanced Competitive Strategy | Online Course Support

Through which mechanisms could an airline company increase consumer switching costs?

 
 
 
 

A professional customer service which is outstanding in the airline market can also increase customer switching costs because the customers cannot expect such a service with other airlines (or do not know whether the service with other airlines is equally good).

 
 
 
 

If an airline offers a very specific booking tool (e.g. very customer friendly or intuitive) the airline’s customers are getting used to this booking system. Hence, such a booking system can also lead to some switching costs which prevents that customers switch.

 
 

This is true. If customers use a mile-based loyalty program (e.g. with Lufthansa’s “miles & more”) they are locked-in because switching to another airline would mean to give up the loyalty status they achieved. It would take time to reach the same status with another airline. Thus, customers with a high loyalty status are less likely to switch airlines.

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