Subscriptions Are Coming To Travel, Should You Get On Board?


An American Airlines Boeing 737 Max jet plane is parked at a maintenance facility in Tulsa, Okla., on Dec. 2, 2020. American Airlines says the first quarter was difficult, Thursday, April 21, 2022, with another large loss, but it expects to turn a profit in the second quarter as more people return to travel. That's similar to what other airlines are saying, as they plan for a booming summer travel season. (AP Photo/LM Otero, File)
By 
Sam Kemmis 
NerdWallet

The subscription pricing model is trending in the travel industry. Though it might be a familiar payment option for your favorite streaming platform or at-home meal kit, it’s taking new shapes in tourism. Alaska Airlines recently launched a subscription service for West Coast flyers, offering 1-cent flights (on top of a monthly fee) for flights between California, Nevada and Arizona. And for $2,500 a month, holders of the Inspirato Pass can book luxury travel accommodations at premium vacation rentals and high-end hotels. Though these membership services usually don’t make sense for the average traveler, they could be a good fit for a niche market.

Subscriptions have seeped into nearly every consumer industry, from TV to tacos. There are even services that help subscribers cancel all their subscriptions. But one industry has notably lagged: travel.

That could be changing.

The market for travel subscriptions has started to expand and includes cheap flights, airport lounges, luxury accommodations and high-end credit cards.

“Subscription models can add a lot of predictability to an industry that can be very spiky,” says Amy Konary, vice president at the Subscribed Institute by Zuora, a think tank focused on the subscription economy .

Travel purchases tend to be one-off and transactional. Airline and hotel loyalty programs aim to promote loyalty and benefits, but only those travelers who travel (and pay) a lot can reap the rewards. Subscriptions could turn this concept on its head by offering these benefits upfront.

“The subscription model lets you get access to those premium perks by paying directly,” Konary says.

Will customers take to this idea? Travel brands are rushing to find out.

Alaska Airlines dipped a toe into the subscription waters in March with the launch of its “ Flight Pass.” For a price that starts at $49 per month, subscribers can book one round-trip main cabin flight every two months for one penny plus about $15 in fees. The catch? The flights must be direct, booked within a limited time frame and, most importantly, fly between particular airports in California, Nevada and Arizona.

Confused?

“Communication has been the big challenge,” says Alex Corey , managing director of business development and products at Alaska Airlines. “It’s been hard for people to appreciate that this might not be designed for them. If I went to my favorite store and it didn’t meet my needs, I’d be like, ‘Hey, make this this way.’”

Instead of trying to be everything for every traveler, Alaska’s subscription has focused on a narrow niche: younger Californians with plenty of wanderlust and schedule flexibility. So far, just under half of subscribers are millennials or Generation Zers, according to Alaska.

It’s a niche product, to be sure, but Alaska is confident that it can appeal to a particular kind of West Coast traveler.

“Californians travel 3.5 times more within their own state than residents of other states do,” says Corey, explaining why the airline chose the state as the proving ground for its idea.

And Alaska focused on the lowest-cost entry point possible, starting at $49 per month to make a flight subscription seem feasible to almost anyone.

“We wanted to compete with an Uber ride or a bar tab,” Corey says.

On the other side of the price spectrum, the luxury travel platform Inspirato offers a subscription service for vacation rentals and high-end hotels starting at $2,500 per month .

That’s $30,000 per year for the opportunity to book high-end accommodations around the world. That might seem like a huge bill for a vacation budget, but it’s potentially more reasonable for remote-working nomads looking to travel as much as possible.

Yet Inspirato’s subscription, too, comes with a long list of caveats and exceptions. Pass holders may book just one trip at a time, bookings are on a first-come, first-served basis and many rooms and homes are available only during off-peak seasons.

Less spendy digital nomads can choose Selina, a co-living and coworking subscription service that combines the cost of accommodation, office space and dependable Wi-Fi into one monthly bill. Subscribers can bounce between Selina’s global destinations and take advantage of surfing lessons, yoga classes and other wellness activities.

These services offer one benefit to potential customers that is difficult to quantify: simplicity. Rather than searching through hundreds of vacation rental listings, subscribers can make one payment per month and choose from a range of vetted options.

Yet simplicity alone won’t cut it, Konary says. Consumers are wary of adding another monthly bill to their long list of active subscriptions and need to know they’re getting a good deal.

“As we’ve become more familiar with these models, we have a high bar for what we expect in terms of value,” Konary says.

Travel subscriptions aren’t a new idea. JetBlue Airways introduced an “All You Can Jet” unlimited flying pass way back in 2009. The promotion received plenty of attention but didn’t translate into a sustainable business model.

And successful travel subscription services already exist. Premium travel credit cards offer perks to travelers such as airport lounge access for a yearly fee. And services like TSA PreCheck and Clear let flyers bypass normal security lines.

But a new wave of subscriptions is coming to travel with one big difference — specificity. Instead of trying to be the Netflix of travel, with something for everyone, new services are providing niche offerings to specific demographics.

Not everyone wants to fly within California every other month or take surfing lessons in Belize at a coworking space. But for those who do, these subscriptions could offer a valuable way to travel without the hassle. Or they could go the way of MoviePass.

“I do think what we’re doing is unique,” Corey says. “I hope it catches on.”

 

This article is republished from NerdWallet, a personal finance website that provides consumers with personalized insights to help make money moves. It was distributed by The Associated Press. Find more at nerdwallet.com.

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