Price strategy - Hot Air price change

Hot air changed their retail price in April 2011.

The previous retail price was 225 per person in 2010/2011. The normal flight included a Champaign buffet breakfast which was very tasty and sufficient. Due to cut down the cost and increase the profit, from 1st April 2011 the Hot Air cancelled the breakfast and increase express flight 10 AUD per person.

Despite the cost cut down as cancelling the breakfast, the 10 AUD per person additional fee is a little bit weir. People will usually choose the express light to catch up the cruise which can take them to the Great Barrier Reef. Normally the visitors came to Cairns and stay in Cairns three to four days and Chinese tourists stay even less. So the express flight will be sold out quicker than the normal flight. I think the 10AUD price difference is designed to encourage people to choose the second flight which is the normal flight.

But does this strategy work for the Chinese tourist market? I am doubt about it.

Hot Air put a lot of marketing emphasis on the Chinese market. With the booming of the Chinese tourism market in Cairns, Hot Air got a piece of pie. Hot Air ballooning become one of must-to-do option for the Chinese tourists.

But the most of Chinese tourists come to Australia as a group and travel to 3-4 cities of Australia and New Zealand in 10 to 15 days. So they don't have a lot of time in Cairns. For achieving must-to-do willing, they have to take hot air ballooning before going to the reef. This is the reason for the customer to choose the first flight.

Never than less, the other reason is those tour guides and tour leaders told their customers that the express flight has more chance to see the sunrise than the normal flight. It is partially true but people buy it.

So those were two major reasons for Chinese tourists to choose the express flight and the express flight will be more popular than the normal flight.

Although the 10 AUD different may convert some tourists from the other countries excluded China from express flight to normal flight, but to convert Chinese tourists to do so, we need some other strategies.