By separating the value of the actual flight from the services associated with flying, airlines have greatly expanded the profit pool associated with flying. This combines the advantages of integrating overall low cost and differentiation strategies.

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Perhaps the primary benefit to firms that integrate low-cost and differentiation strategies is the difficulty for rivals to duplicate or imitate. This strategy enables a firm to provide two types of value to customers: differentiated attributes (e.g., high quality, brand identification, reputation) and lower prices (because of the firm's lower costs in value-creating activities). By separating the value of the actual flight from the services associated with flying, airlines have greatly expanded the profit pool associated with flying. They have found that flyers may be very price-conscious when purchasing tickets but are willing to shell out more for a range of services. While this does increase their revenue, it may also provide benefits for at least some customers. Jay Sorensen, CEO of IdeaWorks, noted that it offers the potential for an airline to better tailor service to the needs of individual customers. They can click and buy the amenities they want rather than the airline deciding what is bundled in the base fare.

By Separating the Value of the Actual Flight from the Services