Basic Economy fares are highly restrictive, especially basic economy seat assignments. The goal is to make the travel experience worse, so that you don’t like that product and are willing to spend more money to avoid it.
- No advance seat assignments
- No changes to your ticket
- No upgrades
- Board last
- No full-sized carry on bag (United only)
How Basic Economy is Supposed to Make More Money for Airlines
Basic economy is a price increase — but a targeted one. It’s a price increase on those who care about their travel comfort.
It’s also a way to regain pricing power over business travelers. Airlines used to offer cheap flights to leisure travelers and expensive flights to business passengers using 14- and 21-day advance purchase requirements and Saturday night stay requires for the least expensive fares.
One of the challenges posed by low cost airlines like Spirit and Frontier – beyond just competing with lower costs and lower fares – is that the fare rules that used to separate business and leisure passengers broke down. Spirit and Frontier started offering their cheap flights on one way and last minute fares.
What airlines have largely accomplished with basic economy fares is to keep their cheapest fares for price sensitive passengers. Business travelers frequently aren’t even shown basic economy fares in their booking tools. This is why basic economy isn’t sometimes just $20 or $30 cheaper but might even be $300 cheaper — you’re seeing the difference between what the airline is willing to sell a seat for and what they think they can sell that seat for to the right customer.
Harsh Basic Economy Rules Cause Airlines to Lose Business
The risk for airlines is that making their product worse, or more expensive, risks sending the customer to a different airline.
- A higher-priced or less comfortable trip might mean people taking less trips
- They might decide to spend more on a different airline — Delta’s basic economy is less restrictive than United’s basic economy (the only airline still banning passengers on basic economy fares from bringing carry on bags onto the plane, and refusing to allow basic economy passengers who don’t check bags to use online or mobile check-in).
When United launched their basic economy product they admitted it initially lost $100 million. They blamed this on American not yet having rolled out basic economy, so passengers booked away (at the same fare American was offering more value than United).
Of course Southwest Airlines is the largest carrier of domestic passengers and still allows two free checked bags and doesn’t charge change fees. And Delta’s President said harsh basic economy rules were causing United and American to lose money.
American is Making Basic Economy Seat Assignments Less Bad
American Airlines admitted that their basic economy plan underperformaed and they brought back carry on bags for basic economy customers to make it less harsh, in the hopes fewer customers would book away from the airline.
Now they’ve taken another step further and are allowing basic economy passengers to pre-select a seat for a fee a week in advance, instead of just 48 hours prior to flight. (HT: JonNYC)
Many Passengers Should Now Consider Buying Basic Economy on American
Most customers won’t get upgraded anyway, even elite customers. Boarding last doesn’t matter if you’re in coach on one of American’s planes with bigger overhead bins (gate agents are being told they don’t have to gate check bags on these flights). The 87% of passengers who fly no more than once per year have to pay for any decent advance seat assignment even if they spend more to avoid basic economy. And now that you can pay for that seat a week in advance, the average customer should just consider doing that.
American isn’t doing what it should be doing — trying to deliver a better product at a lower price — but it’s removed much of the sting from basic economy so that it can be something closer to what they need it to be, not a way to squeeze $20 more from passengers each way, but a way to separate leisure travelers from business travelers again. They’ve made basic economy seat assignments easier to get in advance, albeit for a fee.