Delta says it is introducing a new “Basic Business” fare that strips out things that used to come standard in the premium cabin. What’s widely misunderstood is that this isn’t a new cheaper business class price point. It’s new restrictions on the lowest business fares so Delta can sell last minute seats to price-sensitive travelers without offering the same deal to customers who would have paid more money. Passengers buying the least expensive business class tickets will have an inferior experience compared to what they get today.
A year ago at Delta’s investor day they promised to do to business class what they did to coach – introduce a new, worse “basic” fare product. They intend to offer Basic Business just like Basic Economy.
Since November they even have a ‘basic’ version of extra legroom coach (“Comfort+”) where you don’t get a seat assignment in advance, and get stuck in a middle seat. They say that’s performing slightly above expectations, so expectations must have been very low, because who would pay more to get stuck in a coach middle seat? It’s probably people who didn’t understand what they were buying.
During this month’s earnings call, Delta President Glen Hauenstein laid out that basic business is coming this year.
I think we’ve talked about really having 3 categories for every product, which is basic, main and extra. And that continues to evolve. I think we put those products in place for Comfort+ earlier in the year, and that implementation is producing results that are actually slightly above our internal projections.
So as you see us continue to bring that and move that up the ladder to give customers choice not only of the seat, but the actual product that they want to buy with that seat and really disaggregating that out. And that should be rolled out pretty much throughout ’26 and as part of our initiatives and our Delta initiatives in our plan.
And since Delta is doing it, United is planning to do it, too because everyone copies what Delta does.
What Will Basic Business Class Look Like?
Drawing on what other airlines around the world have done, basic business could mean:
- Pay to check bags
- Pay for seat assignments
- Lounge access not included
- No business class check-in, priority boarding, or premium security
- No changes or cancellations
- No miles or elite status credit
Basic Business Doesn’t Mean Lower Fares
Unfortunately there’s been a whole lot of misunderstanding and misreporting of what Delta is doing. For instance, “Delta’s business and first-class fares may soon get a whole lot cheaper.” No, they won’t. Basic business (and basic for domestic first class) will not mean lower fares.
What Delta Is Actually Doing?
Delta does need to discount business class to fill seats, but they don’t want to discount it for passengers who would pay more. This is about customer segmentation.
We’ve seen airlines offering different prices for business class for many years. For instance, a decade ago the primary method might have been 50- or 90-day advance purchase ‘Z fares’ with big change fees. You wouldn’t have business travelers making their long haul business class travel plans that far in advance so it was a good way of differentiating leisure passengers (maybe flying to take a cruise) from business fares.
But this didn’t work as well as airlines would like. They want to wait until late in the game to decide how many seats to discount. They might know they’ll need to do some discounting, and offer limited availability of these Z fares, but when the seats haven’t sold at the last minute is when they actually want to sell them cheap. Plus many leisure travelers now are increasingly last minute bookers.
So they need a way to say, here are the price-sensitive customers who will buy a business class fare at the lowest price, and these are the customers who will pay what we ask – and avoid offering those customers the cheaper fare. And they don’t want to face the choice of do we let the seats go empty to maintain high fares, or do we let people pay less than they’re willing to in order to offer low fares and fill seats?
So this is not a ‘new lower fare’ it is ‘new restrictions on existing lowest fares’.
Here’s Why Basic Business Doesn’t Work As Well As Basic Economy
Basic economy was a tool to make the cheapest product worse in order to compete with low cost carriers. The major airlines had to price match Spirit and Frontier, or else they’d lose passengers. But when they offered Spirit-level fares, people who would have paid walkup fares just paid less. It was costing them a lot of revenue.
So Delta, and then American and then United (followed eventually by others like JetBlue and Alaska) introduced fares that were much more restrictive. They might not earn miles, get full status benefits, allow seat assignments at time of booking or – in United’s case – even allow a customer to bring a carry-on onto the plane. That way when they price-matched Frontier and Spirit, they offered a similar product – one that their traditional customers did not buy. They could offer low fares to avoid losing passengers, without premium passengers paying them less.
While Spirit has its ‘Big Front Seat’ that they now call first class, not in a separate cabin and with no lounges or hot meals (and it’s still Spirit) and Frontier is promising first class, there’s really very little that’s similar for long haul international that business class competes with. Zipair out of Tokyo sells business class as ‘just the seat’ with add-ons, and a few international full service airlines have started selling basic business for about 10% less (like Finnair, Qatar and Emirates). But true ultra-low cost carrier long haul business isn’t a competitive threat.
This is just about trying to fill the plane with leisure passengers at the last minute without offering lower fares to business travelers, but not significant discounting like a price match to Spirit entails.
And the restrictions don’t help a lot because they often don’t come with significantly lower pricing. Plus, when people value the seat most of all they just aren’t giving up very much by choosing the ‘basic’ option.
- Non-refundable as big a deal on a last minute purchase
- You can give up lounge access and just show up close to departure, not 3 hours early and spend time in the lounge.
- You might get a middle seat in business class, but often that’s all that’s left at the last minute anyway.
If the price isn’t significantly lower, it’s not really segmenting customers. And if the price of basic business is low enough, even many companies are going to be willing to say just buy basic business. The employee gets to fly business, they’ll deal with not also having paid lounge access.
Like always the consumer gets screwed! The airline gets richer.
Yes but I thought they were a premium airline.
My bad
For anyone that supports these crooks you get what you deserve
Can’t wait to hear Tim Dumm try to justify this crap from his cousin Ed
ISN’T EVERYTHING ABOUT DELTA INTERNATIONAL “BASIC?”
– will have an inferior experience compared to what they get today
One would not think thats possible on US airlines… but alas.
@Gary: Your explanation of Basic Economy (BE) assumes the plane is not full. Without more data we cannot determine if BE is a mechanism to enforce price discrimination or a way of filling planes. Do you have passenger number data to determine which?
The economics are obvious. The features up for consideration have no or low marginal cost to DL. They only adopt such policies if their revenue in the F/J cabin goes up. This could mean that the price of a basic F/J seat is lower than classic F/J, but it also guarantees the equivalent to today’s package is more. Congrats DL, smart move. I need checked bags, but can give up lounges. The extra cost for miles is a simple decision. But, no way I’ll risk being in the 2 section of a 1-2-1 J cabin. I’m certain I’ll be stuck next to a mouth breather.
Let’s consider the options:
Pay to check bags: I rarely check bags and prefer not to, so not a big deal. And what if I have elite status and/or credit card that comes with a bag. Can’t really take that away I hope.
Pay for seat assignments: Maybe important but not worth $2000 fare difference. Hope that seats can still be selected for a fee.
Lounge access not included: Can be meaningful if it’s an airport with a real premium lounge, and if customer has time to use the lounge. Delta doesn’t currently have many premium lounges.
No business class check-in, priority boarding, or premium security: Elite status, Clear or Pre-Check give this. And it’s often not worth much abroad. Just make online checkin work properly.
No changes or cancellations: Most of the discounted biz class fares already have change fees and non-refundability.
No miles or elite status credit: Maybe marginally useful. Except I have lifetime status so not chasing status. Plus the airlines have devalued elite status considerably and are selling most of the features, so are we even chasing status any more?
I often see the price difference between higher business class fares and the leisure fares at $2000 or more per direction. No combination of these benefits is worth $2000 so this feels more like punishing your customers than meaningfully raising revenue. And most of the corporate customers aren’t paying the higher fares – they have corporate discounts.
I’d hope that at most maybe they cut redeemable mile earning and maybe restrict seat assignment until check-in. Status earning is revenue based so it already captures the fare paid.
I don’t see this moving the needle revenue-wise. It’s just a way to anger customers. Hope AA & UA don’t follow, let DL be the bad guy
I struggle to find words strong enough to convey how much I dislike this change. Business class should mean business class and everything that comes with it, full stop. This creates a de facto underclass within business class, which is both distasteful and completely undignified on Delta’s part. And at a gut level, it meaningfully erodes my own loyalty to Delta. It also raises an obvious question: will these same fare category contortions be applied, without exception, to top-tier elites flying international business class? And once that door is open, it is hard not to wonder how far Delta will go. Will passengers who purchase the lowest long-haul business fares next be asked to pay separately for inflight meals and beverages? Will inflight entertainment come at an extra cost? Such outcomes no longer feel far-fetched. Nor does the prospect that American and United might eagerly follow the same path soon after. What tf happened to you, Ed? You used to be beautiful. But you’ve just revealed yourself to be nothing but a full blown carbon copy of Michael O’Leary with better tailoring, a smoother accent, and the uncanny gift of turning every bad recent decision into ‘shareholder value’ while never personally eating the sh*t you so confidently serve up with a smile.
@L3 – I think you’re misunderstanding something. If the plane was full without lowest fares, they wouldn’t be making lowest fares available. The point is to lower fares to fill planes – something airlines do today – but do it in a way that doesn’t lower reduce the fares paid by other passengers. In other words, it’s a strategy to generate incremental passengers (and the lowest fare passengers on full planes today are ‘incremental passengers) without lowering the fares for everyone else.
feel free to provide the fares and service included with each fare type for any given market, Gary.
here is space for you:
____
I thought so. You really have no idea any more than anyone does.
@Tim Dunn – we know how revenue management executives explain this. we know how it’s worked in other cabins. hauenstein describes this as a continuation of the same thing, Tim. You’re purposely asking for data that doesn’t exist yet because the fares aren’t filed yet, you think tht makes you smart. It makes you obtuse – when airline executives tell you what they’re trying to do, and it’s not pro-consumer spin, why don’t you believe them? Do you think hauenstein is lying?
Delta products absolutely are horrendous.. they are BELOW average … I fly first class and when I am in first class sometimes I get stuck in a first class seat on a 737 which is an old Lion aircraft… the seats do NOT go back, there is no screen that works, there is no power and that is why I pay first class fares? Delta sucks. I have been flying breeze the past few months … less than half the price, the seats are more comfortable, everything works… I get snacks that are good and SAFE! Delta you are going to bleed your customer base! Get with the program. I already canceled my delta select card as I will not fly delta until things improve including the odor of their aircraft. Delta narrow body aircraft smell like formaldehyde! Disgusting !