Basic Economy is the New “Saturday Night Stay” – a Tool to Stick it to Business Travelers

Andrew Sheivachman of Skift writes that a survey of large corporate travel buyers and managers report 63% of travel policies “ban basic economy bookings completely, while just 13% allow them.”

And the way basic economy was first laid out that makes sense, “the consensus is that travelers end up paying more over the course of a trip if they go basic economy and have a worse flight experience to boot.”

Corporate travelers can often expense the extras anyway like seat assignments, checked bags, wifi, and inflight meals. It doesn’t make sense to save $20 on the fare and give it back for a seat assignment, and have a worse overall experience too.

And when the difference between basic economy and regular economy is just $20 that’s unquestionably right. But airlines have taken that knowledge, that business travel booking engines will filter out basic economy options, and used it as ‘the new Saturday night stay’ — the means to differentiate pricing for leisure travelers and business travelers.

Here one way economy was more than a $400 buy up from basic economy.

Here it’s more than a $200 difference.

These aren’t errors and it isn’t pricing departments gone mad. Of course a leisure customer is going to choose the basic economy fare, at least most of them will, and they might very well have been willing to spend an extra $20 or $25 to avoid the restrictions. But that misses the point.

Airlines are trying to regain the ability to sell tickets more expensively to price insensitive business travelers while also selling tickets cheaply to price-sensitive leisure travelers. They used to do this through fare restrictions such as:

  • Advance purchase requirements (7, 14, 21 day)
  • Saturday night stay requirements

They can’t do this anymore is many markets. Prices are now frequently one way, a roundtrip isn’t necessary to get the lowest fares (which makes requiring a Saturday night stay impossible, business travelers fly out Monday and back Thursday or Friday while vacationers spend the weekend). And the ultra low cost carriers offer cheap prices even on the day of departure, so to compete airlines haven’t been able to offer cheap fares booked far in advance while charging more to last minute business customers.

Basic economy is a price increase, airlines:

  • charge more for the same product (regular economy)
  • make their base product so bad that many customers will spend more to avoid it

But it’s also a way of regaining control of their price discrimination stategies, the way they charge massively different amounts based on willingness to pay.

And by refusing to show basic economy fares no matter what the price difference businesses have capitulated to airline attempts to do just that.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. You miss the other major aspect of it: Business travelers don’t have the incentive to book it outside of their Concur app and file a discrepancy report because mileage and elite status is now based on spend.

  2. I just paid $56 for my wife and I to fly Ord to New Orleans on basic. I couldn’t find the fare at all on the United app (I missed the basic economy toggle). $386 more to fly regular ?!? Book a bag $25 done. Sit in a middle seat for 2 hrs done.

    And on a side note. 15k miles and $30 to fly back in business via lifemiles win. No close in booking fee. And no 25k Miles

  3. The problem is that price discrepancies like this (where regular economy is 7x more expensive or more!) is going to lead to some small-to-medium size companies requiring that their employees take basic economy “if the difference is more than $X” or if “if the flight is shorter than Y”. And that’s a problem. Companies will wise up.

  4. @Mick, obviously you know what you are doing and can work the system successfully. Good job on your itinerary. But they’re counting on the fact that 98% of travelers aren’t as competent. I can miss out on the worst parts of basic economy too as a Barclay Aviator cardholder. That detail even gets printed on my boarding pass now.

  5. I recently bought a “last minute” Basic Economy fares on AA for my family for $69 where the cheapest regular coach fare was $503.

    Even though the flight wasn’t full, we were mostly assigned middle seats. Even at the gate, the agent would not move us unless we paid extra. We simply “self upgraded” ourselves to empty non-middle seats on the aircraft.

    If this is a strategy to make non-price sensitive business travellers pay more, I don’t have a problem with it. And neither should anyone else. If you want to be a fool with your money, that’s your business. It helps subsidize non-fools. I do agree that such price disparities, if they are common, will cause some businesses to reconsider their Basic Economy prohibition.

  6. Are you sure the example you show of the $400 difference isn’t a mistake? First is cheaper than main cabin in that example.

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