Major airlines Delta, followed by United and American, launched basic economy fares. These restricted tickets were originally framed as ‘competing against ultra low cost carriers’ like Spirit and Frontier. The idea was that they wanted to offer the same prices, to not lose on ticket sales, but had been offering better value. So they made their product worse to compete.
However these fares changed, so that they weren’t just offered where they compete with Spirit and Frontier, and also not just to get people to ‘buy up’ an extra $20 or $30 for their tickets, but to segment customers.
- Leisure travelers would buy basic economy fares, worry about their seat assignments later, and be stuck with non-refundable tickets or only partial credit if they had to change plans.
- Business travelers, spending other peoples’ money, would pay traditional fares. Where the airlines were employing this strategy, the price difference between basic economy and regular fares could be several hundred dollars (sometimes even $400).
Airlines used to use Saturday night stay and advance purchase requirements to separate price-sensitive leisure customers from higher fare business customers. They don’t want to sell tickets for less than someone is willing to pay. But often those advance purchase and Saturday stay requirements no longer worked, because low cost carriers didn’t impose those restrictions and eventually they fell away from the majors too. Basic economy became the new advance purchase restriction on the lowest fares, making the travel experience worse.
On United’s fourth quarter earnings call on Tuesday, they reported that their basic economy revenue rose about 20% year-over-year for the quarter. That increase, they say is coming from customers who usually book Frontier or Spirit. Outside of Frontier customers based in Denver, for whom United is a reasonable choice though Southwest might be better, this is a poor and ill-informed choice.
What most people do not realize – even where they understand that they’re buying basic economy (which they may not always if they aren’t buying on an airline’s website) – is that basic economy restrictions aren’t the same across airlines and that United Airlines offers much worse value than competitors.
Usually you earn fewer miles for your trip (if any) and won’t get all of your money as a credit towards future travel if you have to change plans. If you want to select your seats you have to pay, versus being assigned a seat at check-in (though available fee-free seat selection is usually pretty limited for most customers anyway). And you board last.
However United takes their basic economy to extremes, and this was specifically a choice made by their CEO Scott Kirby when he came over to the airline from American.
- You aren’t permitted to bring a full-sized carry on bag on board. American Airlines (where Kirby came from) started there, but got rid of that restriction. That means you’re more likely not just to be inconvenienced, but also to have to pay to check a bag.
- And if you’re flying on a basic economy ticket without a checked bag, you’re not allowed to check in online or via the airline’s mobile app So all basic economy customers are forced to wait in the line of shame at the airport. Their travels are slowed down and what they save in airfare they pay in time.
@united now makes checking in for a flight harder – unless you spend more on a ticket or in checking a bag.
Adding additional discomfort to extract higher prices is a @united foundational principle. pic.twitter.com/ujuBTMEmdq
— alexander ooms (@axooms) January 19, 2024
This isn’t a new restriction. It’s been the case for seven years. The airline both inconveniences the customer and also has the restriction in place to see that the bags you’re bringing are small personal items only. United is the only airline that restricts full-sized carry on bags on basic economy fares. American and Delta offer better value that United on their cheapest tickets. And of course Southwest Airlines doesn’t have basic economy, and includes two checked bags at no extra charge on all tickets.
United Airlines elites and co-brand credit card customers, of course, get earlier boarding as a benefit – even on basic economy tickets. And since carry on restrictions are enforced based on boarding group, those restrictions don’t apply to these customers. But for the vast majority of people with a choice between airlines for their itinerary, where price and schedule are similar, they’re probably choosing United out of ignorance that they’re getting less for their money.
Good on UA for Not allowing “full-size carry-on” bag . Excellent news .
Every time I fly United on a small 50-72 seat plane, they ask you to put your roller bag on a cart outside. They give it a green tag and never charge them for it.
Only if they would prevent OPM flyers from bringing on 3 carryons
The entire basis of United NEXT is for United to replace the ultra low cost carrier segment as being the source of basic economy fares which were created by Delta and later matched by everyone to be competitive with ultra low cost carriers. UA NEXT will add so much capacity to the US airline system that they know they cannot fill all of the capacity unless they deeply discount and provide fences to limit buydown. Of course, adding all of the that capacity requires getting enough new planes – which Boeing isn’t likely to be able to do at Kirby’s speed – so he is willing to put real money down on the A350 order in order to get Airbus to find some more A321NEO production slots for UA.
and even on AA or DL which solicit free gate checks for all passengers, the boarding sequence means that basic economy passengers will run a much higher risk of having to check large checks and that is enough of an incentive to not buy down for those that don’t want to risk making a stop in baggage claim.
You gotta love how the “squeeze every dollar until the eagle screams” philosophy from the AmericaWest DNA is still alive and kicking with a soulless bean counter like Scott Kirby.
Gary, you’re missing what the actual choices are.
Very few travelers are picking between basic economy on UA and basic economy on AA or DL. If you’re a traveler in Denver, you’re choosing between Frontier, UA, and WN, and you’re going to pick UA, because their basic economy is still better than Frontier (Frontier charges for all the things United does) because Untied is better operationally. And you won’t pick WN because their airfares will be higher.
This makes complete sense, if the purpose of your basic economy fare is to compete with discount carriers, who also charge for carry-ons. United with carry-on bag fees is still better than Spirit or Frontier, and United is more focused on those customers than the few passengers who they might “lose” to AA/DL because of a free carryon, who aren’t buying a non-basic fare anyway.
Just for the record, if you don’t pre-purchase a seat assignment, AA has, or at least had, the same awful Basic Economy policy of making you get your security clearance pass (since seats are assigned at the gate) at the airport, and I’ve been on the wrong end of this at PHX. If I didn’t happen to have have Gold status through a status match that year, I would have missed my flight, as the lines for self-checkin kiosks were miles long.
I didn’t associate it with not having checked a bag, though that makes sense too — I was just told I couldn’t check in via mobile or online, to my shock, and by then it was also too late for me to purchase a seat assignment through the app. My chief objection was not the policy itself, awful though it is — it’s that they when they tell you all the reasons not to buy Basic Economy on the site or in the app, before you buy your ticket, they don’t list *this* restriction, which you really, really need to know about.
So I felt really, really angry about that experience. If you’re gonna serve me a plate of shit, at least warn me properly first before I commit to it. I consider it to be deceptive product sales on UA and AA’s end to simply not list it as yet another of BE’s restrictions, and instead let you know about it only after the fact.
Moral of the story — the airlines win. I will never buy a Basic Economy ticket again. Even if it happens to fit my use case, the whole purpose of BE is to make your travel as awful as possible so you pay up for full econ next time. They punish you for buying the ticket, on purpose, and I’ve gotten the message. It is: with a BE ticket on AA or UA, you are scum, you wear a scarlet letter (UA BE digital boarding passes are literally a bright orange, just so that the gate crew can know you’re one of *those*). It’s not worth it.
And that’s why we haven’t flown UA in years. Once you add the additional fees for a carryon, the fare no longer is competitive.
The whole point of United’s basic economy is to get you to sign up for their CC.
Just throwing this out there, but maybe this product is designed to be very unattractive. I mean, if the entire plane, or even half of the plane is full of the bottom end of the lowest level of the market, then they are not making any real revenue. They’ll also have a plane full of people who would otherwise fly Spirit or Frontier. Maybe they just don’t want that and make the offering so poor that those passengers stick to those airlines. In general, a Spirit or Frontier passenger may be comparing with a bus in some cases, whereas United may actually choose to not actively solicit customers from that segment. It’s a thought.
@ChadMC exactly.
In their earnings call United says they are selling basic economy well, and that growth is coming from Spirit and Frontier customers. But many of those customers would be better off on Delta or American.
Indeed when United first rolled out basic economy with carry on bag restrictions, and American had done so yet (they since backed away from that rule), United reported losing ~ $100 million as a result.
United has specifically said they intend to grow the amount of economy basic fares they sell – and they are doing it. AA and DL are reducing the number of basic economy fares they sell.
The notion that UA is offering it solely to focus on ULCCs or as a disincentive to book higher fares is completely inaccurate.
Basic economy IS part of UA’s strategy to fill all of the extra seats they intend to throw into the market as part of their aggressive domestic expansion which is United NEXT.
Gary is right that AA and DL offer better value if you want to buy economy basic fares.
Given that Southwest is the most direct competitor to United, Southwest is an even better value if you are considering economy basic. Not only does WN match the fares but they give you the whole enchilada that is their economy package.
I’m sure most UA Basic customers dont read “full-size carry-on bag” and just read “full size bag” and proceed to attempt to board with said behemoth, , then do a Karen when refused boarding with it.
My wife and I flew UA Basic Economy a few months ago. We’re not spoiled Millennials that expect to be treated like royalty when we buy a cheap ticket, but I got the distinct impression that the airline went out of their way to treat us like second class citizens. It wasn’t an unpleasant flight but frankly UA can kiss my a**, we won’t fly that airline again.
Good on United. Actually, the carry-on restriction *adds* value for everyone by reducing departure delays that are due to full overhead bins.
Generally, the Basic Economy concept is a better market segmentation tool for customers compared to the old Saturday night stay + roundtrip requirement. I myself use B.E. on the North America network carriers (UA/DL/AA/AC) from time to time – it’s not suitable for every trip and situation, but oftentimes it provides good value if you know what the restrictions are.
Southwest might be a viable alternative to B.E. on a network carrier, depending on the route, but under no circumstances are Frontier or Spirit so; the latter are essentially a scam with wings.
Another reason to avoid BE, probably for all airlines, is individual space –seat size and legroom. I flew UA economy a few years ago. My legs don’t fit. UA kiosks are unreliable. I just read that AA has an initiative to standardize seating, and as part of that, they are reducing legroom in all classes and the restroom.
All reasons to take Amtrak.
I hate domestic flights so don’t consider them for international flights.
If Basic Economy is about less costly tickets, then forcing people to check in with an agent, not only erodes the margin, but also delays other passengers who need an agent. I also give ugly stares at people who check in with an agent, rather than online or at a kiosk.
I don’t fly United due to their lying and costing me extra money but I do fly JetBlue using their Blue Basic seating on nonstop flights. For it, I get the extra inch or so of pitch that they provide. It does not come with a carry-on included so I buy a checked bag fee each way and since I want to sit where I want to sit, I also include a seat fee each way. Those fees added to the Blue Basic are less than the next higher ticket that includes the carry-on and an assigned seat. I end up being able to carry more which works out because I bring food back that is harder to find in Los Angeles. I board last which is great and since I am only carrying my personal item, I don’t have to worry about full bins.
I hope we bankrupt US air lines except for delta with newer future transits pretty soon given this.
I’m a big fan of UA (or any) basic economy since >90% of my travel recently has been Dora-The-Explorer style with just a backpack. I don’t see myself ever choosing to fly Spirit, Frontier etc, just a personal preference. For trips > 1.5 hours in the air I usually just buy a seat when I buy the ticket which still comes out a lot cheaper than going full economy. I also like to be the last on the plane anyway regardless of boarding position because I don’t like being on the plane longer than I have to.
Having to go to the airport to check-in is a little inconvenient but I don’t mind it since (perhaps fortunately) it is a <5 minute process for me. The annoying part of that is the reminders I get to check-in when I clearly can't haha.
Agreed you definitely have to be aware of what you're getting into with basic economy — if my travel circumstances changed i.e. have a carry-on I wouldn't play around with it and just treat economy as the cheapest fare for me.
> You aren’t permitted to bring a full-sized carry on bag on board.
This is by design, and I 100% applaud it: carry-on bags make boarding and deplaning miserable and interminable (translation: costly for the airline).
Profitable Southwest understand this very well, that’s why bags fly free (so they go to the hold).
Let those cheapos people clog AA’s boarding and delay their flights with their huge carry-on bags!
United’s customer-unfriendly ways with “basic economy” passengers creates messes at check-in that hit even those who are traveling on high fare tickets. Those “basic economy” type passengers aren’t the only ones that need to use the UA check-in lines.
All the people complaining are people who purchase shit without reading what they’re buying!!!!!!!!!!
Just don’t buy basic economy. I find United’s airfares less expensive on the same routes than Alaska’s and I prefer United’s (west coast US to Mexico)
The key reason that United has an egrigiously bad Basic Economy product is because all of their hubs are in cities that people want to fly to (NYC, LA, SF, DC, Chicago, Denver, and even Houston). Because their hubs are in cities that people want to fly to, it attracts SkipLaggers, much more so than DL or AA. DL and AA have at two or three hub cities that mainly serve connecting traffic, rather than O&D, whereas United has NONE! By disallowing carryons, for instance, United prevents customers that are SkipLaggers.
But… but… none of this is true! Carry-on bags are free in all classes, as well as 1 small personal item, just like always.
Have you even flown United lately, or are you just scraping up fake news so you have something to write about? I’m completely baffled by this article!