Why airlines don’t want you to fly basic economy
with the rock-bottom fare, but in doing so make basic economy so unappealing that many people scrape together additional money to trade up to the traditional, now more expensive economy fare. Basic economy also represents what appears to be a permanent revenue boost for airlines that often struggle to raise prices.
In the U.S., Delta pioneered basic economy as a defensive measure against lower-cost rivals such as Spirit Airlines and Frontier, which feature low prices as their primary product. The idea was to match their fares on competing nonstop routes, albeit with fewer benefits, such as the ability to change flights.
Basic economy fares have accompanied a broad industry trend in which the aircraft is divided into various cabins with differing amenities, called segmentation. You may thus find sections of seats that are traditional economy, economy with slightly more legroom and premium economy, all on the same aircraft.
Basic economy has spread to Latin America, the Caribbean and across the Atlantic but has yet to appear on the longest flights to Asia or South America.
“If Norwegian and WOW Air had been offering $99 seats from Tokyo or Buenos Aires to the U.S., I’m sure we would’ve seen basic economy in those markets,” said Seth Kaplan, editor of trade journal Airline Weekly. A low-cost airline’s cost advantage narrows on long flights, and passengers generally consider meals and seat assignments more crucial as the trip length increases. “That also partly explains why low-cost, long-haul flying in general hasn’t been as successful as low-cost short-haul flying,” he said.
Alaska began a “soft launch” of its new, basic economy “saver” fare in the fall on tickets sold from San Diego to three cities. Saver flights will begin in all markets by early January. The Seattle-based carrier is touting the chance to choose a seat — albeit a middle seat in the back of the plane — as its main difference from the rest of the industry.
Some choice is better than nothing, an airline official contends. “I think that’s extremely important to people,” Andrew Harrison, Alaska’s chief commercial officer, said in April when the new fare was unveiled.
But even for the cheapest, most stoic customers, a line has to be drawn somewhere. This summer, Fort Worth, Texas-based American, the world’s largest carrier, began allowing basic-economy travelers to bring a carry-on bag after finding it was losing business to Delta, which allows bags.
As for the success of the airline’s marketing strategy? American said in October that about 60 percent of customers choose main economy over basic but that it expects the percentage to dip to around half, given the change to its bag policy.
United is an outlier for restricting carry-on bags for basic economy passengers, a move the airline credits for helping to board planes faster and keep departures on schedule. It also sees more people trade up to regular economy than American does, owing to its more onerous restrictions. United has no plans to change its bag rule, Andrew Nocella, the airline’s chief commercial officer, recently told Wall Street analysts.