Fewer Niceties, Similar Price: Airlines Turn to ‘Basic Economy’ Fares
When is a new, budget offering actually a hidden increase in overall cost? When the airline industry introduces new economy fares.
Over the last week, United Airlines and American Airlines joined Delta Air Lines in starting or announcing plans for a “basic economy” fare option geared toward bargain travelers.
For these major airlines, a “basic economy” ticket means the airline will transport travelers where they want to go. Most everything else, though, costs extra, ending many of the remaining niceties provided by large commercial carriers.
Gone is the ability to choose a seat free. (Hello, middle seat!) Upgrade or refund under the new fare? Forget it. And, under some airline rules, do not even think about putting a suitcase into an overhead bin without paying.
Something else travelers do not always get with the basic economy fare: an actual price discount.
While airlines are loath to discuss pricing, the new basic economy class seats are expected to be in many cases the same price as the standard economy fare, meaning travelers will get less for the same price.
Instead, the old-fashioned economy ticket — the one with the niceties — is expected to cost more.
“Yeah, the same product is going to be more expensive,” said George Hobica, the president of Airfarewatchdog.com. “It’s like they were saying you were getting an introductory offer and that they were giving it away, but no longer.”
The one upside? Basic economy travelers will still get soda and mini pretzels — for now.
For United, which began offering basic economy fares this week from the Minneapolis-St. Paul region to its seven hubs, a round-trip flight on May 9 from Minneapolis to Denver under the standard economy fare will cost $176. The new basic economy fare for the same flight will be $136.
Basic economy travelers will not be allowed to choose their seats or carry on a bag, so they would have to pay $25 each way to check their bags, raising the price of the basic economy fare round trip to $186. And basic economy fare passengers who try to sneak bags on board will be charged the $25 bag check-in fee plus a $25 gate-handling charge.
In other words, the standard economy ticket, the one expected to rise in price, may end up being a better deal in some cases than the new basic economy ticket.
A United spokesman said that customers willing to accept the basic economy restrictions should have lower overall travel costs. A spokeswoman for Delta, which introduced basic economy fares in 2013, said in a statement that basic economy travelers were not permitted to choose their seats and that families may not be able to sit together, but that the fare “has never included a fee for carry-on baggage and that remains true today.”
Over all, the airlines have argued they are merely giving customers what they want as demonstrated by the robust growth of low-cost, no-frills airlines like Spirit, Frontier and Allegiant. These airlines typically charge lower fares but often charge many additional fees. For instance, the same Minneapolis-to-Denver flight on May 9 on Frontier is a bargain at $88 round trip.
Frontier, though, charges travelers $6 on each flight to choose their seats, and $30 to $35 each way for larger carry-on bags. The fees are higher if the upgrades are made at the airport.
The low-cost airlines — which have lower legacy and labor costs than large airlines and have historically flown into smaller airports with smaller landing fees, are increasingly taking on the big airlines on their own home-turf hubs.
In 2011, Spirit flew to three cities from the American Airlines hub in Dallas/Fort Worth International Airport. Today, Spirit flies to 25 cities, Robert Isom, the president of American, said in a letter to employees last week announcing the basic economy fare options that would be available for travel starting March 1 for 10 routes, including Fort Lauderdale to Philadelphia and Miami to New Orleans.
Pointing to aircraft orders from Spirit and other airlines as signs of continued growth, Mr. Isom concluded that, for American, “competing aggressively against these airlines is not optional.”
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