What Percent Of United Customers Are Buying Basic Economy Tickets?

Delta was the first US airline to introduce “basic economy” fares. They did this back in 2012, and at the time their implementation of it was slow, as they started by just introducing this in markets that had a lot of competition from ultra low cost carriers. Basic economy tickets couldn’t be changed and didn’t allow seat assignments in advance.

This past November, American and United both announced that they were going to introduce basic economy fares in 2017. It’s clear that they wanted to make up for lost time, because they took a much more radical approach to these fares than Delta has.

With United’s basic economy fares you don’t receive any elite qualifying mileage credit (which will get elite members to pay the premium for a non-basic economy fare), and can’t bring on a full sized carry-on (elite members are exempt from this).

On top of that, United has rolled out basic economy fares throughout almost the entire domestic system, meaning they’ve done so much faster than American and Delta have.

So United probably has more interesting data on these fares than any other carrier, given how quickly they’ve rolled them out. I’m sure I’m not the only one who has been wondering just how many people are buying United’s basic economy fares.

FlightGlobal quotes United’s president, Scott Kirby, regarding these new fares. He spoke at an industry conference yesterday, where he shared a couple of interesting tidbits. Most interesting is that apparently just over 30% of eligible economy passengers are booking basic economy. He’s confident that within a few years they’ll earn a billion dollars of incremental revenue annually by better segmenting the market.

I guess about a third of customers booking basic economy is in line with what I expected. What I’d be curious about is how that number differs between those booking directly with United, and those booking through an online travel agency.

United’s website goes great lengths to discourage people from booking basic economy. There are several warning screens, the text is in orange, etc. Basic economy fares scream “DON’T BOOK ME.”

Meanwhile when booking through online travel agencies there are notices, but they don’t jump out at you nearly as much. You’ll see the fares described as “basic economy,” but the only other thing it shows is on the next page, where you have the option to upgrade to another type of fare.

Something tells me there are a lot more people booking basic economy fares through online travel agencies than through the airline directly. And given how many people don’t bother reading what they’re buying, I suspect a lot of those people don’t realize what they’re getting themselves into.

Apparently Scott Kirby continued his false narrative regarding basic economy fares yesterday as well:

“It gives customers choice,” says Kirby, though he acknowledges that being the only carrier selling basic economy in this manner is a “disadvantage” to United.

Other airlines acknowledge that they’ve expanded basic economy because they can, while Scott Kirby continues to claim that this is an option that “gives customers choice,” and that it’s a “transformational” product. Make no mistake, basic economy doesn’t lead to lower fares. Instead, basic economy becomes the new standard, and airlines want to see how much extra people are willing to pay for a non-horrible experience.

Bottom line

Nearly 70% of people are willing to pay extra (call it ~$20 per one-way, though it varies) to avoid the misery of basic economy. This is potentially an even bigger revenue source than when airlines introduced checked bag fees.

What do you make of just over 30% of people booking basic economy fares? Does that number seem higher or lower than you expected?

Comments

  1. I’m surprised it’s only 30%. Too many people seem willing to be treated like cattle in exchange for saving a few dollars. It’s the Walmart mentality = endure crap products/service in exchange for “low prices”.

  2. sounds about right. I can travel extremely light domestically these days, so I won’t shy away from BasicEcon fares from any airline where I don’t care about status.

  3. I’m surprised it’s only 30%. Most leisure travelers don’t even care about seat pitch, aircraft, airline, or IFE. They just book the cheapest thing they can find on Expedia.

  4. Seems about right to me, but I’d be willing to bet 50% of those people or better complain when they get to the airport and can’t have a carry-on, sit with their family, etc.

    I know I’ve already shifted flights away from United because it’s now more expensive to have the same benefits as other airlines. Just hoping if they’re right the appreciation of my United stock offsets the pain of having to book more expensive flights. 🙂

  5. I have over 1M miles on United but I found the Basic Economy structure confusing enough that I’ve been booking other airlines instead. It’s not because I’m “angry” at United but because I’m confused! Fares with a more WYSIWYG approach to ticketing (like Southwest) are easier to decode and I don’t have to figure out what my status does or doesn’t get me.

    I think this reinforces the idea that people are beginning to abandon loyalty and just buy what they want.

  6. “Something tells me there are a lot more people booking basic economy fares through online travel agencies than through the airline directly. ”

    The more interesting OTA data would be the number of people choosing other airlines because of basic economy. People at united.com have a higher likelihood of having settled on United for their trip. Looking at data just of the slice of customers comparison-shopping airlines would be fascinating, although we may just learn that people don’t dive in to understand the differences and what United is exploiting is indeed customer confusion or bias that all airlines are equally bad.

  7. I support choice and not paying for things I don’t need or use. I rarely take checked baggage and for a one hour flight don’t care where I sit, so happy not to pay extra for those things.

    I assume this strategy of selling basic economy but then doing everything they can to get pax to ‘upgrade’ to normal economy is so they can advertise purely on price and pax won’t necessarily realise/remember that the cheap fare on a full-service carrier is actually an LCC fare because its unbundled. I don’t really see an issue with this provided all carriers are offering an LCC fare so you can compare like for like.

    You say its misery flying basic economy so by all means pay the same amount you paid before for ‘normal economy’. Presumably basic economy is cheaper than normal economy used to be?

    You forget how cheap people can be – people would stand for the entire flight is the price was right.

  8. @ Ben — A couple of things:
    — This isn’t just about checked baggage (as you say), but they also prohibit carry-ons with this fare.
    — “Presumably basic economy is cheaper than normal economy used to be?” That’s the problem, it’s not. The former economy fares became basic economy fares, and then airlines raised the non-basic fares. So you’re paying the same for less, and if you want the same you had before, you have to pay more.

  9. United or AA or DL did not offer basic economy because they expected the fare class to be very popular and sell very many tickets. Rather, the purpose of basic economy all along was to offer a fare class that was (a) so bad because it offered nothing that few would want to pay for it, and (b) it would send a subliminal message, by insisting that basic economy is the answer to “budget” airlines, that the “misery” of basic economic what one gets when one is lured to “budget” airlines because they offer cheap tickets.

    Bottom line: Basic economy is the “scarecrow” fare that gets people to purchase the standard Y tickets, which UA/DL/AA actually want them to purchase, while at the same time sending the message that misery is what one gets when one gets lured to “budget” airlines because of their cheap tickets.

  10. As another commenter mentioned, I think the interesting thing to watch will be how many folks bought Economy Minus off the OTAs and didn’t realize what they were getting into. Then, they’ll make a scene at the gate when told they can’t bring on their carry-on and their family of 5 will have to settle for scattered middles in the back. I think it was Ben Baldanza that said something to the effect of 80% of the complaints about Spirit’s fees were generated by the 20% of customers who purchase tickets on the OTAs.

  11. Like you, I also expected pandemonium to break out at MSP (and across the country) on 18APR, but it didn’t. I didn’t see a single negative news story or even FT post re: the BE experience. So that supports the other comment about how poorly people are willing to be treated nowadays.

    I’m not looking forward to paying an extra $40 from here to eternity but that’s life. They keep moving the goalposts…

  12. it’s probably higher than 30% because some of the 70% not buying BE are not choosing to pay more for E but rather connecting to international or connecting to *A partners where BE isn’t a choice.

  13. It seems to me the Group 5 lines are shorter than they used to be. Maybe it is the flights I take.

  14. Could be people are buying now and just beginning to realize that they were not allowed normal economy “extras.” I think this percentage will go down over time. The worst part is folks traveling together, especially families, who will not be seated together. And of course, the pain of BE won’t be complete without factoring in the forthcoming 737’s with the reduced pitch in Y.

  15. Sure, before the word gets out to infrequent travelers, 30% book BE. But as this post points out, we don’t have a clue how many of them did it knowingly. Even people booking thru UA may not realize what they are getting themselves into.

    For me the real question is how many of the (I assume mainly clueless) folks who book BE once, will do it again once they experience it? And then, how long will it take for them to find out that they can get better treatment for a lower price with SW and the LCCs?

    AA has this coming up too. As people experience being crammed into 29″ seats, then take a flight on SW with 31″ seats and free checked baggage, how many of them will go out of their way to fly AA again? I’m betting that just as AA reports losing millions of dollars from selling far fewer miles, due to lack of award availability hitting home, none of this will end well for UA and AA. 😉

  16. I might add that I’m Lifetime Gold with DisAAdvantage, and don’t fly economy that often. But when I do fly economy, usually for short flights, I check with SW first. If I can find a non-stop with SW, I just book that without even checking to see what’s available thru AA. Up to now that’s due to nicer FAs, no regional jets, and no cancellation fees. AA shrinking the pitch will just make SW even more of a first choice for me.

  17. I think 30% is a large number, and agree with Donna in that the big question on my mind is what’s going to happen when people (especially families) cannot sit together. I would think that some people will just assume that they can get other passengers to switch seats, but obviously will not be successful every time.

    When you have a big enough “sample size” (say millions of flights) some conflict (caught on cellphone video, of course) is bound to happen.

  18. It goes to show the infrequent flier is either clueless, doesn’t care, or doesn’t understand how the system works. It amazes me that people don’t look at aircraft type, seat pitch, regional vs mainline flights, etc when booking. They only see a time of day and the cities and book it. That is how you end up with a miserable flight.

  19. On two recent flights with United, I noted these two (infuriating) things.
    First, boarding group 5 persons (those who bought Basic Economy) were allowed to gate check their bags for free.
    Second, boarding group 5 persons were given seats in Economy Plus, at no extra charge. One of the flights was oversold, but the other wasn’t. Since Basic Economy doesn’t board until the end, they are “filled into” any available seat, apparently including the available seats in Economy Plus. That’s two nice upgrades for Basic Economy.

  20. Remember the Dr. Dao plane-dragging incident 2 months ago? So many people were swearing they’d never buy another ticket on United again, etc.

    Yet United’s most recent monthly numbers show an increase in passengers over that same month a year before.

    In short, most customers look only for the cheapest fare and care about nothing else. No surprise BE is doing as well as it is.

    The not being able to sit together thing is interesting. How long until someone sues UA because they weren’t allow to sit next to their child, and their child was seated next to someone who abused them?

  21. @ Robert F – to your point, the legacy airlines have tried this before. United launched Ted and Delta, Song. They both failed. The fact is there are plenty of people who will not fly Spirit or Frontier. Some tried and said “never again”. And if it is Southwest that is burning their britches (as it has since it was founded), then there really is disparity in service because “bags fly free,” and everyone is on the same playing field; no assigned seats, no extra legroom, etc. Once you start mixing and matching, just watch the families who want to sit together start to whine and the fights that will break out about having no carry-on, etc. All the legacy airlines are doing is instilling further misery into the travel experience to line their own pockets.

  22. What Doc says is concerning. I can see it now. On a partially empty flight they will fill up the economy plus middle seats with basic economy while allowing the center backseats to go un-filled. This will result in the frequent fliers and those purchasing economy plus to have a degraded experience, while those purchasing basic economy get free upgrades.

    I would think that that won’t last long once a complaint pilot. However, they kind of do this already with standby passengers. I routinely see them leave back middle seats open and place someone next to me and economy plus.

  23. @Doc Even as a lowly Silver, I don’t have a problem with unexpected freebies for BE pax. Since they are not guaranteed, they’re basically playing the upgrade lottery. And are you sure those BG5 were BE and not aisles? I thought SHARES was gonna strictly enforce $50 bag fee 😉

    @Adamw If the computers are not filling in E- completely, that is troubling. I’m surprised there isn’t an FT thread on this already. I would presume the order is fill all E- W/A, then E- M, then E+ W/A, then E+ M. And would it go back to front or front to back?? I don’t mind GAs having some discretion for individual pax (empowerment and all) but the Aero tools had better follow the rules!

  24. Allegedly, all boarding group 5 people are now basic economy and only that group. Certainly the people filling in were basic economy…and bragging about how little they paid to get to sit in economy plus ..abd the free bag check.

  25. Is there ever any positive news when Scott Kirby appears in an article? Scott Kirby is the worst thing to happen to the airline industry. As someone forced to take United, I really hate that guy.

  26. honestly, most of these forums are full of Anti-southwest fliers, mostly because of lack of lounges, codeshares and premium economy. But at what cost do you stand up to mainline carriers. WN is usually more expensive but you don’t have to deal with bag fees and crappy regional jets. And as long as you check in on time, you will be able to sit together with family/friends. For me (SAN based) WN is almost always the best option, many nonstops, no regionals, decent credit card & no shell game when redeeming miles. Crew is always friendly as well.

Leave a Reply

Your email address will not be published. Required fields are marked *