American announced the full details of their basic economy fares at the beginning of the year. While Delta introduced basic economy fares several years back, American and United became significantly more punitive with these fares.
For example, in the case of American, those booking basic economy fares:
- Aren’t able to select seats in advance; instead they’re automatically assigned seats at check-in, or can pay to assign seats 48 hours out
- No upgrades are permitted, even for elite members
- Only a personal item can be taken on the plane, and not a full size carry-on
- They have to board with the last boarding group
- Tickets are non-refundable and non-changeable, even at a fee
- Full redeemable miles and elite qualifying dollars are awarded for these fares, though only half elite qualifying miles and segments are awarded
In February American began selling basic economy fares in 10 city pairs, though they haven’t expanded it nationwide yet. Meanwhile United decided to rip the band-aid off quickly, and introduced basic economy on virtually all domestic flights as of late May. They reported that just over 30% of people were booking these basic economy fares. They admit they’ve lost some business because of how prevalent basic economy fares are, and have backtracked slightly as a result. Specifically, they’ve removed basic economy fares on some high last minute fares in expensive markets. It’s insulting to be asked for an extra $40 to take on a carry-on when you’re paying $1,000 for a last minute ticket.
View from the Wing notes how on today’s second quarter earnings call, American said that they plan on rolling out basic economy on virtually all domestic flights by the end of September 2017. This is despite:
- American acknowledging they’ve seen some “share shift” from United, given that United has rolled out basic economy nationwide, and it has caused some people to book on American
- United saying they’ll see some of those passengers back on their planes once American expands basic economy, since American will no longer have a competitive advantage
This is also a reflection of the fact that basic economy fares don’t actually lead to airlines introducing lower fares, but rather airlines instead charging more to get the same thing you got before (or else United wouldn’t see people booking American instead). We saw this clearly when United first introduced basic economy.
Unfortunately this will be yet another devaluation for American frequent flyers. We’ll have to pay extra just for the privilege of taking advantage of many of our elite benefits. Given how uncompetitive the US airline industry has become, American will get away with this, and I suspect it will improve their bottom line.