In February American began selling basic economy fares in 10 city pairs. They continued to progressively roll out these fares until earlier this month, when they introduced basic economy fares in virtually all domestic markets.
American’s approach to basic economy was very different than United’s. In February United decided to rip the band-aid off quickly, and rolled out basic economy fares in almost all domestic markets overnight. Just a couple of weeks ago, around the same time that American rolled out basic economy fares systemwide, United admitted that basic economy wasn’t quite working out as they had hoped, and eliminated basic economy on many types of fares.
United’s general approach to basic economy has been that they’ve charged a $20-40 one-way premium for regular economy over basic economy. They’ve really been consistent, and we haven’t seen huge upcharges. That’s very different than American’s approach — many readers have contacted me to point out how ridiculous the upcharge is for some American basic economy fares.
Take the below flight from Miami to Houston (pointed out by @ladakn99), where basic economy is $55, and regular economy is $190. Regular economy costs almost 350% as much as basic economy. As someone who hates the concept of basic economy, you might think I have a real issue with that. Personally this actually bugs me a lot less than the approach United has taken.
Let me explain.
When basic economy was first introduced, airlines claimed that this was in order to allow them to compete against ultra low cost carriers, which charge for everything. The idea was that they could appeal to different market segments by offering different services to different passengers.
But that’s in no way how United implemented basic economy. Their strategy instead was to make the previous lowest fares basic economy, and then charge $20-40 extra one-way to let passengers buy back what came included before. In other words, United was banking on a majority of their customers being willing to pay an extra $20-40 one-way to not be miserable.
The worst part was that at first United had basic economy fares even on their most expensive tickets, like a $442 one-way ticket from Newark to San Francisco. I’ve never seen Spirit publish a domestic one-way fare that high! Let’s keep in mind this plan proved a failure for United, and they rolled back basic economy, especially on more expensive domestic fares.
This brings us back to American. Do I like seeing them charge 350% as much for regular economy as basic economy? No. But I appreciate that in these instances where there’s a huge disparity, at least the basic economy fares are often ridiculously good. I think the airline is justified here in saying “we’ll throw in these really low fares with a lot of restrictions to compete with ultra low cost carriers, but we’ll charge a lot more for our normal fares.”
While I’d rather just not see basic economy at all, I at least think what American is doing here is a bit more true to the idea behind basic economy. American is publishing some super low fares to compete with ultra low cost carriers, and these fares are exclusively available in basic economy, with a substantial upcharge for regular economy.
The counterargument is “well yeah, but the cost to the airline isn’t an extra $135 to carry-on a bag.” That’s true, but what airlines charge in airfare has never directly reflected the cost of the services provided. That’s why there are dozens of fare classes. The airlines try to maximize everyone’s willingness to pay, but inevitably some passengers are always subsidizing others.
I guess to sum it up, for a domestic one-way flight I think an airline is more reasonable to charge $55 for basic economy and $190 for regular economy, than to charge $442 for basic economy and $467 for regular economy.