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Hate Basic Economy Fares? More Are Coming

The Wall Street Journal. logo The Wall Street Journal. 8/9/2017 Scott McCartney

Buying airline tickets is getting even more dastardly: Basic Economy fares are spreading nationwide.

Only in the increasingly complex airline world is there a big difference between “basic” and “standard.” Travel agencies have scrambled to display differences in coach fares so travelers don’t buy the lowest price without realizing they won’t get what they used to get.

What is Basic Economy? Delta, United and American, the three largest U.S. airlines, sell discounted fares about $30 to $50 less than standard coach tickets.

But there are major catches: Fliers are stripped of basic amenities like advance seat assignments and overhead bin space. Remember when airlines posted great-looking fares, only to reveal in the small print that they required a Saturday-night stay? Basic Economy is the new Saturday-night stay. Some people make it work, but the constraints push many to higher fares.

Now the big three airlines are rolling out Basic Economy across their entire domestic networks and some international routes. They’re betting even more travelers will then buy up to higher coach fares.

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Frequent fliers complain Basic Economy basically creates a loyalty-program tax—they have to pay more to get the amenities they used to get free. Fares have been rising this year, so to many, Basic Economy looks like a ketchup bottle with fewer ounces at the same price. 

“You see that upcharge and it’s kind of a kick in the teeth,” says Scott Nealey, a San Francisco attorney who takes about 40 trips a year.

He says United’s Basic Economy has shown up in his searches more than other airlines, even on expensive business trips. When he is paying $600 to $700 to go to Seattle, he wonders why any business traveler would agree to cede benefits to save $40. “It takes United off my map,” Mr. Nealey says.

With Basic Economy, you can’t get a seat assignment until right before departure and you can’t make same-day flight changes. On Delta, you board in the last group and aren’t eligible for upgrades or extra legroom seats, even if you have elite status. On United and American, you’re last in the boarding line unless you have elite status or a qualifying credit card that gets you earlier boarding. You can bring a full-size carry-on for the overhead bin on Delta. You can’t on United and American, unless you have elite status.

The fares are fraught for unsuspecting travelers who blindly book the lowest price. Slip up and bring a full-size carry-on to the gate and United and American will charge you $25 to check it when flying on Basic Economy. There go your savings, especially if you also check a bag on your return flight.

Families and groups should avoid Basic Economy tickets, because there’s no hope of sitting together. If you’re worried about getting bumped from a flight, don’t buy Basic Economy—cheap fares and no seat assignment make you an instant target for involuntary denied boarding. If you have elite status, you’ll lose some benefits.

Many travelers are willing to give up perks to save some dollars on tickets. Still, airlines say when offered a Basic Economy fare, which they initially started to compete with discounters like Spirit and Frontier, about half of all customers click to a higher fare.

American says the average upsell so far has been $23. Delta says it got an extra $100 million in revenue in the second quarter from its fare strategy, but that includes upsells to extra-legroom and first-class seats.

On United’s second-quarter earnings call, President Scott Kirby said the airline wasn’t getting the expected revenue boost yet because it has been more aggressive rolling it out and was losing customers to airlines offering the same fares without reduced benefits. Still, United said it expects Basic Economy to boost revenue by $200 million in 2017.

Many companies have removed Basic Economy fares from corporate travel-booking sites, and online travel agencies and even some airline apps let you opt out. American Express Global Business Travel says 66% of its clients suppressed Basic Economy fares at the end of December. That has grown to 75%. One reason: fares that are completely unchangeable or nonrefundable end up being expensive to companies when travelers have to make changes.

Airlines say Basic Economy is another step in stripping down their product to core transportation, then letting customers add the services they want, like checking bags, early boarding or selecting seats in advance.

A Delta spokesman likens Basic Economy to selling a hamburger, then asking customers if they want fries, too. “We feel like it’s been transparent and straightforward,” spokesman Morgan Durrant says.

United says an added benefit, since most Basic Economy passengers don’t get overhead bin space, has been a 30% decline in flights where overhead bins end up full and a 50% reduction in the number of bags tagged and checked at the gate. That means quicker boarding and more on-time departures.

“The majority of customers who purchase a Basic Economy ticket are arriving at the airport aware of the details this fare entails,” spokeswoman Maggie Schmerin says.

That still leaves many who aren’t. Industry analyst Henry Harteveldt, founder of the Atmosphere Research Group, says travel sellers and airlines need to do a better job clarifying the differences of Basic Economy.

“Airlines haven’t done a good-enough job marketing it as a product. People look at it as a fare. Then it’s confusing for the consumer,” he says.

Tom Farmer, a Chicago-based communications consultant, finds Basic Economy tickets are indeed presented as the new normal in coach. He avoids them, but doesn’t want to explain to clients why he bought a pricier ticket. Instead, he’s avoiding United and flying more with American, which has a much more limited rollout so far, as well as Southwest and JetBlue. “It propels more guys like me into free agency,” he says.

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