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United Airlines is sticking with no-overhead-bin rule for its cheapest tickets

CNBC logo CNBC 10/17/2018

a airplane that is parked on the tarmac at an airport © Provided by CNBC LLC Traveling in United Airlines' cheapest seats? Pack light.

The airline has no plans to follow American Airlines by allowing travelers flying in its cheapest class of service, known as basic economy, to bring a full-size carry-on that fits in the overhead bin on board, United said Wednesday.

Airline executives have said these fares are offered to compete against low-cost competitors like Spirit Airlines and that they measure the success of these bare-bones tickets by how many travelers pay the higher fare just to avoid it. These tickets generally do not allow date changes, do not come with free seat selection in advance, and travelers have to board the plane last.

"The way we designed basic was carefully constructed to allow us to segment our products, to allow us to compete effectively against ultra-low-cost competitors and allow our operation to deliver better results for everybody in terms of on-time departures," said United's Chief Commercial Officer Andrew Nocella on a call with analysts after the company raised its profit outlook for the third time this year . "It's working as designed and it's working full speed ahead with where we're at."

United and American each rolled out basic economy fares in 2017 that did not allow travelers to bring a carry-on bag that fits in the overhead bin. American backed away from that in September, which brought its product more in line with that of rival Delta Air Lines. "There are other features of that product that we think will continue to provide us sell-up rates," Kurt Stache, American's senior vice president of marketing, loyalty and sales, told reporters at the Boyd Group International Aviation Forecast Summit in Denver in August.

The difference between the classes of service varies but a search for a roundtrip United ticket between Newark and Los Angeles in early December showed basic economy was $60 cheaper than the $297 fare for regular economy.

The biggest U.S. airlines have scrambled in recent years to segment their economy-class cabins into subcategories. At the high end are seats with more legroom and on longer flights perks like amenities kits, with basic economy at the low end. United said that its ancillary revenue — income outside of base airfares — rose in the last quarter, led by its extra-legroom seats that are closer to the front of the plane.

Related video: United's Oscar Munoz on Q3 results, jet fuel and Q4 outlook

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JetBlue Airways in September said its planning to roll out its own version of basic economy fares next year.

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