This morning American Airlines announced the long-awaited details of their Basic Economy fares. You need to pay attention to this post carefully because it will likely affect your travel or the travel of those in your personal network.
You can see the American press release here but I’ll do my best to summarize the details that you need to know. The questions below are what I imagine most of you will be asking, they’re not pulled from the press release.
What are Basic Economy fares?
American’s customer base is pretty segmented already. Over 80% of American’s customers fly American only once per year (making up 50% of American’s revenue). These travelers likely view travel as a commodity and will buy the cheapest fares out there, whether they’re Spirit, Frontier, American, Southwest, etc.
Mainline carriers (United, Delta, American) have introduced Basic Economy fares for one reason: low-cost carriers are eating their lunch! In a market like DFW, American has to compete with Spirit on ticket prices even though Spirit by and large offers an inferior product (this, unfortunately, is probably up for debate on some days). So the airlines have decided to offer all of the
pleasantries misery of a low-cost carrier experience on their mainline jets.
Yes, Basic Economy fares are lazy attempts to get more revenue out of customers for things which cost the airline very little, but in today’s copy-and-paste airline environment, Delta and United already announced their version of these fares so it was inevitable that American would follow suit (what former president Scott Kirby would call “innovation”). It’s a reminder that American executives are loyal to one group of people: their shareholders.
Can you summarize American’s Basic Economy fare?
- Seating assignments – American will assign you a seat when you check in. If you’d like, you can pay for a seat 48 hours in advance of your flight, regardless of your status level.
- Upgrades – none.
- Carry-on luggage – one personal item only. If you bring a rolling bag and try to sneak it through you not only will be charged the checked baggage fee now but also an additional $25 service charge. If you have elite status or certain AAdvantage credit cards you will still be able carry on a piece of luggage in addition to your personal item.
- Boarding – Basic Economy customers will board last unless passengers have American/Oneworld status
- Changes to flights – none, even for status holders. No standby or same-day flight change.
- Refunds – nope, “use it or lose it” as American says in their press release
- Elite qualification – Basic Economy fares will earn elite-qualifying dollars and redeemable miles per the normal policy but only 50% elite-qualifying miles and 50% elite-qualifying segments
Is it just me or does all of that seem pretty dang reasonable?
Actually yes. I lament the segmentation in the airline industry and how complex everything is but these seem like reasonable accommodations which American hopes will allow them to compete against the low-cost carriers better. Make no mistake though, when you read airlines talking about how this “gives customers more choice” because it does not. Basic Economy fares are about getting more revenue and that’s it.
What do you think are the “gotchas” in the Basic Economy fares?
I think the additional checked baggage service charge will be interesting to watch. American has a maniacal focus on “D0”, their initiative to get jets pushed back on time, no matter what. Gate agents are already pretty frantic as it is, the stress of charging customers for baggage that’s outside the “personal item” limit will be very interesting to see in the field. Other than that everything is pretty logical.
The biggest gotcha, though, doesn’t have anything to do with any of these policies. When I travel for my real job I book my tickets through a portal which returns results which fall under my company’s travel policy. In other words, if I book a ticket on American I never actually go to their site to make the purchase. What interests me is how I will be able to make sure I’m not purchasing a Basic Economy fare when I’m making a booking away from American’s site. I’ll keep you posted on what I find out about that, but it’s concerning.
Do you think they’ll actually be able to pull it off?
Jury is out, obviously, but the only way American will be able to make Basic Economy fares work is communication. From the purchasing experience to the gate, American needs to communicate incredibly well so there are no surprises to the end customer. I think this will put a lot of stress on the gate agents as well.
What do you think about American’s new Basic Economy fares? Tell me in the comments below!