United gate agents.
Certain United Premier elites.
Passengers purchasing tickets from third-party travel agencies.
The stomachs of executives at Spirit Airlines from laughing so hard.
The above are a short list of those who will be inconvenienced from United’s announced details of their new “Basic Economy” fares today. Fares will start in 2017.
Here’s what you need to know:
- No seat assignments, regardless of your elite status
- Carry-on bags are limited to a personal item (like a purse) unless you have elite status or a qualifying credit card
- No ticket changes will be allowed, even for a fee
- No upgrades
- No elite-qualifying miles will be earned for travel on Basic Economy fares
- No combinability with regular economy fares or interlines
The Question: Why?
It’s simple really. Low-cost carriers like Spirit, Allegiant, and (now) Frontier are taking valuable market share away from the mainline carriers. Heck, even America’s favorite low-cost carrier, Southwest Airlines, hasn’t been immune from the Low-Cost Three.
I’ll use American Airlines as an example. 88% of American Airlines customers fly on the airline once per year. This 88% of flyers account for just half of American’s annual revenue. So the logic the Big Three (Delta, United, American) are using here is that they have to compete on lower airfares with airlines like Spirit, so why should they be giving mainline benefits on low-cost fares?
But let’s take a look at what a passenger on a mainline carrier experiences if they do not have frequent flyer status:
- They must pay to pick a seat that’s not in the far back and/or middle of the row of seats
- They must pay to check a bag
- They must pay for food
Is it really that different from Spirit already?
This brings me to my main annoyance with these new “Basic Economy” fares:
Basic Economy fares force frequent flyers to pay for access to their benefits and make the flying experience worse for everyone.
I imagine the Big Three will tell you “they’re trying to create a suite of benefits more closely aligned to the competition at certain fare levels” and hope that somehow that works. Hint: it won’t. Spirit, Allegiant, and Frontier have some of the worst customer service rankings in the country specifically because of fee nonsense like this. If that market segment is really what the mainline carriers are going after then I guess go for it, but I imagine the revenue difference won’t be worth the lost brand equity.
United, Delta, and American are trying to create two different airlines within the same airline and somehow not confuse their customers. It won’t work.
They are all simply charging more for something they currently provide. This new type of fare puts more stress on gate agents (measuring personal items to ensure compliance during the last boarding group, when on-time departures have never been more important), is a slap in the face to their elite members who travel for business, makes life more difficult for third-party travel agencies, and depends on a perfect job of educating their customers to have any chance of working smoothly.
Here’s the ultimate thing: the additional revenue will not be enough when jet fuel prices rise again. Damaging your brand equity trying to squeeze more money out of your customers when times are good will not be forgotten next time these airlines go bankrupt and ask their frequent flyers to “remain loyal”.
Gary Leff said it best, “I am not my fare.” If you are telling me that just because my company requires me to travel on the cheapest economy fare that I won’t even earn elite-qualifying miles then you might as well stop calling it a loyalty program. You’re actually training your customers to fly other airlines!
Up next, of course, is American’s release of their Basic Economy fare details. My prediction: they will match United almost word for word.