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American Airlines to sell restricted ‘basic economy’ ticket

Tickets similar to bare-bones fares offered by Delta and soon to be matched by United


January 18, 2017
The Canadian Press
by David Koenig

DALLAS—The evolution of a caste system in the economy cabin of jetliners is deepening, with passengers divided and treated differently based on how much they are willing to pay the airline.

American Airlines has announced that passengers will be able to buy “basic economy” tickets starting next month that will be similar to bare-bones fares already offered by Delta Air Lines and soon to be matched by United Airlines.

If you want to get the cheapest fare on American or United, you will have to leave that rolling carry-on bag at home. Passengers who pay basic-economy rates on those carriers will be limited to one item that fits under their seat—no wheeled bags that take up space in the overhead bins.

American didn’t describe prices for its version of basic economy, which will begin at 10 U.S. airports and later be expanded nationwide and to close international destinations such as the Caribbean.

On randomly chosen flights next month on Delta, the basic-economy price ranged from $7 to $25 cheaper than a regular economy ticket. Rick Seaney, CEO of FareCompare.com, said savings can be even higher because Delta tends to try to match prices for Spirit Airlines and Frontier Airlines. But, he said, Delta limits the number of basic-economy seats much the same way that it limits seats available for customers paying with frequent-flier miles.

The idea behind the stripped-down ticket is to better compete with discount airlines for travellers on a tight budget. Spirit and Frontier go after those customers with cheap fares, then tack on fees for extras including use of the overhead bins.

Delta offers basic economy on about 40 per cent of its U.S. routes and plans to cover them all by year-end and expand it to international flights. United officials said Wednesday that they will begin selling a similar ticket by the end of March at one airport, Minneapolis, for travel starting in late spring or early summer, then expand to the rest of the U.S.

If you buy a basic-economy fare on American, you can expect this:

  • No wheeled carry-on bags; you’ll be allowed just a single item that fits under the seat.
  • You will be in the last group to board the plane unless you’re already a high-level member of American’s loyalty program or hold an American-branded credit card.
  • Tickets are nonrefundable and can’t be changed.
  • No upgrades allowed.

Basic-economy buyers aren’t able to pick a seat when they buy their ticket, although American will let them pay extra for a seat assignment starting 48 hours before the flight. The policy will make it harder for two or more people to sit together if they buy basic-economy fares, although American said it will try to seat children 13 and under with an adult family member.

American Airlines President Robert Isom said in a memo to employees that flight attendants won’t monitor whether basic-economy ticket holders try to put their personal item in the overhead bins. United Airlines President Scott Kirby said his airline would take a similar approach.

If a customer gets past the United ticket counter and to the gate with a wheeled bag, an employee will take the bag and the customer will be charged a bag fee and a “handling fee,” Kirby said. The fee for a first checked bag is $25, and the handling fee will also be $25. American plans a similar $25 extra fee.

The big airlines hope that cut-rate fares will win back some of the passengers they are now losing to fast-growing discount carriers. They also aim to try to convince customers to buy more expensive tickets with more flexibility and amenities. Delta says that about half the customers who intend to buy basic economy decide, when presented with options, to trade up.

Delta’s president, Glen Hauenstein, said recently that the industry is in the early stages of segmenting the main cabin—in Delta’s case, from basic economy to “premium select,” which has more room and a special menu and is sort of a watered-down version of business-class.

This slicing and dicing of economy passengers “will deliver significant shareholder value over the next three to five years,” Hauenstein said.