Details of New American Airlines Basic Economy Fares Leaking

US airlines have been trying to figure out how to compete against low cost airlines like Spirit and Allegiant — they feel the need to match price — while trying to get customers to pay more for things that used to be included in ticket price but could be made optional.

Delta launched Basic Economy fares first, and has done the most to expand on them — they plan to grow use of the fares into international markets, and don’t see them merely as a way of competing against low cost carriers anymore.

United has announced full details of their Basic Economy fares, and we’ve been waiting to see what American had up its sleeve.

I haven’t been able to confirm this with American yet, but the JonNYC twitter account is usually a strong source of information about American Airlines.

My bottom-line take is that American’s basic economy — fewer benefits and less flexibility at the lowest ticket prices — is going to be very similar to United’s and go farther than what Basic Economy pioneer Delta has done in taking away travel benefits.

That’s not surprising because American Airlines President Scott Kirby became the United President and was involved in United’s basic economy decisions. No doubt the work he did at American influenced those choices.

Apparently American’s Basic Economy product means:

  • Last to board with no full sized carry on (“personal item only”) like with United
  • No changes at all to tickets. If you can’t fly you forfeit all value rather than retaining ticket price minus a change fee.
  • Seat assignments will only be available close-in. You’ll be able to purchase seats within 48 hours of travel. Presumably you’ll otherwise get leftover seats assigned to you when you check in.

I’m certain that these fares will not be upgrade-able but that — since it’s how United is doing it — elites and co-brand credit card holders will be able to board earlier based on status and be allowed to bring on a regular carry on bag.

There will no doubt be additional details forthcoming including timing when these fares will be introduced, how mileage-earning will work, and whether there are any other penalties for purchasing the lowest fares.

No doubt this will be covered as a way to offer you lower fares but make no mistake that isn’t true, it’s about getting customers to pay more than they do today.

  1. This isn’t about offering you lower fares. American has already largely been matching the lowest fares in the market.

  2. Basic economy is a way of moving some passengers who buy those fares today to buy more expensive fares instead.

Reminder this remains unconfirmed but highly reliable information, though likely only a portion of the story. Hopefully American will share the full picture shortly.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. These cheap no frills fares are going to be a disaster for the airlines. They make their money on the business traveler who pays higher fares but why would business people want to travel on a flying Greyhound bus? I know that I will reduce my travel significantly because upgrades are harder to get and I refuse to end up in coach with all the screaming, fighting and cheap people. This has to be one of the most short sided policies they have ever come up with. If I wanted to fly Spirit I would book on Spirit. They’re idiots.

  2. @Mark — even with middle seats and only “personal items” there’s still a big difference between legacy-carrier Basic Economy, and the low-cost airlines.

    (1) Reliability. The low-cost airlines have poor on-time arrival records, and they don’t interline with other carriers, which is a big disadvantage in case of delays and cancellations.

    (2) Social status. The low-cost clientele is uncouth, or at best, blue collar. Sorry to be politically incorrect but most travelers want to sit next to employees of McKinsey, rather than McDonald’s.

    (3) Customer care. Legacy carriers offer employees higher pay and greater benefits — which translates to friendlier and more competent service. Legacy carriers also hire _more_ employees and rent more space in airports, translating into shorter lines and wait times.

  3. @Jason:

    1) American’s reliability is abysmal (I should know; they’re my carrier of choice (I know stupid me)).

    2) Basic fares equal Mickey D’s, not McKinsey clientele.

    3) Basic fare=no customer care. That’s the whole point.

    American is racing Delta to the bottom of offerings, without the quality of service and professionalism and on time performance. In 1st on o day, everyone said they’d fly another carrier if it was a realistic option out of Dalls.

  4. The devil is in the details, depending on whether elites still get free bags, carry on, preassigned seating.

  5. Internationally, putting my business trip/business class money into foreign carriers (regardless of the implications for American status) is looking even better than before.

    Domestically, JetBlue, Alaska and cutting back on discretionary trips are looking a lot more attractive.

  6. I basically gave up on United after they killed me with their slim line seats. Over a decade as 1K and now I avoid them and their 737’s like the plague. There is some travel that is simply unavoidable but where I can eliminate travel I will do so or I’ll just buy a FC ticket. Adding these Spirit fliers to AA, UA and DL flights aren’t going to be welcome to the business flier. All the BS from Jason about legacy carriers means nothing if your flight is miserable. Happy flying!

  7. Is McKinsey actually flying their grunts around in premium cabins? I’ve never heard of any larger consultancy actually opting for better tickets for their grunts, only that they wind up earning status via their road warrior lifestyle…

  8. I’m betting that WN is laughing all the way to the bank. 5 years ago a lot of business travelers would laugh at their Southwest-flying brethren. “Why fly southwest if they dont have first class!? No upgrades? Crazy!” “What a cattle-call!”

    Now, with airlines putting in PE, monetizing F with cheap cash upgrades, and now pushing these basic economy fares, what’s the point in flying the majors anymore? And ESPECIALLY for AA/UA.

    Same stuff BA is doing across the pond. In an effort to match the LCCs on price, they’re losing any remaining differentiation they had. And in WN’s case, they actually take the advantage since they fly direct.

  9. We’re living in a Monty Python skit where blithering imbeciles try to figure out how to drive away every last customer. John Cleese has a list of 40 year customers (like me) which he reads out saying that they need something more to drive them away (already did). Eric Idle comes up with an idea that they take away everything except the seat and then pin people into a slimline backboard where they cannot move to reach anything.

    This is American airlines today. Utter ruin, like the US economy after Bush. But that was Mad Magazine. Soon nothing will be able to parody it.

  10. Not allowing change fees to Basic Economy is a moot point, as cheap fares usually result in throwaway tickets anyway.

  11. American needs to differentiate their basic economy by offering discounts in an a la carte fashion instead of introducing this lower price point. For example, if you don’t plan to bring a carryon save $24, however if you bring one you’ll pay $100 at the gate. If you don’t want a seat assignment save $8, if you don’t want to earn aadvantage miles save $10, etc. That way the consumer can see the benefits of a regular economy seat as opposed to the lesser seats that the ULCC carriers are selling. When you allow the consumers to make decisions that lower their cost they get to take advantage of cost savings that would equate to a basic economy product. United had so much negative backlash a month ago when details were released about their basic economy product, American has a real opportunity to learn from the mistakes and get some positive press depending on how they roll out this new fare class. Let the consumer unbundle to their hearts content to save money, and charge them through the nose when they expect more than they peronally chose when building their itinerary.

  12. Folks, this isn’t complicated stuff. Airlines like Frontier and Spirit make their money by offering money losing “come on” fares and then try to make a profit by selling you all sorts of ancillary items. In a perfect world, the major airlines would prefer not to play this game, but when you have competitors pricing this way, you’d be foolish not to compete. It’s the same reason why hotels implement ridiculous “resort fees” when their competitors do it.

    Nobody should feel entitled to pay $49 and get “full service” on AA, DL and UA. Those aren’t profitable fares. In the future, if you buy these ultra low fares, you’re going to get less. That’s life. Sorry. If you want more service, you just pay a bit more. That’s what the airlines would prefer you to do. Choice isn’t a bad thing.

  13. The point is flights are pretty full as it is. Start charging $99 instead of $159 or $199 that means there are now seats that are not available to business travelers to purchase for a higher fare. The cabins then become full of severely discounted seats instead of more profitable fares. People that are attracted to these ultra low fares are not going to spend any more money than necessary. Airlines like Frontier & Spirit have much lower operating costs than mainline carriers so they can offer these cheap fares and still make money. The mainline carriers need higher paying customers and premium customers who are willing to upgrade to FC or biz or who spend more money inflight. There is a reason why there are Days Inn and Comfort Inns and then there are Hyatt’s, Hilton’s and Marriott’s. Oh well, fortunately I get to send other people out on the road while I can stay put and travel when and where I want or need to go.

  14. No, we can go to JetBlue, Southwest or Alaska which offer full service (and full miles on Alaska) for the same fares. Did you miss that? I am in Hawaii on Alaska $350rt and then LAX-FLL on Alaska’s Virgin nonstop for $228 rt and get my WIndow seat, full miles which earns me a free ticket.Plus they just dropped 10,000 appreciation miles in my account for visiting their merger page. American who?

    Don’t tell people to get used to it. We’re not getting used to it. We’re leaving. https://www.youtube.com/watch?v=ogAqgkkTV5U

  15. I think management at Delta/United/American are not stupid and know they are losing customers, revenue, and profit with their changes. There is no way any reasonable person could believe they can continue to reduce comfort and charge more at the same time. In the long run, that will impact revenue, demand, and profits.

    For some reason, they do not care…..

    However, I am at peace. Right now, I would be flying to maintain status. No need!. Just fly why I have to go somewhere.

  16. These fares are irrelevant in a lot of corporate travel policies – like mine which is lowest “reasonable” Y. No ability to change = not reasonable. Won’t be buying basic economy.

    Oh and Alaska, Jetblue, and the like are nice little carriers. But there are a lot of places they don’t serve.

  17. And, while on the topic of strange things AA does: aa.com shows tons of biz award seats from BNE to SIN (operated by Qantas) on most days in December, for two or more passengers. However, when trying to book them on any day you get the message that “The flight you selected is no longer available. Please modify your request.”. Yet another case of phantom availability…

  18. I had never even entertained the idea of flying on Frontier or Southwest or Spirit Airlines. Until now. AA has shot itself in the foot along with Delta and United. [I began avoiding United long ago due to cramped and uncomfortable seats.] The larger carriers like AA and Delta seem interested only in the bottom line for their shareholders, and have eliminated any advantage that has helped distinguish themselves from other “low cost” carriers. If you want to add to the bottom line, just raise the fares. Don’t mess around with what people have long expected from your airline. My guess is that customers will not mind paying a little more to keep flying with the same level of service as today.

  19. Mark, you have no idea how Revenue Management works. Don’t fault an airline for trying to sell every seat. Jason – You want the airline to make sure only a certain class of people sit around you. Sorry, the world doesn’t revolve there.

    If an airline can sell the seats at a higher price to business travelers, then seats will not be sold as Basic. The beauty of this product is that the airline can turn up or down the number of Basic seats on any flight depending on demand.

    Iahphx – you hit the nail on the head. Basic means a lower fare for those for whom price is the major factor. And I would much rather have the Basic experience on a mainline carrier than on one of the ULCCs.

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