Why Basic Economy is Like the Movie Say Anything and Customers Have Their Boom Boxes Out

The major US legacy airlines have gone to great lengths to destroy their brand this year. And not only because a United Airlines passenger was dragged down the aisle and bloodied back in April because he wanted to travel home on the ticket he purchased when he was already in hit seat.

The introduction of ‘basic economy’ fares were aimed at making the travel experience so bad many customers would refuse to buy them. The airlines hoped passengers would just spend more money with them and not book away onto another airline that offered better value (Southwest, jetBlue, and Alaska do not currently offer these restrictive fares). United lost about $100 million in its roll out because they bet wrong.

Airlines worked hard for the last 35 years building loyal relationships with their customers, turning what was essentially a commodity product (a seat that gets you from A to B) into a differentiated one where passengers had brand preferences and were willing to spend more to stick with ‘their’ airline, or to take less convenient flight times and routings to give their preferred airline the sale.

But airlines no longer treated even their absolute best customers well every time they stepped foot on a plane. Even the highest revenue customer buying premium cabin international fares for work couldn’t sit with their family on a weekend trip if they bought the least expensive fare offered. And airlines called those customers ‘basic’ which even Ione Skye knew in Say Anything was a sure fire way to risk a budding relationship.

You know that there are loyalty executives who regret the decision to break up with their customers. They’re torn because they’re afraid to speak out against conventional wisdom. Too often in companies you tell the boss what they want to hear, and you have to stick to the story that their strategy is working. Stick your neck out and you risk your job, and there’s little upside to give dissenting advice (even if it’s right) especially once a decision has been made.

But they lie awake at night wondering if their loyalty program is risking its revenue stream. If they made a mistake, as their customers stand outside their bedroom window with a boom box reminding them of the relationship they used to have. Those customers haven’t moved on yet, at least many of them haven’t. They’re still remembering how good it used to be.

Sure some of them went by the Gas ‘n Sip and took Jeremy Piven’s advice to just fly Southwest (“your only mistake is that you didn’t dump [the loyalty program] first”) and earn points from credit card spend with bank transferable programs like Chase Ultimate Rewards and American Express Membership Rewards.

But if they’d just go to the window and call down it isn’t too late…

If just one of these courageous executives sat up from their bed and shouted, “I really do value you. If you are a valuable customer (however I define it, meeting minimum spend requirements) I will treat you well each and every time you step onto one of my planes. I value your business and your loyalty, not just how much you spend on today’s trip” there could be a promising future.

Diane Court: No one thought we’d do this. No one thinks it will work do they?

Lloyd Dobler: (shakes his head no) You just described every great success story!

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. Thanks for the new storytelling approach.

    I don’t see it going away. They need to be page 1 result 1 on the OTA listings. If they didn’t unbundle at that price they’d be less profitable then a real LCC.

    I agree that at least a partial fix would be for elites or maybe even mileage members of that airline to be able to buy basic and the Airline should just upgrade/refare them to main cabin at time of booking. It would encourage booking loyalty to that airline at a minimal cost and normalize repeat customer experience too. At least do it for elites. I’m looking at you United. But the other two screw elites in basic in their own ways.

  2. If Basic Econ was done simply to price-match the ULCCs, i.e. “You want a Spirit-level $35 fare ORD-LAS? You get Spirit-level restrictions”, I wouldn’t mind it at all. However, it’s a requirement to buy-in to any semblance of loyalty, even at fairly high fares. AA wanted an extra $50 for Main Cabin on a $678 fare to PVR last week, so we booked DL instead, who didn’t have a BE fare (at least when we booked).

  3. I just made Million Miler on UA when the changes happened. After the changes in 2012, and after the Basic Economy enhancement, the only reason I have to fly UA was low price or schedule. The offer of 8 miles per dollar spent is a joke. Alaska credits full mileage credit.

    P.S. to the legacies, my Alaska account is bulging with miles (that can be used), vs other carriers. My AA miles are like German Marks after world war 2… worthless. YMMV.

  4. My husband and I flew basic economy on AA last weekend. It was a non-stop MYR-PHL. I waited until about an hour before I arrived at the airport to check in. We were given seats that, according to the chart, were premium seats. Because we have the CC, we boarded in Zone 5. No we did not sit together but given the price differential of $170 pp for main cabin, it was an easy decision.

  5. I am not seeing Basic being offered on AA flights I’m checking where it was offered just a few weeks ago MIA/FLL/PBI->SEA. In fact now that I’ve started checking more AA filghts again because of this, I’m not seeing it at all. Did they roll it back?

  6. My wife and myself are die hard disney fans and basic economy from PHL to MCO is routinely 45dollars round trip, so myself, wife and son travel round trip for 173 total , taxes included …. we went on Disney 3 times last month Friday to Sunday…. and we love basic economy

  7. If I go to a restaurant every week and order filet mignon, they bring me filet mignon. And maybe they have a revenue-based loyalty program that gives me a few points for buying my meal.

    One week I decide I only want to pay for a hamburger. They bring me a hamburger, and not filet mignon. I earn fewer loyalty points for buying the hamburger.

    Believe me, the money the airline is making from upselling customers while still competing with Spirit’s “bare fares” is far more than they’re losing from hurting your feelings, or anyone else’s.

    FWIW, as a 1K who has bought a couple of Basic Economy fares, I think I’ve got exceptional value from them AND been rewarded for my loyalty. Half the time they’ve sat me in Economy Plus. I’ve boarded early, given me free food and alcohol, and a free full-size carryon bag. The only thing I really lost was a spot on the upgrade list, which probably wouldn’t have worked anyway. I would submit that anyone who wanted more for $49 is the very definition of “over-entitled.”

  8. I’ve had my first experience with AA sub-economy. Once is enough. I was done with UA long ago. I’m done with AA now.

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