American Relaxes Basic Economy Restrictions Today, Admits It Was All About Making You Pay More

American Airlines Basic Economy fares are highly restrictive. The purpose of these fares is to make the travel experience worse, in hopes that you will spend more money to avoid them. However they need to balance that with the risk that you will just give up on them and choose to fly someone else instead.

American Airlines President Robert Isom, speaking at the Cowen and Company Global Transportation Conference, admits that “the premise of basic economy, it wasn’t a price cut…[but] an upsell.”

American was always honest about this, while United Airlines touted the falsehood that Basic Economy was a new lower fare even though fares didn’t go down they just added restrictions like no advance seat assignments, no changes, and no full-sized carry on bags.

Starting today American has removed the restriction that prohibited basic economy passengers from bringing a full-sized carry on bag on board.


American Airlines Economy

Basic Economy customers board last, and customers in that boarding group weren’t allowed to bring more than a personal item on board. Of course elite frequent flyers and co-brand credit card customers got their preferred boarding and avoided this restriction.

And now the restriction has been eliminated because Delta never imposed this restriction on customers and so customers could get a better value at the same price elsewhere (as they also can flying Southwest) and increasingly the world will see easier comparison of total travel costs from online search engines like Google.

This is essentially what happened to United when they launched their basic economy restrictions before American. They lost about $100 million instead of generating more revenue because customers did better flying Delta, American, and Southwest. Their bet was that since they knew American would follow (United President Scott Kirby developed the restrictions when he was President of American) the competition would become worse for customers too and passengers would have fewer choices.

As of today United Airlines is the only major US airline prohibiting customers on their cheapest fare types from bringing a full sized carry on bag onto the plane. That means they’re uncompetitive — and in a way that they’ve admitted in the past cost them a nine figure loss over a period of months.

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. Kirby will remove the bag restriction when his spreadsheet shows a similar savings elsewhere. Kirby did mention that spreadsheets aren’t everything at a conference and spoke about brand recognition. Seems like corporate speak to me.

  2. When the board of either of these companies creates a financial incentive for its executive team to be the highest quality carrier as rated by consumers, then things will change. Until then this is unfortunately a waste of time.

    More specifically, in addition to the executive team, everyone on the board of AA should be ashamed at what’s happened to this brand. Here are the board members: https://www.aa.com/i18n/customer-service/about-us/corporate-governance.jsp

    Mostly venture capitalists who fly private anyway and couldn’t care less about how the profit is made.

  3. A major reason why they gave up is that it’s really difficult to police this sort of thing and every customer who does bring luggage aboard creates a scene that delays everyone

  4. I don’t think UA can last more than a couple weeks being the only major US airline that doesn’t allow a Basic Economy free carry-on, I mean, this is a huge differential that travellers will immediately notice. Just think about Chicago. I am certain pax are already booking away.

  5. What corporate america, airlines especially, doesn’t get is that better customer service equates to better profits. Why do they not get that after seeing how Southwest Air has been so profitable for so many years?

  6. I don’t know why this was a surprise to anyone. American is NOT in the transportation business. They are in the sales and marketing business, and especially credit cards and selling miles. If you happen to get to your destination and you happen to be on time that’s great but it isn’t their main objective. The objective is to market and sell tickets, credit cards and points.

    How much time do you think the CEO spends correcting what caused a flight from Omaha to Dallas to be late by five hours? How much time do you think the CEO spends correcting what caused their website sales function to be done for 20 minutes? If there were repeated occurrences of these which one would get the CEO terminated? Duh.

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