Overview

The big three, American Airlines, Delta Airlines, and United Airlines have now all rolled out their Basic Economy fares.  This has attracted the attention of passengers, the media, and Congress among others.  The overall reaction labels this move as an evil one by the big three.  Senator Chuck Schumer has certainly voiced his displeasure.  Let’s take a closer look at the product offerings, the limitations, and the reasons behind the move.

What is Basic Economy?

While there are small differences in the Basic Economy fare between airlines, a few common elements exist.  Generally speaking Basic Economy is the lowest coach fare offered by the airline.  The fare is reduced by stripping extra amenities which result in a savings for the airline.  This allows the carrier to offer the ultra low fare.  The fare is ideal for the budget minded traveler who can cope with the restrictions.  There are occasions where I might purchase a Basic Economy fare.

Basic Economy Limitations

Although the limitations vary slightly between carriers, the following limitations are common.

  • Carry on baggage limits are greatly reduced for Basic Economy passengers.  Use of the overhead bins is not permitted.  This means your carry on bag must fit under your seat.  The popular rolling suitcases are not going to make this requirement.  Small to medium backpacks and duffel bags are examples of the carry on option for the Basic Economy passenger.  Larger bags must be checked and the associated fees paid.  There are small exceptions depending on airline, credit card, and loyalty status, but generally plan for just the small carry on bag.
  • Seat assignments for Basic Economy are generally made the day of travel at the airport.  This means assigning from the leftover seats close to the time of departure.  When 2 or more people travel together on Basic Economy it is unreasonable to expect to sit together.  In fact, United warns about this issue.  Even for families separation throughout the cabin should be expected on Basic Economy fares.  One exception is American Airlines allowance to select a seat within 48 hours of departure.  Of course this seat selection comes at a price and will still not guarantee groups being seated together depending on availability. The potential wild card in the seating arena is pending rule making requiring all airlines to allow children under 13 tone seated next to a family member at no additional cost to the passenger.  The creation of this rule was directed by the FAA reauthorization bill in 2016.  While this sounds straight forward and simple, there are many exceptions to the potential rule allowing airlines relief if this move results in a upgrade to seating, cabin class, and other factors.  How this will affect seating of families traveling on Basic Economy fares is unknown at this time.  To be safe I wouldn’t count on relief from this future rule making.
  • Frequent flyer earning is affected on Basic Economy fares.  While I will not attempt to define specifics of each airline, Basic Economy fares will generally earn frequent flyer miles and status at a reduced rate.

How Basic Economy Fares Fit in the Industry

The Basic Economy fares offered by the big 3 are in use at other airlines.  While they are not labeled as “Basic Economy”, they are very similar.  The features such as low cost, limited carry on bags, and limited seat assignments are all characteristics of these fares.  Some airlines using this type of fare are Spirit, Allegiant, Frontier, Norwegian, and WOW.  Most of these carriers have even more charges for extras than the big 3.  Another difference is this other group airlines encourages the purchase of these extras to enhance their revenue.  Generally the big 3 do not allow upgrades from Basic Economy.  They approach the situation by selling you a low fare ticket and keeping you on it.

The big 3 are now able to attract the very basic traveler that needs simple no frills transportation at a competitive price.  While I agree the vast majority of U.S. based travelers do not travel this way, there are some who do.  I have made trips where I can comply with these restrictions easily and would certainly consider the lower fare.

The big 3 are now on a more even footing with the other carriers as well.  Sales are lost everyday to travelers who simply search out the lowest fare and stick with the low fare carrier without regard to all the additional costs.  By pairing down the Economy product to offer a competitive fare the big 3 have a much better chance of capturing those travelers. 

What to do about the Basic Economy fare

As a passenger, the Basic Economy fare is a great choice if it meets your travel needs.  Make no mistake, the big 3 are not following the path of the other carriers and charging all customers for seat assignments and overhead bin use.  Simply purchase the Economy fare that suits your travel needs.  As United has pointed out many times there is only a small difference between Basic Economy and a more robust Economy fare.

As for Congress, the question is a complicated one.  While some have voiced their displeasure, it would be anticompetitive to allow only certain airlines to market their fares in a particular way.  One alternative is a move towards re-regulation requiring a minimum of service to be included in the price of a ticket.  Defining and enforcing a rule like that would be very difficult.  A more workable solution would be to enforce clear easy labeling of what a fare does and does not include.  Meanwhile as a consumer take the time to read more than what follows the dollar signs.  Continue to be a good airfare shopper.  Many people end up paying more on a Basic Economy type fare with all the add-ones than if they had selected a slightly more expensive Economy fare.

How do you feel about the Basic Economy option?  Is it something you might use?