Basic Economy – we had better get used to it.

From This Week’s Economist

Back in February United and American Airlines announced they were joining Delta Air Lines in introducing“basic economy”, a new class of fare below standard. This doesn’t mean sitting even farther back in the plane, but it removes the few perks that economy passengers still enjoy, chiefly the ability to select one’s seat before checking in (and to ensure that parties traveling together could sit together).

The early reviews were universally negative—except for the only one that counts. Because basic economy, it seems, is quite profitable for the airlines. Delta, which introduced basic economy on a limited scale in 2012 and announced an expansion last year, has now released a report on its financials. In the first three months of this year, the airline says, basic economy earned Delta an additional $20m in revenue. Delta is planning to expand the fare class beyond the roughly 1,650 routes (8% of the airline’s total routes) it currently serves. Once United and American introduce it later this year, it’ll become a relatively standard feature of flying on US carriers.

That news is likely to be met with further groans from flyers, who have complained that the last remaining pleasures of air travel are being slowly stripped away. And yet it’s what flyers are voting for—if not with their voices, then with their wallets. In a recent survey conducted by an airline-industry group, passengers urged airlines to provide more legroom and comfort. But they also revealed that they make their flying decisions based on price above all other factors. In other words, what they say they want isn’t what they’re actually willing to pay for.

The introduction of basic economy could be greeted as part of a trend of good news for flyers: traveling by air is getting cheaper. The average US fare is now at its lowest level since 2010. Much of that can be attributed to lower fuel prices. But for cash-strapped travelers, the ability to pay a slightly lower price in exchange for sacrificing a few privileges can be the difference between flying and not flying. For an industry trying to expand its customer base, and for some of those customers themselves, that’s surely a welcome development.

“If you’re shopping for just solely price, we want to have a product that can compete effectively and provide the best services against carriers who are providing a much lower quality of service” Delta’s chief revenue officer, Glen Hauenstein, recently told analysts, according to the Los Angeles Times—a dig at the low-cost airlines, such as Spirit and Frontier, against which basic economy is intended to compete.

For many other flyers, however, the arrival of basic economy represents yet one more area in which they’re given an unwelcome choice: pay extra or be subjugated to further indignities. Like it or not, they’d better get used to it.

My last UA return to the US was a combination of “normal” and “premium” economies…..if there is to be a lower quality (though cheaper) version I’ll consider flying to the USA via asia instead !!!!

pathetic service and comfort, no decent stop overs (other than iceland), minimal FF & status points – maybe ok on the outbound (like BA short haul) but a totally miserable inbound experience

Not sure where you start your journey’s from Peter, but you don’t need to go via Asia. Emirates have a service from Milan direct to the US – though I’ve no idea how Economy is.

Thanks Alex. I’ve yet to fly it though I likely will in November. My fellow board members have done MXP-JFK and tell me it’s superb, with business comparable to Swiss first. They will also send a car to Lugano to collect me and bring me back. Very tempting.

Back on topic, BA Y – without status (and LH, AF, even with status) is pretty much ‘basic eco’.

No seat selection, you get what’s left at checkin.

BA HBO is definitely basic Y. Seat 25A/B on the A319 (143 seats) has no window and is opposite the bogs – lovely jubbly. A GGL could get one of these on a HBO fare – insanity.

Now Ryanair is different; the CVP (customer value proposition) is cheap price, punctual, but no frills – very low customer expectations; You can add what you want, exit or upfront seat, priority boarding.

I have very mixed feelings about Ryanair, I don’t like the way they treat some staff, but as a strategist, I recognise they have a very clear view of what business they are in, who their customers are and how to service them – really case study suff.

The difference between Ryanair and the legacies, is that Ryanair were the disruptive innovators, who learned how to deliver an acceptable product (to those who buy it) at a cost that the legacies can only dream of; in response, the legacies responses are negative and ultimately will fail.