American and United recently joined Delta in rolling out a rock-bottom “Basic Economy” fare product – similar to the Spirit Airlines pricing model – in dozens of new markets. And while the airlines have claimed publicly that the introduction is going well, early tests of the fares have revealed drawbacks, especially for travel sellers.
Among other things, agents could be put in the uncomfortable position of having to explain a product that’s at odds with what most consumers expect from a traditional airline.
“Basic Economy fares take the lowest fare being offered by an airline, and work to give customers less,” travel expert Gary Leff recently wrote on his blog.
Terry Regan, owner of Berkeley’s Northside Travel, in Berkeley, CA, agrees. “It’s the lowest fare but with fewer amenities than what you got for the lowest fare in the past. That means your customer will be in for a great surprise when they go to the airport. And you do not want the customer to be surprised when they go to the airport.”
Surprises include not being able to get a seat assignment in advance and having no assurance that a family can sit together, Regan said. Such situations will ultimately need to be sorted out at the gate, which is not encouraging, given the recent airline meltdowns that have made the news.
Consumers also may be surprised to learn that a Basic Economy fare doesn’t entitle them to use the overhead bin for their belongings. And unlike virtually all other coach fares, Basic Economy tickets cannot be changed – even for a change fee. “It’s use it or lose it,” said Regan.
Airline executives, for their part, are claiming publicly that the introduction of the fare type is going well.
“Early results are encouraging,” said American Airlines president Robert Isom during a recent conference call with analysts, citing results in 10 test markets in early March. “We plan to continue to roll the product out to the remainder of our domestic and short haul international markets in a phased approach with more markets coming in May and June.”
United president Scott Kirby went even further in recent comments, praising the Basic Economy product as “transformational.”
“It lets you go where you want to go at our lowest available fare while enjoying United’s exceptional inflight service,” he said.
But what airlines have been telling travel agents and other travel sellers about these fares would suggest that the product is encountering some speed bumps.
In fact, United posted a three-page advisory about the fares on its JetStream travel agency portal, urging agents to fully explain the discrepancies between Basic Economy and the next highest fare level, because consumers who’d booked the fares during a recent test hadn’t understood exactly what they were getting.
“Our test has shown that customers are arriving at the airport unaware of the restrictions of the fare that they purchased,” United wrote, asking that agents “confirm that you are advising your customers that purchase Basic Economy fares of the following minimum attributes” including no seat selection, no full-size carry-on, no changes and no upgrades.
Agents can block this fare category in their GDSs if they don’t want it to be on the table, but in most cases that leads to an extra charge for the agency subscriber.
And it seems the real intent of these fares is to get customers to upgrade to the next highest fare. As American’s Isom said in the recent investors’ call, “In the launch markets, half of the eligible Basic Economy passengers have bought up to the main cabin, which is right in line with our forecasts.”