Opinion: Basic economy fares constitute a deceptive business practice

I am an awards booker. I spend hours per day looking at airfare, both in terms of award mileage and cash fares for positioning flights. Basic economy fares have made my work unnecessarily complicated.

United and American have billed basic economy as a new class of service. Fliers who normally don’t have the funds to travel on a major carrier now can, the airlines claim.

I find that assertion to be flat wrong. Instead, airlines are using these fares to manipulate and complicate the process of searching for and booking flights. Based on my experience, basic economy fares appear to be a hack conceived to move an airline’s flights higher in cost-based search results, without compromising revenue.

Take this recent flight I booked for a client between Los Angeles and Houston. The advertised fare was $257 round trip.

See the note about carry-on baggage?

United certainly makes it clear that customers are purchasing a basic economy fare. The landing page features this big orange box, next to a button allowing customers to upgrade to a standard economy fare.

The fare class rules are not what is deceptive here. Instead, the basic premise of offering this fare is fraudulent.

There is a $20 difference between the basic economy fare and standard economy fare, each way. It costs $25 to check a bag, which you are required to do if you buy a basic economy fare. The only scenario in which a basic economy fare affords a net savings is if a flier is travelling with no substantial luggage.

Why would anyone pay $25 to check a bag when they can upgrade to a fare class that allows them to carry on their bag AND pick a seat for $20?

The basic economy fare does not offer fliers any net savings over a standard economy ticket. In fact, presuming a flier is bringing something other than a purse with them across the country, the basic economy fare, with baggage fees, is actually more costly.

The basic economy fare is valuable for United, though. Remember that Google Flights search page we started on? United’s basic economy fare positions its flights near the top of the search results.

If United had advertised its standard economy fare — remember, the only one that makes economic sense for the customer — its flights would have appeared several rows down, behind American Airlines.

The net cheapest option for any passenger not living out of a backpack is the American Airlines flight. This itinerary costs the same as United’s advertised fare, but includes baggage.

In this example, United Airlines comes across as the cheater, but United is not alone in this game. American also publishes these basic economy fares, replete with checked baggage requirements, on other routes, effectively boosting its standing in search results.

What this appears to be is an arms race to manipulate flight search engines. This is a deceptive business practice designed to marginally improve online ticket sales at the expense of transparency. The practice adds to the time it takes to search for flights, as customers have to reconsider the cost of additional fees and fares advertised by other carriers that include those services.

Google, Kayak and other search engines that are being manipulated in this scheme should react accordingly. If anything, this practice is a threat to their value proposition, which is to simplify the process of searching for flights. Basic economy fares complicate that process in a way that favors airline profits over consumer convenience.

Pingbacks

  1. […] Last month I wrote about the deception that occurs when these basic economy fares mix and mingle in …. The basic fares act like a paper tiger, giving flight shoppers the impression that prices are lower than they actually are. On United and American, the difference in price between a basic economy fare and a higher standard economy fare is often less than the bag fee basic economy fliers are forced to pay — if they want to bring anything bigger than a backpack with them. […]

Comments

  1. Agree with you but this sentence is wrong “The price of a checked bag, which you are required to purchase if you buy a basic economy fare, is $25. “.

    You’re not required to check a bag on fares on most airlines as far as I know. Baggage is always optional. Think you meant to say required to purchase if you want to bring a carry on

    • United requires basic economy passengers to check luggage. If basic economy passengers fail to check luggage before boarding, gate agents assess additional fees starting at $25, in addition to the baggage fees. The only pay-ahead option to carry-on a bag is to pay the $20 difference to move into a standard economy fare.

      • I think what Brian is implying is that you don’t HAVE to have anything with you when you fly. I travel light, but I don’t really know who travels that light.. But that is really a silly silly premise. I guess I could envision a day trip with a small backpack. Or an overnight to a warm climate.
        I fully agree with what John is saying. I am now super obsessive when I book a flight to make sure I haven’t clicked on one of these silly and ridiculous fares. It scares me a bit…..

  2. The best way to fight back against the greed is to own the airline stock(s). Large institutional investors(think Blackrock, Vanguard etc…) are squeezing management to grab every nickel out the flying public in a myopic effort to pump up share prices. Kinda like healthcare stocks. Don’t fight city hall. Participate.

    • My point here is that the search enginges themselves are in a position to end this nonsense by excluding these fake fares from results and prohibiting them in their terms of service, and they should. Basic economy fares make it more difficult to use the search engines. If I were operating a search engine, I would see this type of manipulation as a threat to the quality of my service and a threat to my direct customers.

  3. Buy a big trench coat with lots of pockets and stuff all your belongings in there. They can’t discriminate against fat people.

  4. Get over it. There’s nothing deceptive about it. The website is clear as to what is and what is not included. Just because you don’t like it, it doesn’t mean that others won’t or shouldn’t. As to the likes of Kayak or Google, it’s not UA’s job to make their lives easy.

    Personally I’d rather they hadn’t unbundled fares but I do understand that, for many people, an unbundled fare is the more attractive proposition. Indeed, for short flights and day trips, I generally use them.

    • Please find some real world examples of people who are enjoying now receiving less for service for the same amount of money and being treated like sh!t in the process. The fares didn’t go down and even on high last minute fares you buy gargbage low-end service class.

      Do enlighten us, how are consumer benefitting here, and how is this not just a deceptive money grab from someone who has a monopoly on many markets?

    • Basic economy on United and American is not an unbundled fare. Passengers aren’t saving money. This is not similar to what Spirit Airlines does with its fares. It is a trick to manipulate search results.

      Imagine you went to the grocery store, saw two different brands of yogurt next to each other, and took them both to the cash register. One brand had prepaid sales tax, so even though the posted price was higher, you are paying less for that yogurt. The other brand you chose because the sticker was less, but when you get to the cash register, you find out you’re actually paying more. Would you consider that a deceptive business practice?

      • I don’t agree with the analogy.. More like finding out the spoon was extra and trying to decide how ape like you would be eating with your hands.

        • You’re getting the spoon either way. How many times have you travelled cross-country with only a purse or backpack?

          In this editorial, I’m not saying that basic economy fares are deceptive from a service standpoint. I am saying they are a form of price manipulation that is outside the perception of the average consumer.

  5. You should consider a different example which mirrors the behavior the big 3 are targeting. Do a search for Philadelphia Chicago and assume the audience isn’t a reader or someone you’re booking flights for.
    That’s the target of basic economy. The 88% that buy based on price and fly once per year.

    As a frequent traveler, I can only say my disappointment is that the tools I use to consider my travel options are less helpful than they used to be. Sounds like an opportunity to provide value added services to a distinct segment.

    In the era of commerce, segmentation and personalization is how to drive revenue.

  6. the challenge is if people don’t book it, the airlines will say “customers know what they want and chose regular economy so there is no confusion or issue with offering the lower fare” but if people book it, then they will say “customers vote with their dollars and we gave them what they wanted”

    I used to believe airlines should be allowed to offer anything they want and let the market decide. But as more routes become monopoly routes or have few choices, and the “normalization” of <30" pitch, I'm starting to think it may be time to impose some minimum standards or require clearer "initial search" view of anything below some reasonable minimum.

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