Whether you view Basic Economy as a draconian measure to make travel even more miserable or an easy way to ‘save’ money (basic fares aren’t cheaper – the regular fares just got more expensive), the trend is here to stay. Delta was the first U.S. airline to experiment with “We’d like to offer you more options” – American and United followed with even stricter policies.
The Basic Economy trend is going global now too, with European carriers introducing basic fares across the Atlantic. Even the decidedly premium Porter Airlines is rolling out basic fares.
Surely, this must be a mistake fare, right?
Not quite. I’ve seen similar Basic Economy fare differences with increasing frequency, albeit with very specific criteria:
✅ Travel within ~36 hours
✅ One-way fares
✅ Competitive routes between large markets
Basically, last-minute one-way fares between major cities, like Chicago to Las Vegas. Here’s another example:
At least this one is slightly more reasonable, although still double the cost to fly “regular” economy…
Here’s what I think United is trying to do
United touted its ‘continued strength’ in close-in bookings during its second-quarter earnings call. With domestic passenger revenue (PRASM) up 1.7%, it’s clear United’s last-minute pricing strategy is working, at least to some extent.
There will always be a market for (expensive) last-minute business travel. Anyone who has booked a ticket hours before departure knows fares can be ridiculously high. From the airline’s perspective (and your employer’s) you don’t have much of a choice; the airlines can – and do – charge a premium.
Most corporate booking tools default to the lowest economy fare but, at least for now, usually exclude basic economy fares. In other words, a business traveler using [booking tool X] searching the flight below would see $528 as the lowest fare.
On the opposite end of the travel spectrum is someone who is looking for a cheap, last-minute weekend escape. They are searching on Kayak, Priceline, Google Flights, and beyond for the cheapest flight and find a $111 fare for tomorrow. Not a bad deal for such a long flight, right?!
The market booking $528 fares is somewhat limited. Although it feels like every flight is 110% full, we know there are in fact a few empty seats – about ~15% averaged across all flights.
United can’t fill all 15% of remaining seats with expensive fares, so the next strategy is to sell them to the lowest bidder? Fuel is increasing, but it’s still low enough (relatively speaking) where a $111 fare + $25 bag fee might eke out a dollar or two in profit.
There’s another dynamic at play – oversells
Remember Dr. Dao? Of course, who doesn’t? A little over a year after the incident (April 2017), data from the Department of Transportation Air Travel Consumer Report reveal some very interesting findings:
- From January – March 2017, United involuntarily denied boarding (IDB) to 900 passengers
- From January – March 2018, United involuntarily denied boarding (IDB) to just 27 passengers
That’s not a coincidence, of course. United made a public commitment to reduce oversells, and official data – at least in terms of involuntarily denied boarding – suggests the carrier followed through on its promise.
What does that mean? United is being judicious about selling those final seats, selling only to the ‘highest’ and ‘lowest’ bidders.
Basic Economy fares infuriate Premier members
While all MileagePlus members traveling on Basic Economy fares still earn a
reduced minuscule amount of award miles and receive a small bag of generic pretzels, Premier members will not receive:
- Premier credit (qualifying dollars (PQD), miles (PQM) or segments (PQS))
- Complimentary Economy Plus seating
- Paid upgrades
- Mileage upgrades
- Complimentary upgrades (CPU, RPU, or GPU)
- Lifetime miles
That means under most circumstances, Basic Economy fares are a no-go for Premier members. But can you really justify paying $400+ for a “regular” fare?
🌟 Check out One Mile at a Time for more on Premiers booking Basic Economy
The ‘normal’ basic economy fare should be about ~$25 cheaper
When United introduced Basic Economy, fares were typically around $25 cheaper than the standard economy fare. The price difference is largely the same on most flights, like this Denver (DEN) to Las Vegas (LAS) itinerary:
Compare the above fare – a reasonable $25 difference – to this Chicago (ORD) to Las Vegas (LAS) fare: a not-so-reasonable difference of nearly $500!!
At least the fares are transparent
Plenty of people book Basic Economy fares, and to United’s credit, they make it very clear what Basic Economy does not include – it’s a long list. United also makes you check a box acknowledging ‘Basic Economy works for me.’ Fair enough.