It’s no secret that airlines are squeezing every possible dollar out of travelers by unbundling services that used to be free. The newest trend involves the introduction of a no-frills ticket class that promises cheaper fares and fewer perks.
On Jan.18, American Airlines (AAL) announced plans to introduce a Basic Economy fare that will provide a stripped down travel experience for flyers. These tickets will go on sale in select markets starting Feb.1, and are expected to expand to other markets later this year.
In exchange for lower fares, customers who purchase a Basic Economy ticket will not be allowed to place a free carry-on bag in the overhead compartment (one personal item is still allowed). Instead, they’ll have to check their luggage and pay $25 for the first bag and $35 for the second. Travelers who choose this fare class will also forgo the option to pick their seat assignment ahead of time and will be placed in the last boarding group. Additionally, their tickets are not eligible for upgrades; they can’t make same-day standby or flight changes; and only one-half of an Elite Qualifying Mile will be earned per mile flown.
“American Airlines now has something to offer every customer, from those who want simple, low-price travel to those who want an ultra-premium experience via First Class,” American Airlines President Robert Isom said in a statement. “Importantly, this new fare product also gives American the ability to compete more effectively with the growing number of ultra low-cost carriers.”
The news from American comes just two months after United (UAL) announced plans for its own Basic Economy set to launch in the first quarter of 2017. Catering to customers they call “price sensitive,” United’s Basic economy similarly prohibits a free carry-on in the overhead bins. Passengers are also restricted from selecting their seat, upgrading their ticket and changing or refunding their flight. United passengers booking in the lowest fare class will not be able to sit with family members and will not have access to certain Mileage Plus and Premier member benefits.
Whether these cheap tickets are worth the limitations really depends on the traveler. The perk-free model might not sound appealing at first, but United and American are following the lead of low-cost carriers like Spirit (SAVE) and Frontier, which have achieved a level of success by catering to customers who are indifferent to amenities and just want the cheapest ticket possible.
Delta (DAL) tested this theory back in 2012 when it unveiled a Basic Economy option in a handful of markets. With this fare class, flyers don’t receive their seat assignment until after check-in, families are not seated together, travelers have to board in the last zone and tickets are not eligible for same-day changes or refunds. As for luggage, a free carry-on bag is still allowed in the overhead bin.
We reached out to American and United to get an idea of what fares might look like in Basic Economy. Neither airline would comment on specific price ranges, but said fares will vary and be competitive with low-cost carriers. While Delta’s Basic Economy has slightly different rules, it might be able to give us a clue on the price range we can expect from American and United.
The price breakdown
We found a round-trip flight from Los Angeles to Philadelphia from March 1-5 on Frontier for $274.60. After paying $35 each way for a carry-on bag, the total comes to $344.60. If you check your bag instead ($30 each way), the price drops to $334.40.
On Spirit, the round-trip base airfare is $292.98, and jumps up to $362 after paying $52.35 for a carry-on a bag.
A Delta Basic Economy round-trip ticket for the same itinerary has a base fare of $305.60, which includes a carry-on bag and a personal item. If you choose to check a bag, the price jumps up to $355.60. A regular main cabin ticket on Delta for this trip has a base fare of $335.60 (or $385.60 round-trip if you decide to check one bag).
Considering all of these stipulations, Delta’s Basic Economy airfare is competitive with – in fact, cheaper than – the low-cost carriers (if you pay to carry-on with the discount carriers). Admittedly, the travel times are less desirable than more expensive tickets, and you’ll likely end up in the middle seat, but if your goal is to save money, it does the job.
As flying amenities continue to unbundle, some lawmakers are making it their personal crusade to keep airlines from overcharging customers. At a press conference on Sunday, New York Sen. Chuck Schumer chided airlines for charging passengers to use overhead bins.
“You don’t have to read the tea leaves to see that, when it comes new airlines fees, the future is turbulent,” said Schumer. “They continue a relentless march to monetize every atom of the airline, nickel-and-diming travelers with fee after fee to maximize their profits.”
Schumer suggested that he would work on new legislation with the Federal Aviation Administration to ban the charges if airlines continue down this path.
In its press release, American Airlines was sure to highlight that Basic Economy was just one option travelers could chose from. “Our goal is to make sure that all customers have the opportunity to purchase a ticket on American that works for their specific needs,” said Isom.
Sound off: What do you think of Basic Economy? Is it worth it?