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In February of this year, United first started selling basic economy. But, unlike American Airlines — which started selling basic economy on the same day — United has been incredibly aggressive about its basic economy rollout. Less than two months in, UA had already expanded to over 100 routes.
This morning, in United’s earnings conference call, UA President Scott Kirby confirmed that basic economy has now been rolled out to all domestic routes. This is drastically different than American Airlines, which has slowly introduced the new fare class to just 24 basic economy routes at this time.
In addition, Kirby says that United will always offer a basic economy option — even if there’s just one seat left for sale on the plane… and even if the price is $1,172 round-trip for 1.5-hour flight:
In an all-to-common refrain, Kirby claims that this “gives customers choice.” While that’s technically true, there’s a much bigger driver of basic economy’s introduction: increasing fares.
Our data shows that — while American and United claim basic economy allows them to compete with the low-cost-carriers — the airlines continue to charge more than the LCCs. Essentially, the new basic economy fare is what fliers used to pay for standard economy. Now, travelers have to pay more to get to carry-on bags, select a seat, earn elite miles, not board last and/or have a shot at an upgrade.
And, it has worked for United so far. The airline has made its basic economy fares so painful and ubiquitous that roughly 70% of passengers have chosen to pay more to get a standard fare. From the airline’s stance, this is even better than American Airlines’ performance getting only 50% of passengers to pay more for the same service they were getting prior to February.
Hopefully the other 30% have learned that you can use credit cards to alleviate much of the pain of basic economy fares. Just by having a United co-branded credit card — most of which waive the annual fee for the first year — you can board early, carry on a bag and check a bag for free, too.
Are you paying more to avoid basic economy?
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