Finally, American Airlines Admits Basic Economy Means Higher Fares
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
Back in February 2017, American Airlines first launched basic economy. Since then, the world’s largest airline has expanded the no-frills ticket option nationwide and even into Canada. First presented as providing customers a “lower cost option,” it was marketed by AA as a customer-friendly move.
Throughout the rollout, we’ve seen that this isn’t the case. Fares haven’t dropped. Instead, customers are having to pay more for the same “Main Cabin” experience than they used to. Basic economy fares have generally matched the old economy fares on many routes. Even worse, AA hasn’t lived up to its promise of matching low-cost carrier fares with its basic economy fares, meaning that passengers are having to pay a premium for a similar experience — even though American Airlines likes to tout differences between the two.
Thursday, at American Airlines’ Investor and Media Day, AA’s President Robert Isom admitted what we have all noticed to be true: “Basic Economy is not a price cut,” he said during a presentation.
American Airlines is saying that, as part of product segmentation, basic economy fares fill the old role that Main Cabin used to have.
Of course, the fact that basic economy isn’t cheaper isn’t news or that surprising to those who follow The Points Guy. After all, we reported in January that American Airlines was projecting $1 billion per year in incremental revenue from basic economy and premium economy.
However, this marks the first time that we’ve heard American Airlines admitting that basic economy is in fact a price increase, and spinning it as a positive for investors and passengers.
WELCOME OFFER: 60,000 Points
TPG'S BONUS VALUATION*: $1,200
CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 60,000 points are worth $750 toward travel
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Earn 5X points on Lyft rides through March 2022. That’s 3X points in addition to the 2X points you already earn on travel.