Avianca will introduce basic economy in North America

North America is about to get one more airline that sells basic economy tickets to destinations abroad.

On Wednesday, March 4, Avianca will introduce "branded fares" on its flights to the U.S and Canada.

The Bogota-based Star Alliance carrier first introduced basic economy tickets on flights within Ecuador in September 2019, and expanded the offerings to its flights in Colombia in October 2019. European flights were added earlier this month, and Mexico, Central America and Avianca's other South American markets will see the new fare structure beginning April 15.

Sign up for the free daily TPG newsletter for more airline news.

The fares are branded as "XS" -- as in "extra small" -- through "XXL," and will be more inclusive the "larger" they get. Like many other basic economy options, Avianca's most restrictive will prohibit checked baggage and seat pre-selection. No matter the fare class, Avianca said the onboard service will remain the same for all passengers.

In 2012, Delta Air Lines was the first U.S. carrier to introduce a basic economy fare, and other major carriers including American and United followed suit in the years after as the legacy airlines tried to compete more directly on price with discount carriers like Spirit.

Those restrictive cheap tickets were first available on domestic flights, but most airlines have since expanded the offerings to cover the majority of their routes.

Michael Swiatek, Avianca's chief planning officer, said branded fares give passengers more flexibility by allowing those who don't care about checking a bag or selecting their seat in advance to travel for less money.

He also acknowledged at an event in New York celebrating the airline's 100th anniversary that basic economy fares give Avianca another way to respond to discount airlines in competitive markets.

Daily Newsletter

Reward your inbox with the TPG Daily newsletter

Join over 700,000 readers for breaking news, in-depth guides and exclusive deals from TPG’s experts

Email address

Sign up

By signing up, you will receive newsletters and promotional content and agree to our Terms of Use and acknowledge the data practices in our Privacy Policy. You may unsubscribe at any time.

For example, Spirit Airlines has been growing its network between the U.S. and Latin America. Swiatek said Avianca doesn't plan to follow Spirit into every new city it's adding, but the basic economy fares allow Avianca to defend its turf against the discounter on routes where the two airlines compete directly.

Related: Spirit Airlines grows in Florida, serving more Latin American destinations

"We have to be careful of overexposing ourselves on point-to-point," Swiatek said, explaining that Avianca remains generally committed to the hub-and-spoke model, and doesn't plan to change that in the foreseeable future.

As the airline looks to overhaul itself in the coming year, other changes will be coming to Avianca. For the North American market, the two most notable are the airline's plans to start service between Bogota and Toronto or Montreal, pending regulatory approval. And, Avianca's three daily flights from New York-JFK to Bogota will all be operated by widebodies beginning March 29.

Currently, the airline serves the route with a mix of widebody and narrowbody aircraft, so the move will be an upgrade — especially for premium passengers, who will benefit from more predictable, lie-flat service on every flight.