'Basic business?' Fees on $2,500 fares may be coming. 'Not everybody wants the full experience'
Imagine spending $2,500 or more for a lie-flat business-class ticket only to find out you have to pay extra to select your seat.
Sound a little like basic economy?
It could be coming to a premium cabin soon.
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After Delta Air Lines last week dropped hints about offering a bare-bones, “basic business” fare in the future, United Airlines was similarly coy on the subject on Thursday.
“Not everybody wants the full experience,” Andrew Nocella, United's chief commercial officer, said while speaking on the Chicago-based airline’s second-quarter earnings call.
It’s the same argument airlines have long made about basic economy fares, which strip away some of the once-included perks of flying (think: seat selection and full mileage earning) in exchange for a lower fare.
Now?
It’s looking increasingly likely that the cheapest Delta One and United Polaris tickets could someday come with new restrictions, too.
Only breadcrumbs so far
To be fair, neither Delta nor United has explicitly used the term “basic business” or confirmed for sure that it’s coming.
But both have left breadcrumbs. In Delta’s case, the hints have been coming for about a year.
Last week, Delta's president, Glen Hauenstein, said the carrier’s main cabin, which currently offers both a standard and a "basic" option, would be a "template" for the rest of its planes in the future.
"It's all about giving people more choice, more pricing options, and more products and services in every cabin," Hauenstein told analysts July 10.
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United weighs in
Asked on Thursday whether United is considering something similar, senior executives sure didn’t deny it.
“What I would say is, over time, over the last seven or eight years, we’ve leaned heavily into segmentation of our revenues, which is really an inarticulate way of saying ‘provide more and more choices to our customers so they can pick the experience they would like,’" Nocella said.
“We look forward to continuing to diversify our revenue base, and segment it in the appropriate way,” he added without offering more hints. "I’ll leave it at that."
What would 'basic business class' entail?
What would a basic business offering potentially look like?
For context, Delta's basic economy passengers currently can't select a seat for free. They also don't earn Delta SkyMiles on their tickets and can't enter Delta Sky Clubs, even if they're members.
United's basic economy passengers don’t get a full-size carry-on bag, among other restrictions.
Business class would probably be a little different
Presumably, long-haul business-class restrictions would look different from the basic coach rules.
I could see airlines excluding practical benefits like checked bags, which are generally included on all premium tickets. (Even standard coach fares generally don't include a checked bag.)
Ditto for seat selection; some European carriers already charge passengers to pick the exact lie-flat pod they want — and we’re talking triple-digit prices on this British Airways flight from New York to London!
I’d also wonder whether the carriers could look to bar passengers on skinny business-class tickets from entering premium lounges, like the Polaris Lounge and Delta One Lounge outposts.
Obviously, we’ll have to wait for an announcement from the airlines to know for sure.
How travelers (and industry experts) are reacting
Already, though, reactions were strong among frequent travelers in our TPG Lounge on Facebook.
“People don’t fly business to get a 'basic' experience,” Elizabeth Lovell wrote.
“If someone is paying $5000-$10,000+ for a flight, it's ridiculous to charge them for anything on top of that,” added Nicole LeBlanc, a travel adviser.
Could it also give cover for a stealth fare increase?
That's what some critics believe. Don't value an advance seat assignment enough to pay for it — even in business? Fine. But, will your airline really knock down business-class fares by $150? Or, will the airline just keep fares where they are but tack on $150 if you want to select a seat?
Airlines see profit potential
Not surprisingly, Wall Street sees plenty of upside for airlines' bottom lines.
"We believe offering 'good, better, best' options within business class can be a success for Delta without alienating customers,” TD Cowen analyst Tom Fitzgerald told TPG Thursday after Delta dropped hints about its "basic" plans.
“Travelers who might only want one or two features of the business-class product can gain access at lower price points, while those who want every feature can still purchase an option with the full bundle,” Fitzgerald posed. “We can envision this product flexibility appealing to premium leisure customers who are flying in business class more than they did prior to the [coronavirus] pandemic.”
It's ultimately about choices, airlines say
Ask airlines, and they'll tell you the larger vision is, indeed, about offering customers a wider range of choices.
In United's case, that includes a higher-end premium option, too, in the form of its extra-swanky Polaris Studio planned for its future Boeing 787 Dreamliners.
We should note that this expanding menu of ticket options may stretch beyond business class, too. Should airlines offer a basic product on long-haul business-class tickets, I'd call it a likely bet you’d see similar options in the premium economy and domestic first-class cabins as well.
Count frequent traveler Emily Brown among those willing to reserve judgment until she sees what restrictions airlines have in mind.
“I would be totally happy with paying fewer points for no checked bag,” she said. “But I want lounge access, a good meal, and no charge for seat selection.”
Will she get her wish? We'll have to wait and see.
Related reading:
- United Airlines MileagePlus: Guide to earning and redeeming miles, elite status and more
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- United Premier status: What it is and how to earn it
- Maximize your airfare: The best credit cards for booking flights
- The best credit cards to reach elite status
- United basic economy: What you need to know about bags, seats, boarding and more
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- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
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- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
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- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.