By Justin Bachman / Bloomberg
When buying an airline ticket, the old days of choosing between coach and business are long gone.
In the never-ending effort to pad thin margins, airlines have become more sophisticated merchants. They’ve created an array of travel options — particularly in the economy cabin — where a new, stripped-down fare awaits the most frugal travelers.
They call it basic economy.
Just a few years old, the basic fare is now firmly entrenched. Last week, Alaska Air Group began selling its version, and JetBlue Airways is preparing to launch a similar offering. (Southwest Airlines is the only major player to have eschewed this ultra no-frills fare.)
So, for those who have yet to experience it, this is how basic economy differs from everything else short of the baggage compartment: The fares don’t allow changes or refunds. Some carriers still let you choose a seat (for a fee) a week or more before you travel; others don’t. Most allow you to use the overhead bin space like everyone else; United Continental Holdings, however, does not. Some airlines, such as Alaska and Delta Air Lines, even let you accrue mileage toward elite status in some loyalty programs.
But in the end, everyone else on the plane will still know who you are: No matter which airline you fly, if you choose basic economy, you will board last.
JetBlue President Joanna Geraghty said basic fares reflect a consumer environment in which many travelers shop strictly on price. “Highly price-conscious travelers voted with their wallets, showing they are willing to give up some of the experience for the lowest fare possible, ” she wrote in a September JetBlue blog post, warning that the carrier’s “success is at risk” without such fares.
At its core, this is sleight-of-hand marketing. The goal is to reel you in with the rock-bottom fare, but, at the same time, make basic economy so unappealing that many people scrape together additional money to trade up to the traditional economy fare. Basic economy also represents what appears to be a permanent revenue boost for airlines that often struggle to raise prices to traditional economy.
In the U.S., Delta pioneered basic economy as a defensive measure against lower-cost rivals such as Spirit Airlines and Frontier, whose primary product is low prices.
The idea was to match their fares on competing nonstop routes, albeit with fewer benefits, such as the ability to change flights.
Basic economy fares have accompanied a broad industry trend in which the aircraft is divided into various cabins with differing amenities, called segmentation. You may thus find sections of seats that are traditional economy, economy with slightly more legroom and premium economy, all on the same aircraft.
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