Opinion: Why We Shouldn’t Blame American Airlines for Rolling Out Basic Economy

Economy Class on American Airlines (Photo: AirlineGeeks.com)

American Airlines has finally launched Basic Economy fares on all routes in the continental United States for immediate travel.

American Airlines initially rolled out Basic Economy for sale on February 21 for travel beginning March 1, with some of the initial routes including flights to Canada, Mexico, and Caribbean. At that time it was announced that eventually Basic Economy routes will be rolled out to all domestic routes by the end of September.

This is following the general trend in the industry of unbundling fares due to direct competition with low-cost carriers in domestic markets. Airlines such as Spirit are offering cheap fares with the usual low cost carrier restrictions such as high change fees, no free carry-on bag and more.

Considering that Basic Economy is still a relatively new concept to American and legacy carriers, the airline is putting all efforts forward to make sure both employees and customers are aware of the new fare options.

Employees are receiving training on what the new Basic Economy fare rules allow and customers are now given multiple, clear disclosures throughout the booking process to ensure that they understand what they will and will not be getting with a Basic Economy ticket.

Basic Economy tickets will come with many restrictions. Flight changes won’t be allowed and elite miles will be restricted.  Carry-on luggage larger than a personal item is banned, and customers will be among the last to board the plane. Elite customers and customers with AAdvantage credit cards will still receive priority boarding however.

American is dubbing the concept as an opportunity to compete with carriers offering similar products while providing the same Main Cabin on-board experience. The other airlines introducing Basic Economy see it as the same way, as a tool to compete with low-cost carriers.

The Industry’s Response to Low-Cost Carriers

Initially, legacy airlines were matching the price of these low-cost carriers while still providing a full range of offerings with the ticket. For a while, legacy carriers were the better deal to fly on when they matched low-cost carrier rates.

After some reflection and analysis, each of these airlines (American, Delta and United) and are using Basic Economy as a way to compete with low cost carriers. However, at the end of the day, Basic Economy is nothing more than a thinly veiled money grab. In most markets the average trending full service price simply became the Basic Economy price, while regular economy jumped $20 to $40 instantly.

Basic Economy hasn’t been as successful as hoped thus far. During the airline’s last earnings call, United President Scott Kirby said only 30 percent of eligible passengers are booking Basic Economy and that they are not seeing the revenue increases expected, blaming the results on the fact that American hasn’t rolled out Basic Economy yet.

Now that American, United, and Delta have finished their race to the bottom, customers will be faced with Basic Economy fares across the board. But, at the end of the day, we cannot blame the airlines. They are simply following market trends.

The Consumer Push For Basic Economy

Through the rise of low-cost carriers we have seen that most consumers will consider price over all else. They will pick the cheapest option available regardless of how miserable the experience will be. Airlines have learned this and this is why legroom is shrinking, seats are getting narrower, and benefits that were once free now cost money.

This shift in the industry is not being caused by the greed of the airlines, but by the spending habits of the consumer who is always looking for the cheapest possible way to travel, even if it means giving up amenities once considered basic. Ironically, at the end of the day it will be the consumer complaining about the loss of benefits that they caused themselves.

The unbundling movement in the airline industry is not going to be stopped. The concepts are even spreading to premium cabins. At the end of the day, the consumer will get exactly what they pay for, nothing more.

Hemal Gosai

Hemal Gosai

Hemal took his first flight at four years old and has been an avgeek since then. When he isn't working as an analyst he's frequently found outside watching planes fly overhead or flying in them. His favorite plane is the 747-8i which Lufthansa thankfully flies to EWR allowing for some great spotting. He firmly believes that the best way to fly between JFK and BOS is via DFW and is always willing to go for that extra elite qualifying mile.
Hemal Gosai
  • Bill___A

    This analagy is ridiculous, People want lower fares, but they don’t choose the things that airlines use to make them lower., No one chooses a smaller seat, and they didn’t choose the lower fare because they wanted a smaller seat. I can see selling tickets with only a personal item allowance, but I am sick of seeing anyone say that this and that amenity was “asked for” because consumers wanted it. The baseline desire is for lower fares, and the fact that search engines for fares show only the numbers without any regard for what comes with it is the problem.

    • Hemal

      Spirit and other low cost carriers introduced cheap fares with the trade off that seats will be smaller, you can’t bring a large carry on, etc. These carriers are doing pretty well for themselves, load factors are pretty high.

      People are choosing smaller seats. When they compare a fare from Spirit vs a main economy cabin fare from United and they pick Spirit they are essentially picking the smaller seat or personal item only allowance.

      It is a race to the bottom. The legacy carriers have realized that they can do the same thing Spirit is doing and get away with it so they will.

      As for search engines return basic economy fares, I looked at Expedia and Priceline results and all BE fares are clearly marked and restrictions shown. What I did notice however is that Priceline lacked direct display of Spirit’s carry-on policy while Expedia showed it up front.

      I don’t genuinely think that airlines are trying to hide their basic economy restrictions in order to fool customers. Airline execs are expecting ancillary revenue growth from BE to main cabin buy ups and it only makes sense to make the customer fully aware of what they’re buying in order to somehow terrify them into buying up.

  • twoseats_priceofone

    Wow, another cis-white-male trying to AmericanAirlinesplain to me. Here’s a good thought for the industry, first one since Edison invented the damn plane in Cape Carnival Flordia, why not seperate the seating by race? First class for PoC and economy for Native Americans, and storage for the rest. Thank you for flying Antifa Airlines.