Tuesday, December 13, 2016

Airlines will offer 'basic economy' fares to compete with rivals Spirit and Frontier

Coming to an airport near you next year: "basic economy" airfares. As the name suggests, the price will be cheaper, but there will be few amenities.

You'll get a basic seat on the plane -- and not much else.

Major U.S. carriers -- Delta, American and United --  are introducing lower-tier fares to attract price-conscious consumers who now choose ultra-low-fare airlines such as Spirit, Frontier and Allegiant, which often have bargain base fares but charge extra for everything from carry-on bags to soft drinks.

The discount carriers have been expanding and taking business away from the so-called legacy airlines. Frontier flies to 10 cities from Philadelphia International Airport, and will add Houston and West Palm Beach in March. It  flies to nine destinations from Trenton-Mercer Airport.

Spirit has seven daily flights from PHL and nine daily flights from Atlantic City airport. Allegiant Air flies to three Florida cities from Trenton.

Basic economy fares are in addition to standard economy tickets, and will not replace them. Rather, airlines are looking for new ways to lure customers and bring in revenue.

"A lot of times the difference between the basic economy fare and the regular economy fare isn't that great -- $15 to $25 each way. That's the cost of a checked bag," said George Hobica, founder of airfarewatchdog.com.

With basic economy fares, passengers cannot select their seats in advance. Seat assignments are made on the day of departure or at the gate during boarding. Tickets are not refundable, and itineraries cannot be changed, even for a fee. Customers who do not make the original booked trip will forfeit the value of the ticket.

United Airlines' "basic economy ticket," announced last month, allows passengers to bring small personal items, such as purses, backpacks or briefcases that fit under the seat in front of them. Anything bigger must be checked for a $25 fee. Passengers with basic economy tickets will board the plane last.

Delta Air Lines' basic economy fare permits a carry-on bag in the overhead bin.  If there is no room in the bin, the bag is checked for free to the final destination, said spokesman Morgan Durrant.  The fare includes free in-flight entertainment and WiFi, complimentary snacks, soft drinks, and Starbucks coffee, he said.

American, which operates a hub and more than 400 daily flights in Philadelphia, plans to announce its version of a "basic economy" fare early next year, said spokeswoman Victoria Lupica.

"I don't think it's particularly good for the consumer," airfarewatchdog.com's Hobica said. "I think the airlines are just doing this to appear at the same price point in airfare searches on third-party sites, such as Orbitz or Kayak. They want to be on a level playing field."

Hobica said passengers who buy the basic economy fares will end up in the middle seat on flights. "There's absolutely no question," he said, "because everyone else is going to choose their seat, a window or an aisle. And you are going to be in that dreaded middle seat."

Delta was the first big carrier to offer basic economy tickets.  A check on its website Tuesday showed a round-trip "basic economy" fare from Philadelphia to Atlanta was $20 cheaper than a regular coach seat. (Ticket prices change constantly based on how full the plane is, the time of day, and date of travel.)

Scott Kirby, former president at American and now at United, said that 87 percent of American's customers fly the airline once a year and are price-sensitive, often searching online fare-comparison sites for the best deal. Differentiating fares in the economy cabin accommodates customers "for whom air travel is largely a commodity."

In yet another effort to differentiate pricing, Delta and American said they plan to introduce "premium economy" fares on some trans-Atlantic routes next year. Premium economy will be a step up in price and amenities from economy, but less expensive than business class.

American Airlines president Robert Isom described at a conference in September the different pricing levels and types of fares:

First class is a "super premium product" with lie-flat seats available on select international and transcontinental routes. Business class offers lie-flat seats, privacy, and deluxe service, while "premium economy" will include more leg room, bigger seats, and amenities such as meals.

Regular economy is the standard coach fare, in which customers can "customize" their trips by paying extra for preferred seat assignments and add-on options for food and checked bags. 

Basic economy will be the lowest price -- a seat on a plane with few, if any, extras.

Source: http://www.philly.com

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