Legacy carriers should stay on the high ground and market themselves as offering superior products as more passengers will discover the pitfalls of some low-cost carriers with their pay-for-everything-extra-but-a-seat model.
A new type of “budget” fare is creeping into legacy airline networks, including Delta and British Airways, and the trend is dismantling the idea of air travel as we know it.
These legacy airlines are building fares to compete with the likes of Spirit Airlines, Frontier easyJet and Ryanair. Traditionally, strong competition from multiple carriers kept airfares in check. One carrier drops its price on a particular route and the others match that price to compete.
It’s a basic, if not prone-to-error, mechanism.
That model gets disrupted, however, by the low-cost carriers like Spirit and Frontier. Offering a slimmer version of a legacy airline ticket, the low-cost carrier model offers only the basic seat with each ticket purchase, adding heaps of fees and a less comfortable passenger experience.
After fees, passengers can often end up paying the same price for the low-cost carrier as they would for the legacy flight, but the price at the point of sale on outlets such as Kayak or Expedia looks far cheaper for the budget carrier — so the low-cost carriers end up selling tickets.
Basic Economy Fares
Fast forward to today, where legacy carriers unhappy with the budget carriers nipping at the industry’s heels don’t like having their lunch eaten. So the industry has come up with a new type of fare to compete with the low-cost carriers: the “budget” or “basic economy” fare.
Delta started ratcheting up the tickets late last year with a new raft of basic economy fares offered solely on routes that compete with low-cost carriers. These fares offer no refunds, upgrades, or complimentary preboarding and there is a paucity of other typical perks that a frequent flyer might see.
Since last year, according to Frequentflier.com, Delta has expanded the tickets to 75 different routes.
British Airways is apparently now getting into the game as well with a similar set of fares in the works.
Indeed, it is fair for legacy airlines to compete when low-cost carriers’ disingenuous pricing is taking business away from their (slightly more) transparent pricing. But matching that bait-and-switch pricing model, I believe, is not the way to go.
Instead, legacy carriers should stay on the high ground and market their airlines as superior products while more passengers discover the pitfalls of some low-cost carriers with their pay-for-everything-extra-but-a-seat model, and the market stabilizes.
Believe it or not, we’re already seeing an effect of this correction. Ryanair, the darling low-cost carrier of Europe, has been increasingly friendly to potential passengers as it faces more criticism for its merciless and often shrewd business practices.
And let there be no doubt: There will always be room for low-cost carriers in a world filled with budget travelers. But that low-cost ticket doesn’t need to come from Delta or British. For those airlines, there’s a standard to uphold.
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Photo Credit: Economy seating in Delta 737s. Delta Air Lines
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