Legacy carriers will quickly learn that even when consumers pay rock-bottom fares they expect better things. And they'll likely expect to be treated better than their fares allow.
Unbundled or “No-Frills” fares offering travelers a basic airline seat with no baggage, upgrade or airport privileges have long been the cornerstone of low-cost carriers (LCCs) like Spirit and Frontier Airlines. But with new interest in the ultra-budget market from legacy carriers, that foundation may be at risk.
The movement started late last year when Delta Air Lines made clear its intention to directly compete with Spirit on a variety of routes. To do so, the airline introduced Basic Economy fares, stripping passengers who purchase those tickets of complimentary and paid upgrades, same-day confirmed and same-day standby flights and the ability to purchase priority boarding.
The resulting experience competes directly with the class of service that LCCs provide — while Delta can’t realistically reconfigure aircraft to match Spirit’s seat pitch or in-cabin experience, they can at least cut services in an effort to match the sunk costs that competitors put into each passenger.
Apparently, the model is also catching on. According to FlightGlobal’s Ned Russell, United plans to introduce “no-frills” fares in 2016, while American Airlines is exploring a similar fare. Mr. Russell’s full story, available behind a paywall, is available over on FlightGlobal.
Depending on how the basic economy fares are implemented across the board, consumers may be in for a big surprise in 2016. Even the most basic of paid economy fares on American and United are eligible for complimentary upgrades and free checked bags for elite passengers. Taking away those perks runs the risk of stirring up more negative consumer sentiment after a fresh merger at American and a rough year for operations at United.
As for implementation, it’s not clear what routes the basic economy fares will be integrated on, but it is most likely that American and United will follow Delta’s lead and only integrate the fares on routes that directly compete with LCCs. While that may be a saving grace for many domestic passengers, those flying out of Denver, Fort Lauderdale and Detroit, three LCC strongholds, should be concerned.
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Photo credit: Spirit pioneered the bare fare that legacy carriers have become so enamored with of late. Spirit Airlines