Skift Take

As happened with United, this story will probably go viral, and consumer groups will whine about not having access to bin space. But remember, the market has spoken: Frontier and Spirit charge for bin space, and yet passengers fly them. Why should American and United not sell similar products?

United Airlines soon will not be the only U.S. airline to bar frugal customers from bringing large carry-on bags to stow in overhead bins.

American Airlines said Wednesday it will introduce a similar no-frills fare in February, as it seeks to compete more aggressively with ultra low-cost carriers, like Frontier Airlines and which often undercut American on price, but do not give customers free access to bins. Initially, American will sell the fare in 10 markets, but it expects to add more later in the year. Not every market will see the fares, however.

Customers who purchase American’s “Basic Economy” product will be permitted one personal items that fits under the seat. They will need to check larger items, and if they forget, they’ll be charged the usual fee, plus a $25 penalty per bag. The special bag restrictions do not apply to elite members of American’s frequent flyer program, nor customers who carry one of American’s credit cards.

American is the third major U.S. airline to announce a Basic Economy fare. Delta has had its current version of Basic Economy for a couple of years, though it still allows customers who buy it to bring larger carry-on bags for free. United announced its new fare late last year, and sales will begin soon, with travelers starting to fly on the fare this Spring. Like American, United will start small, with the fares first being available only for flights from Minneapolis. 

American’s new fares won’t necessarily be lower than today. But they will ensure that, when American puts a low fare in the market — perhaps $39 from Los Angeles to Dallas/Fort Worth — the airline is more or less matching amenities offered by the ultra low cost competition. Today, when American offers cut-rate fares, it often gives customers far more perks than Spirit and Frontier.

“Why are we doing this?” Robert Isom, American’s president, said in a message to employees. “To compete. We know that some of our customers don’t fly very often and they care more about price than about features. Ultra low-cost airlines are growing rapidly – right in our hubs.”

American’s fare comes with other restrictions. Tickets will be non-refundable and non-changeable, and customers will not be able to standby for an earlier flight, even when paying a fee. Most Basic Economy passengers will board last, and they will not be eligible for free upgrades to first class or extra legroom economy seats, even if they’re an elite frequent flyer.

They will also not be able to select seats for free. However, they will be permitted to choose seats within 48 hours of departure by paying a fee, and if seats are available with extra legroom, customers may buy them. With its fare, United does not allow customers to switch seats under any circumstances.

In his message, Isom said American wants to give customers choice.

“Some of our customers will only fly First Class and some simply want a seat from Point A to Point B,” Isom said. “We need products for both types of customers, and everyone in between.”

American’s customers will receive miles in the carrier’s frequent program. And frequent flyers still will receive credit toward elite status on American, but at half the usual rate. United is not giving customers who buy cheap fares any elite status credit.

On the plane, customers will be treated the same as any other passengers. Unlike on Frontier and Spirit, they’ll even get free drinks and snacks, plus access to WiFi and entertainment. Legroom will remain the same as today.


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Tags: american airlines, basic economy, delta air lines, united airlines

Photo credit: American Airlines is introducing a new restrictive economy class fare. American Airlines

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