Basic economy fares are expanding into a new batch of United’s markets only two months after they went on sale.
The new fares strip away perks such as mileage accrual, overhead bin space and upgrade privileges from economy passengers for a cost savings of about $20.
Basic economy was designed to compete with low cost carriers such as Spirit and Frontier. On Delta Air Lines, which designed and debuted the fares on legacy carriers, at first incorporated basic economy only on routes that competed with the low cost rivals. United, which started selling its basic economy fares in February, took a different tack, instead electing to incorporate the fares on routes between Minneapolis St. Paul and its hubs such as San Francisco and Houston.
Throughout the process, both United and its peers picked up heavy criticism from consumer advocates. The blog “One Mile at a Time,” for example, pointed out that basic economy fares were less about giving consumers price flexibility and more about pushing up the baseline cost for economy tickets, saying “there’s no doubt here that basic economy fares are simply replacing the current entry-level economy fares.”
U.S. Senator Charles Schumer, a Democrat from New York, has been a vocal opponent of basic economy fares.
Still, the added revenue from United’s Minneapolis experiment seems to be making a difference and the company is clearly eager to replicate that model throughout its network.
It’s a strategy that’s already worked well for Delta, arguably the leader in basic economy fares. In April 2015, Delta expanded its basic economy fares after pulling in an additional $20 million in revenue after the first quarter. Looking to get over an ongoing media crisis and add onto its already-strong earnings from Q1, there’s no doubt that United wants to move on and copy that success.
According to The Points Guy, United is officially expanding the fares to 100 new domestic markets. Many of the fares are already bookable.