We’ve seen US airlines unbundle their services for a while now, from checked bag fees to standby fees to premium seating fees.
However, Delta is taking it a step further with their new “Basic Economy” fares, which are available in select markets.
The first thing that’s unique about these fares is that they’re non-refundable and non-changeable. That means you can’t even pay a fee to change the flights, so if your plans change you forfeit the ticket entirely.
But the more interesting thing is that advance seat assignments aren’t permitted, even for elite members. This is an interesting development since previously elite members (in particular top tier elites) were more or less excluded from the “unbundling.” Yet in this case even a Delta Diamond can’t get advance seating when booking one of these “Basic Economy” fares (which book into the “E” fare class).
What’s interesting to me is that these fares are still eligible for mileage accrual, and as far as I can tell, also eligible for upgrades. So I find it rather odd that in creating these “Basic Economy” fares they’re only getting rid of seat assignments and the ability to change a ticket.
But I think this is the beginning of a trend we’ll see in the airline industry where they take even more perks out of the lowest fares. Previously the flying experience was “unbundled” regardless of what kind of a non-full fare ticket you booked, while now they’re starting to differentiate between discounted coach fares. I suspect we’ll see other airlines follow, and in turn more things taken away, including mileage accrual and the ability to upgrade. And let’s be honest with ourselves, it’s not like they’re lowering fares to offer you a more basic ticket without the perks. Rather, you’re paying the same fare you previously would have and are getting less. But I guess that’s the story of the US airline industry.
I just hope that United doesn't hear about this...
@Matt MSP - Our travel policy states "lowest available non-refundable economy fare". I am wondering if the travel portal will have the smarts to filter out these fares, especially initially, when they will just appear as an available economy fare.
They are following the Air NZ model, every flight has LCC seats, Legacy economy and business. In addition they have just introduced auctions for available seats in the next cabin above you so as an economy passenger the day before your flight you can make a bid for premium or bussiness. Then the award seat get allocated! Air NZ fflyers are watching in horror!!! I have not hears yet of reduced award seats but have...
They are following the Air NZ model, every flight has LCC seats, Legacy economy and business. In addition they have just introduced auctions for available seats in the next cabin above you so as an economy passenger the day before your flight you can make a bid for premium or bussiness. Then the award seat get allocated! Air NZ fflyers are watching in horror!!! I have not hears yet of reduced award seats but have heard several people getting Fussiness to the states for 500NZD O/W on top of economy!!!!
SQ like AC been doing these discount fare for years...I personally don't care for the DL basic econ since regular econ doesn't cost that much more...(if so, I book away from them...)
Asian airlines typically let discount/deep discount fares earn lower mileage (25-75% of economy)
I don't think corporate travel won't like the new deep discount model because their travel plans change on a dime...unless corporate travel start buying insurance...
earning mileage for work...
SQ like AC been doing these discount fare for years...I personally don't care for the DL basic econ since regular econ doesn't cost that much more...(if so, I book away from them...)
Asian airlines typically let discount/deep discount fares earn lower mileage (25-75% of economy)
I don't think corporate travel won't like the new deep discount model because their travel plans change on a dime...unless corporate travel start buying insurance...
earning mileage for work travel is a priviledge, not a right....don't forget you are paid a salary...
I suspect DL basic economy still waive change fees if the are mx or weather problems on their side or some extreme cases on the customer's side...
This is the pits, big time. According to Gary, Delta is considering going to a revenue based loyalty program. Further info is found here.
https://viewfromthewing.boardingarea.com/2012/03/22/the-delta-rumors-on-moving-to-a-revenue-based-frequent-flyer-program/
@ Ben - Air Canada's Tango fares came to mind for me too. With their fare structure, anyone even travelling on business is normally looking at 25% non-status points at the cheaper fare level. Thus I think a lot of people are now flying WestJet for business because even though their program is in its infancy, it's still superior. In the states they still generally get 50-100% status miles for any fare, way better than up here!
This is scary. FT better raise hell if this starts happening on a wider scale, because this could spell the beginning of the end of MRing
Air Canada already does that. Their lowest "Tango" fares don't qualify for status miles.
@ MattMSP and dmodemd, I just did a search on my company's travel site (Egencia) for MCO-DTW, and sure enough, E class came up! I will definitely monitor my searches VERY closely from now on to ensure that I don't mistakenly book one of these fares. How ridiculous!
Alcholic drinks?
Completely non-refundable fares have been the standard cheap fare in many markets outside the US for years. Likewise, non mile earning fares and, more recently, no advance seat selection.
It will be interesting to see how this works through. I suspect that fares will continue to earn miles as they're not worth much to the airline (except to the extent that they sell them to other companies) and they are valued hugely by the public...
Completely non-refundable fares have been the standard cheap fare in many markets outside the US for years. Likewise, non mile earning fares and, more recently, no advance seat selection.
It will be interesting to see how this works through. I suspect that fares will continue to earn miles as they're not worth much to the airline (except to the extent that they sell them to other companies) and they are valued hugely by the public - also the airline can and does devalue them on a regular basis.
No seat allocation makes sense as it pleases people who pay more as there are better seats available, even for last minute high fare paying passengers.
No refunds also makes sense but I suspect that they'll be some push back on this - Delta might argue "what part of no changes, no refunds do you not understand" but people will come up with endless sob stories about this nasty airline penalising them unfairly. In most countries that have this policy, most people carry travel insurance which pays out when plans have to change - that does not happen here and may be the killer blow to such a policy.
I expect that eventually DL will get around to selling fares even on its own website that no longer earn full miles. DL management are looking to squeeze more out of more customers and one way to do that is to cut the benefits earned from flying and the benefits applicable for flying -- DL will do both kinds of cuts.
dmodemd, I can't imagine a corporate travel portal forcing these fares... if your plans change they're out the entire ticket. But your second concern seems very valid... losing the personal perks of business travel.
So, when we add up the leaked/likely revenue based mileage accrual, this move makes some sense.
While some might say, "the sky is falling", it's not that bad: at Delta, the ceiling has been decending at a steady pace....
This is VERY dangerous for those of us who are subjected to corporate travel policies requiring the "LOWEST available non-refundable fare"! I will check my travel portal to see if these are shown as the required selection! I am very worried that airlines will start offering special corporate travel fares that don't accrue miles and pass the savings onto the company! This is happening with AMEX credit card and a new policy requiring us to...
This is VERY dangerous for those of us who are subjected to corporate travel policies requiring the "LOWEST available non-refundable fare"! I will check my travel portal to see if these are shown as the required selection! I am very worried that airlines will start offering special corporate travel fares that don't accrue miles and pass the savings onto the company! This is happening with AMEX credit card and a new policy requiring us to use the AMEX corporate card so the company gets the rebates.
What's also bizarre is that now a T fare on Delta is $327.40 whereas the U fare is $269.60 and the E fare is $257.60. Try 5/16 as a sample date. Has there been a more comprehensive revamping of fare buckets, and is U now the cheapest old-style economy fare?
This explains the changes to DL's fare availability web reservations interface. And the emergence of the new E fare bucket. They are basically charging people $12 here to have seat assignments. The interesting thing vis-a-vis Spirit, is Spirit charges you a fee to "make" a reservation and also a fee for carry on bags. So there's only so much unbundling a network carrier can do.
Oh for sure, unbundling and economy booking class differentiation is definitely the direction of the industry. DL's Basic Y seems a bit odd to me as well, especially with mileage accural available. I mean airlines (mostly oneworld) like CX already have 25% mileage accural for some of their promotional Y flights.
Meanwhile, AC, which has been a great TPAC North American-based airline, has significantly downgraded within the past year. Now, they've added Tango fares...
Oh for sure, unbundling and economy booking class differentiation is definitely the direction of the industry. DL's Basic Y seems a bit odd to me as well, especially with mileage accural available. I mean airlines (mostly oneworld) like CX already have 25% mileage accural for some of their promotional Y flights.
Meanwhile, AC, which has been a great TPAC North American-based airline, has significantly downgraded within the past year. Now, they've added Tango fares to TPAC routes BUT KEPT IT AT PRICES OF THE PREVIOUS TANGO+ FARE. Tango+ fares are significantly marked up; It's quite a shame.
The story of the US airline industry is that the airlines can't make money as long as jet fuel is sky high. I would rather see higher prices and better service but that's just me.
I guess they are trying to segment the market so that business travelers aren't tempted to buy these. I would have thought they would remove the mileage accrual as well, but I guess they figure the customers who buy these wont redeem high value awards. I'm sure they make up the 5% difference in breakage and selling the occasional better seat.
I don't get the no-cancel policy. These fares are pretty cheap, right? It eliminates DL's ability to collect a $150 change fee! I mean, it's not like these folks are going to tell the airline that they aren't going to show-up, so DL cannot resell the seat.
Am I missing something?
Note that DL is (at least for now) doing this only in DTW-Florida leisure markets where they compete directly with Spirit, the king of unbundling.
WOW no advance seat selection for elite! I feel like Delta is becoming more and more like the LCC! My loyalty is quickly weaning! I'm starting to feel partial to united or AA now!