Over time, we’ve seen the concept of “basic economy” become pretty widespread, whereby the cheapest economy fares include the fewest perks. The purpose of this is twofold — to expand a carrier’s potential customer base, and to get existing customers to “buy up” to a higher fare, in order to avoid punitive restrictions.
Internationally, we’ve also seen some airlines introduce basic business class. Up until now, it’s not really a concept we’ve seen at one of the “big three” US airlines. Could that change, though?
In this post:
Delta appears to be planning a basic business class
Over the past several months, we’ve received a couple of hints that Delta may be planning an unbundled business class product. As flagged by View from the Wing, during the Q2 2024 Delta earnings call, JP Morgan Analyst Jamie Baker asked the following question:
“This concept of unbundling the front cabin is one that I’ve been thinking about in part because unbundling and segmenting the rear cabin has been such a success for Delta and a few others. I want to be careful about asking about future pricing and all that, but I’m curious what the pros and cons are in terms of possibly going down this path, or is one price for all how we should continue to think about the D1 cabin?”
Delta President Glen Hauenstein responded with the following:
“We’ve talked conceptually about that. I think we’ll be giving you more details as we go, but we’re not ready to talk about the details of those plans moving forward. I think the investor day this year should be very exciting.”
Then during the Q3 2024 earnings call, Hauenstein was asked about if premium revenue can continue to grow, to which he answered the following:
“But we also think there’s more to go on the premium products. And I think not to keep harping in on saying, come next month and join us for our Investor Day. But I think we’ll be able to unveil why and how we think those can continue to improve over the medium and long term.”
So while we’ll see how this plays out, it seems pretty clear that unbundling business class is something that Delta is working on, though it remains to be seen how imminent the implementation is.
Outside the United States, there are quite a few airlines that have unbundled business class, ranging from Emirates, to Finnair, to Qatar Airways. In general, I would expect unbundled business class could include some of the following restrictions, based on the precedent we’ve seen at other airlines:
- Fees on seat assignments
- Fees to change tickets
- No lounge access or restricted lounge access
- Restrictions on priority check-in, priority security, and priority boarding
My take on Delta unbundling business class
Since the start of the pandemic, we’ve seen strong leisure demand for premium cabin travel, while business travel hasn’t fully recovered. This combination is a double-edged sword — it’s easier to fill premium cabins, but airlines aren’t seeing as many of the super expensive premium fares as they saw before the pandemic.
I would think that Delta’s primary goal with unbundling business class would be to get people to buy up to more expensive premium fares to avoid certain restrictions. I know airlines try to market unbundling as intending to offer a better value option to more travelers, though in reality I suspect the cheapest current fares would simply become the new “basic” fares, where fewer perks are included than now. So consumers likely wouldn’t come out ahead.
Personally I think the most logical implementation of an unbundled premium cabin would be in domestic first class, at least to start. I hate to say it, but this could be a way for Delta to reimpose change fees on tickets, by making these tickets not changeable or cancelable without paying a fee. Maybe the airline wouldn’t include seat assignments in advance for non-elite members, or something, but I wouldn’t expect it to be too draconian beyond that.
Unbundling business class on long haul flights is a bit trickier, as it’s a coordinated effort. That’s because so many long haul markets are dominated by joint ventures, which coordinate fares, schedules, and restrictions. Delta has a joint venture with Air France-KLM and Virgin Atlantic across the Atlantic, and with Korean Air across the Pacific, so we’d likely see this implemented on a wider scale.
In addition to the potential above restrictions, I wonder if we could maybe see the airline offer Delta Sky Club access on basic business class tickets, while restricting Delta One Lounge access to non-basic business class tickets.
Keep in mind that Air France-KLM have already added seat assignment fees in business class in many markets, and in some ways, perhaps that’s one form of unbundling business class. I mean, I guess by that criteria, British Airways’ business class has been unbundled for a very long time.
Bottom line
While nothing is official, Delta appears to have plans to announce an unbundled business class product in the near future. We’ve seen the concept of basic business class at some foreign carriers, and you can expect that this will include restrictions related to change fees, seat assignments, priority services, etc.
Personally I think Delta is most likely to use this as a way to reimpose change fees on many premium tickets, in order to get people to book more expensive fares. I also think it’s safe to say that if Delta does go this direction, American and United will almost certainly follow.
So for now we’ll mark this as “developing,” but it’s something to keep an eye out for…
What do you make of the prospect of Delta unbundling business class?
You said "unbundled" about 25 times and I STILL have no idea what you mean. Try a different word please.
I am completely happy with this! I choose business class because I need a lie flat seat so I can relax my back. I’m just not able to sit in a seat for 11–15 hours to Europe. I don’t need any of the other stuff.
My problem with this is that today’s fare with all of the bells and whistles (crappy as they are) will become the new basic fare. And you’ll have to pay more for things you got before that were included in the fare. They can spin it anyway they want to, but when you take stuff away you’re not “giving us options”. You’re simply taking things away and charging more for them.
This may work because when many people splurge for business class they want a flat bed and decent meal and that's about it. Many people also now already have lounge access through credit cards, and this would lessen crowds in lounges. And I'd rather visit a Chase Sapphire Lounge than a Delta Sky Club.
However, I could see UA and AA following this, especially since the "big three" European airlines already charge for things...
This may work because when many people splurge for business class they want a flat bed and decent meal and that's about it. Many people also now already have lounge access through credit cards, and this would lessen crowds in lounges. And I'd rather visit a Chase Sapphire Lounge than a Delta Sky Club.
However, I could see UA and AA following this, especially since the "big three" European airlines already charge for things like seat selection.
On the other hand though, I do think its insane that you are paying thousands of dollars for business class, and then it costs hundreds of extra dollars just to select a seat.
it won't work (from the airline perspective) if people go for it. for the reasons you point out, the only thing that works is monetizing change fees.
Unbundling D1 will be interesting, considering the inferior D1 products on 767 300s and 330 200 and 300. Polaris is at least consistent in all planes. I already refuse to give Delta D1 prices and / or miles on this old D1 Interiors. What will be interesting is if the public researches and and turns away. Remember, Emirates has 3 abreast in Business still, and people pay. I am betting that Delta will figure out the numbers. At least I have options!
Isn't the purpose of buying premium/business class is to get a complete experience?
In many people's cases, no. We want the lie-flat seat but aren't bothered by missing out on lounge access, early boarding, a slightly better meal, or a glass of sparkling before the flight.
Most of us have lounge access anyway, aren't bothered by late boarding, prefer to sleep during flights, and have better champagne at home. Just give me the lie-flat thank you.
Not most people prefer to sleep on a flight. And for some people, eating in the lounge and/or on the plane is the only during during a certain set of hours that people can eat.
Please don't speak for the majority.
Your writing is unintelligible. Can you try again?
Please make sense when you type.
@texasoilfields if you didn't understand that then you are the moron here.
“eating in the lounge and/or on the plane is the only during during a certain set of hours that people can eat.”
If you understand that loltex, and you revert to name-calling, I invite you to seek remedial education and avoid dinner parties.
When you strip those F class amenities away and have to pay to get them back, it's Spirit's Big Front Seat.
no. When American matches DL's fares on this, AA will become the Spirit of the international market.
I know when one Big 3 initiates a change the other two tend to follow suit. My home airport is a UA hub, and I'd hate to loose Polaris access. The saving grace is that the Centurion lounge out of SFO is rather nice, and they make a mean margarita; if I Have to pay to get less, I would either do that or ill fly a competing airline. I am not gonna pay more...
I know when one Big 3 initiates a change the other two tend to follow suit. My home airport is a UA hub, and I'd hate to loose Polaris access. The saving grace is that the Centurion lounge out of SFO is rather nice, and they make a mean margarita; if I Have to pay to get less, I would either do that or ill fly a competing airline. I am not gonna pay more for the extras because odds are I have a card that covers perks. I have TSA precheck and Clear, I have the CSR, and Amex on the lounge end. It would be the US big 3's to loose if they did the nickel and timing, because I got no issue flying another airline. The only issue is sometimes there's no choice, or the price difference doesn't justify it.
precisely... which is why this is a greater risk for AA and UA which upgrade higher numbers of passengers using loyalty upgrades.
They will either have to forego revenue and match DL's fares (which they won't do) or weaken their grip in their hub markets which will make it easier for DL to grow its international presence.
Dumb !
This will result in more sales of business class seats, to people who are upgrading from premium economy or regular economy, and appreciating the space without the perks they weren’t going to get in the back of the plane anyway. And that leads to fewer available upgrades for the frequent flyers.
Pay for the seat then. Tired of all these “elite” members whining about their free upgrades.
British Airways is not an airline to imitate. Seat assignment fees are major annoyances that should not apply in premium cabins. I would try another airline which does not charge for business class seat assignment.
Lufthansa Group (Austrian, Lufthansa, Swiss...) charge quite a bit for seat assignments in premium economy.
Doesn't make me happy to pay 2000+ for a premium economy ticket and then not even get a seat assigned before check-in.
At which point I'll rather pay a bit more and fly a ME carrier or TK from Europe to Asia or Africa (at least).
Air Canada has some mild unbundling on business-class fares. "Basic" Business means no free refundability, no free changes and no free same-day standby. Those seem like the first things another airline might apply. As for lounges, I think most frequent flyers already have access via some other means, so taking that away would apply to leisure flyers mostly.
As others have said, I don't really need the "fancy" food and drink on board, all I...
Air Canada has some mild unbundling on business-class fares. "Basic" Business means no free refundability, no free changes and no free same-day standby. Those seem like the first things another airline might apply. As for lounges, I think most frequent flyers already have access via some other means, so taking that away would apply to leisure flyers mostly.
As others have said, I don't really need the "fancy" food and drink on board, all I want is a lie-flat seat. However, I am not sure if airlines want to go to the trouble of differentiating service in the same cabin.
Every airline offering a premium cabin where anything isn't included, is offering an unbundled product.
I'm pretty sure that Lucky is right when he says that the bare bones product will be the new base fare (or 'business discount' or whatever airlines call it now), and I also think this will drive away certain people to other airlines where they can get everything included for about the same price. Because, let's be honest, you...
Every airline offering a premium cabin where anything isn't included, is offering an unbundled product.
I'm pretty sure that Lucky is right when he says that the bare bones product will be the new base fare (or 'business discount' or whatever airlines call it now), and I also think this will drive away certain people to other airlines where they can get everything included for about the same price. Because, let's be honest, you can't go around calling yourself a premium airline and then use Spirit or Ryanair practices and expecting to get away with it. Only a certain kind of cultist would go around and defend it as if it's some stroke of genius by Delta.
In other news: many markets have seen a return of the business traveler on pre-pandemic levels and some have surpassed those levels already. Just not every market, so the airlines aren't very honest here. I've got a feeling that this 'argument' is now being abused to push another price hike in premium travels. 'Cherry picking' is the name of such tactics.
As a Delta loyalist just as my anger is dissipating about Delta’s last devaluation, cost-cutting measure, or whatever boneheaded thing they’re doing in the interest in “shareholder value” they find some new avenue in the race toward the bottom. Glad I status matched to another alliance and have an exit route.
Sure, they MAY sell it at a lower price at first but you can be sure that after the dust settles they will be charging the old all- inclusive fare for basic and charging higher fares for what you get now. If passengers are willing to pay, great but don't act like they are doing us a favor.
Just another way an overpaid, incompetent airline management will stoop to the lowest depths to increase revenue rather than caring one hoot about their customers. I already avoid Delta like the plague so this is just another reason to do so.
Delta better tread very carefully here. They finally "got" a premium product that people are willing to buy outright. If you take away the mediocre premium elements of that product, I don't think people will buy it. Especially domestic first-class. If I can get an aisle seat in the first row of extra-legroom or the exit row, I'm not going to buy first-class if I no longer get Sky Priority, no longer get free seat...
Delta better tread very carefully here. They finally "got" a premium product that people are willing to buy outright. If you take away the mediocre premium elements of that product, I don't think people will buy it. Especially domestic first-class. If I can get an aisle seat in the first row of extra-legroom or the exit row, I'm not going to buy first-class if I no longer get Sky Priority, no longer get free seat assignment, no longer get a meal, and can't do same-day change. Arguably, the biggest plus of Delta domestic first-class is same-day change. I have to imagine it will disappear with a "basic first" airfare. Internationally with Delta business-class, same-day change doesn't exist. I would have less of an objection with international Delta One flights eliminating a meal because the lounge food is pretty good and dinner and breakfast on a 6-hour transatlantic flight are a waste of time.
Nobody gives you less for more money than Delta. Very premium move.
Yeah cant do!! If they are going to charge for seats, meals, or lounge access, I’ll be happy to do a stopover in IST or DXB or somewhere else!
All I need is a seat that fully reclines. I live in a hub so couldn’t care less for lounge. I can eat at home before my flight and I usually skip the meal to sleep. I don’t care for priority boarding. I usually don’t check bags. I don’t care for the cheap wine. Thus, if they can debundle a business class sear without all the unnecessary things I am good.
Did you copy and paste this from LALF?
Unbundling the bags would be nice IF it lead to a lower fare, but of course it won't. Getting 2 or even sometimes 3 "free" bags depending on airline/status is something I personally never utilise and I suspect neither do the majority of customers. Bags=weight=money so I'm sure they factor some of this into the price. I'm not that bothered about lounge access domestically nor fast track security as often TSA Pre can be just...
Unbundling the bags would be nice IF it lead to a lower fare, but of course it won't. Getting 2 or even sometimes 3 "free" bags depending on airline/status is something I personally never utilise and I suspect neither do the majority of customers. Bags=weight=money so I'm sure they factor some of this into the price. I'm not that bothered about lounge access domestically nor fast track security as often TSA Pre can be just as fast or faster. I'd personally happily sacrifice all of these for a better seat and some food on a longer flight. But of course we all know that what standard J costs now will be what basic J costs if they implement this and anything else will be extra. I don't recall many fares dropping when basic economy was rolled out
I am sick of nickel and dimming consumers. The reason business exist is to serve their customers. An elementary lesson sacrificed at the altar of corporate greed.
Incorrect, Sam. Business exist to make a profit. Serving the customers is a means to that end. How well you serve the customer, depending on market forces, may help determine the profit, therefor the success of a publicly traded company. It literally only exist to make money. If not money was being made, DELTA would disappear overnight.
thank you, EB.
there are a few people that understand that all US airlines are businesses and not charities that exist to stroke customer egos.
Some are just better at running their businesses than others.
There is already a proven business model for unbundled business class: the Big Front Seat from Spirit. If Delta unbundles first class, then they have a product that is worth exactly the same. I'm not sure this will accomplish what they think it is going to accomplish.
Lol. Not even close. Maybe for a regional flight where a seat and free drinks is all you get. And let's talk about Spirit's reliability and lack of being able to put you on another airline when your flight is canceled.
And then there’s Delta’s refusal to protect you on American when they very well could have. The end result is the same. They are becoming more like Spirit . . . because they think it makes them more money. It’s a very short-sighted approach.
I disagree that business travel is still suffering. On the contrary I believe it's getting close to pre-pandemic levels. Add to that the continued premium leisure traveler continuing this wave and it's exactly why you are seeing very few last minute intl. redemptions worth flying these days. It's October and it is still the most difficult two months of redemptions I have ever seen in my decades in the game. I personally think the carriers...
I disagree that business travel is still suffering. On the contrary I believe it's getting close to pre-pandemic levels. Add to that the continued premium leisure traveler continuing this wave and it's exactly why you are seeing very few last minute intl. redemptions worth flying these days. It's October and it is still the most difficult two months of redemptions I have ever seen in my decades in the game. I personally think the carriers are even surprised by this. They released a lot of fall award space some months ago anticipating a drop-off. Now the system is completely clogged as business travelers also return in large numbers unexpectedly.
DL has said that their business revenue is back to pre-pandemic levels.
and you are right that these types of fares are as much to attract new uber-leisure passengers that are driving premium travel revenue growth and small business customers as well as large corporate that don't allow business class and the passenger themselves pays for the upgrade- or use miles.
I find that hard to believe. I have found that all my clients are OK now with remote work and many of my colleagues agree. Have not traveled for work in 5 years
I think what airlines discount is that many business travellers fly more than they really need to. There is going to be a tipping point when flying become too cumbersome and many travellers cut back to only what’s needed, which I think will represent a pretty significant drop in business.
Does this mean we won't see one way business class seats that cost 300k Skypesos?
Oh, you absolutely will continue to see that...they just won't come with anything more than the seat. You'll pay 500k SkyPesos if you want what you used to get.
What about no free bags?
I still think given the joint venture this will probably be after the KA merger is done just to ensure there's not issues with that.
I keep Kosher, I'm a vegetarian, I don't drink alcohol, and I travel with carry-on only. I don't need everything that a business class seat comes with. I just want to lay flat on overnight flights and would love to pay extra just to lay flat, like Air New Zealand's sky couch. I'd love an unbundled business class ticket with a lay-flat seat on overnight flights and would be happy to pay $150 to $300 extra for the seat only.
Lay-flat seats (with your head at the same height as the next guy's foot) MUST occupy more square feet, and cost WAY more than $300 extra on a red-eye.
SLOPING flat seats (e.g. on Condor) eat less real estate. I never tried them, no idea how good the sleep is.
LOL at $300.
You left a zero off, son.
I would also like something for practically nothing
Does this seem a little risky?
People tend to get excited about the perks like nice lounges or premium fast lanes but I wonder what the effect of putting a hard-dollar price on them would be. Sure, it's nice to have the Polaris lounge, but it's not really space or dining you would think is that great--or would go out of your way to patronize in everyday life--if you weren't getting it as what people...
Does this seem a little risky?
People tend to get excited about the perks like nice lounges or premium fast lanes but I wonder what the effect of putting a hard-dollar price on them would be. Sure, it's nice to have the Polaris lounge, but it's not really space or dining you would think is that great--or would go out of your way to patronize in everyday life--if you weren't getting it as what people perceive as a complimentary extra with your ticket.
So if you really confronted people with the cost--unless it was pretty marginal--wouldn't a lot of people buy the basic fare and not buy up for the full package? "What the heck--for that price I'll just grab something quick at Starbucks and get on board."
As you have said, business class is really "all about the seat." I question how much fare differentiation the market can tolerate.
access to premium security lanes means something in Europe or Asia. it means absolutely nothing in the US where everyone flying up front has Pre-Check and often Clear as well.
even lounge access means less for U.S. carriers on international flights since the most important lounge access is on your connection at an international destination where your status/card will get you lounge access anyway.
change fees are all they really can monetize.
As long as frequent flyers could still earn MQDs on basic business, there’s definitely a price where most people would do it IMO since it’s still a flat bed on a long-haul flight.
The success of basic economy is creating a product that corporate travel departments will not buy. The lack of flexibility /changability is the key reason why. I think a non-changeable business class fare will help differentiate business and leisure traveller's fares.
The challenge with unbundling is you are mostly competing with price and product. Business traveller's will choose the bundled vs unbundled option unless there is something compelling. Loyalty can be one but with lower...
The success of basic economy is creating a product that corporate travel departments will not buy. The lack of flexibility /changability is the key reason why. I think a non-changeable business class fare will help differentiate business and leisure traveller's fares.
The challenge with unbundling is you are mostly competing with price and product. Business traveller's will choose the bundled vs unbundled option unless there is something compelling. Loyalty can be one but with lower domestic upgrades it's less of a carrot than before. I think business plus seating (bulkhead seats with more room) and elevated lounge access could be loyalty drivers. Upgrade certificates for domestic trips are another - but availability to use becomes a key determination of value.
Hopefully all we see is restricting lounge access and/or seat assignment fees. It would be a huge bummer if change fees come back - but given the huge deal they (big 3) made out of eliminating change fees four years ago, I think (hope) it’s too soon to re-neg that
I don't fly AFKL because of this. It's not that I mind the bundled price, but being presented a lower price and then asked to actually pay 200€ extra to get the basic business class features always pisses me off so much than I end up booking something else, even if it's more expensive. I'm fine playing these games in economy, but when buying a premium product, being reminded that the airline takes me for a fool is not helpful (or maybe it is, for me).
I think a lot of the motivation is the transatlantic JV- as you mention, AF already unbundles business class (not just seat assignments, but change fees and lounge access) on some long haul routes, but hasn’t been able to do so in the US market because of the JV aligning fares and policies.
There’s two things that will probably happen: re-integration of change fees and some sort of reduced mileage earning.
They are going to try to prevent business travelers from wanting these tickets.
In long haul with direct aisle access for every seat, the seat assignment thing isn’t that big of a deal. Yes, flying as a couple or near bathrooms are issues but no seat assignment isn’t the same as basic economy.
other airlines outside of the DL JVs have done it and so there is a history that they work at some level.
DL is adding business class seats with its ex-Latam A350 conversions - with the new A350-900s getting the same configuration (or vice versa).
DL has clearly done the math to see that they can sell more D1 seats at lower revenue than DL but still more than the extra space that a premium...
other airlines outside of the DL JVs have done it and so there is a history that they work at some level.
DL is adding business class seats with its ex-Latam A350 conversions - with the new A350-900s getting the same configuration (or vice versa).
DL has clearly done the math to see that they can sell more D1 seats at lower revenue than DL but still more than the extra space that a premium economy seat takes up (they are reducing the number of Premium Select seats compared to their original A350-900s).
The real target could well be AA and UA that have much larger business class cabins on several fleet types.
If AA and UA are able to make far fewer business class tickets available for loyalty program upgrades because they monetize them at lower rates, DL might be better able to grow in competitive markets.
Will be interesting to watch but DL is going to be growing its Delta One capacity significantly over the next few years so those seats will be filled somehow
They’ll need to rebrand it: Delta One Undone. First there was premium economy. Now to serve you better, there’s economy premium — for three times the fare but only twice the hassle!