I’m fascinated by the whole basic economy situation with the US legacy airlines. Delta has had some form of basic economy for years, while United and American only jumped on board the crazy train within the past several months. But United is absolutely determined to win this race to the bottom — not only do they have the most punitive basic economy concept, but they also rolled it out to pretty much all domestic flights. They make Delta’s basic economy almost seem rational by comparison.
The concept of basic economy is really just a fare increase of course. United doesn’t actually want you to spend less for a ticket, they just want to make you believe you’ll be so miserable that you’ll spend more — with them — to avoid it.
Whether that is working is an open question though, particularly the with them part of it.
United President Scott Kirby recently blamed their basic economy woes on the fact that American hasn’t rolled it out systemwide yet, implying that United will do better when everyone else sucks just as bad.
They’ve also sent out emails imploring their Premier flyers to book away from basic economy, or suffer the consequences. I expect he’s partially right — Premiers are booking away from basic economy alright, but they’re doing so by booking with other airlines instead.
It’s fairly obvious that United is having trouble with their basic economy strategy and is turning the knobs to try to get it dialed-in. Kirby says they are sacrificing the present to figure out the next 20 years. They finally backtracked a bit and decided not to sell basic economy on expensive full-fare tickets. That only makes sense.
But it’s mind boggling nobody thought of that originally.
I’ve also seen United play with the price difference between basic economy and regular economy. When basic economy was introduced back in the spring, it seemed like the buy-out cost was about $15-30 per one-way flight, meaning you’d spend that much more for a regular economy ticket. Lately, however, I’ve seen that differential jump to as much as $100 on some flights. I recently booked a flight for my wife from Denver to Las Vegas where basic economy was $42 but regular economy was $82, almost twice as much.
There also doesn’t seem to be a lot of rationale as to how that pricing differential is set. You’d think that maybe it has to do with routes where they face intense competition from the likes of Spirit and Frontier, or maybe the number of segments in the itinerary, or even the cost of the ticket. But honestly, it seems random to me.
In short, I can no longer really predict how much more a regular economy ticket on United is going to cost compared to basic economy. And that’s a real problem, since Google Flights — and other online travel agencies — generally only show the cheapest offering without telling you what type of fare it is. So for those wanting to avoid booking basic economy, you have no idea what that will cost on United until you run the search on their website.
Well, apparently that pricing differential can actually be negative. My friend Chris just sent me an example this morning where United was selling basic economy tickets from Washington Dulles to San Francisco for $259.
Or you can book regular economy for $249. For the exact same flight.
Gee, I wonder which I should choose?
Basic economy costs more than regular economy!
So is this a glitch? Or are more changes to the basic economy pricing algorithm getting rolled out?
Bottom line
United’s basic economy strategy seems to be evolving of late. It’s pretty obvious that they didn’t have this all that well modeled originally and that perhaps the strategy isn’t working quite like they thought it would.
I imagine that this example where basic economy costs more than regular economy is just a glitch, but it still seems to indicate that there is a lot of tinkering going on with the basic economy pricing models.
What basic economy pricing anomalies have you seen lately?
First cheaper than Economy? Huh?
Mary,
Why is that a problem? It doesn't affect your service or the price you paid?
@ Mary:
I notice the same thing all the time on AA. As a Plat, when I don't upgrade I usually select the the bulkhead row aisle seat. I'll check the seat map a couple hours before the flight, and the middle seats in the bulkhead row (and in most of Main Cabin Extra) are nearly always empty. But inevitably, on 80% of flights, come Group 8 it will be filled by some once-a-year passenger,...
@ Mary:
I notice the same thing all the time on AA. As a Plat, when I don't upgrade I usually select the the bulkhead row aisle seat. I'll check the seat map a couple hours before the flight, and the middle seats in the bulkhead row (and in most of Main Cabin Extra) are nearly always empty. But inevitably, on 80% of flights, come Group 8 it will be filled by some once-a-year passenger, bewildered about why they can't keep their backpack between their feet for takeoff. On nearly all of the flights this happens on, there are plenty of open seats farther back, and yet the gate agent still fills MCE first.
I don't mean to sound like a snob here (though I'm sure I do)...but I go out of my way to keep my Plat status primarily for the Main Cabin Extra perk - paying more for flights, making connections, etc. It seems less and less worth it every time, when apparently all that's required to get sat in MCE is being too cheap to select a seat ahead of departure.
I flew a completely packed UA flight DEN-IAD yesterday midday and there wasn't a single person lined up in Group 5, the BE line. Oh wait, there was a woman briefly there, she was Global Services who apparently didn't want to wait with the "riff raff" in Group 1.
For the second time this week the person beside me in economy plus is on a basic economy ticket. As a United loyalist this is complete bs.
I would really, really like to see Google flights up their game (also the OTAs).
1. They don't (yet) differentiate between basic economy and regular econ. They should. They are not the same product, even if the seat is technically the same.
2. They can't tell the difference between Delta throwing you 3 extra inches of pitch (Y+) and Lufthansa or Air New Zealand (true PE) giving you a notably wider seat in...
I would really, really like to see Google flights up their game (also the OTAs).
1. They don't (yet) differentiate between basic economy and regular econ. They should. They are not the same product, even if the seat is technically the same.
2. They can't tell the difference between Delta throwing you 3 extra inches of pitch (Y+) and Lufthansa or Air New Zealand (true PE) giving you a notably wider seat in a functionally different cabin with improved catering. When DL rolls out true PE later this year, how is that going to be handled by google?
Until search engines fix how to show basic product differentiator issues, airlines like UA can get away (sometimes!) with junk products like their basic econ.
Travis--
I would not infer that the basic economy "strategy isn’t working quite like they thought it would" just because they're fiddling with the pricing on some routes. That's mere speculation -- and it's particularly pernicious because it seems to fit with a preconceived narrative on this blog that basic economy is bad or failing. Pricing anomalies on some routes could just mean United is doing pricing tests on various routes to try to get...
Travis--
I would not infer that the basic economy "strategy isn’t working quite like they thought it would" just because they're fiddling with the pricing on some routes. That's mere speculation -- and it's particularly pernicious because it seems to fit with a preconceived narrative on this blog that basic economy is bad or failing. Pricing anomalies on some routes could just mean United is doing pricing tests on various routes to try to get data on optimum price differentials in some markets -- negative or zero price differentials could be a test to see what percentage of their customers are paying attention. Obviously it's also possible that there's some other explanation. But it's entirely speculative to make inferences about United's perception of basic economy from a few examples of seemingly anomalous pricing.
My sense is that, as much as people decry it on this blog, basic economy is here to stay. They're obviously not seeing a huge drop-off in bookings (if they were they would get rid of it). For all the people who declare they'll never fly United or AA again as a result of this, that's of course their right -- by its silly to think that customers en masse are leaving over this. If they were, United and AA wouldn't be expanding if so much.
Keep in mind, airfare today is the lowest it's ever been -- and legacy airlines are getting clobbered by low-cost carriers, so it wouldn't be a surprise for them to adopt more of the low-cost carrier tactics.
See https://www.wsj.com/articles/how-budget-carriers-transformed-the-airline-industryin-14-charts-1503501624
BE is definitely very glitches right now. I just priced out an IAH - SFO and BE and Economy was he same price so long as you selected Economy on the first segment. If you select BE first then upgrade to Economy on the return, the return costs $15 more in Economy. I really hope this means it's he end of BE on United. They really went too far with how harsh their BE is. They have the worst BE product by far.
Totally don't get the UA strategy here-- I wish Hipmunk (my price engine of choice) would stop showing the fares entirely, although at least the UI flags the 'No Frills' choices.
I usually find that once I rule out Spirit and Sun Country and UA-BE, the AA or Alaska/Virgin fares are competitive. And, I figure at least I won't get beaten with a stick on those carriers. For now.
If Chris clicks through the page while selecting Basic Economy, United will show a notification on the next page letting him know that the regular Economy fare is cheaper and that he will be b ooked to that instead. it's absolutely stupid IMO as well.
The Chrome extension that shows legroom for flights on Google flights also shows which fares have baggage restrictions now as well by displaying a suitcase with a cross going...
If Chris clicks through the page while selecting Basic Economy, United will show a notification on the next page letting him know that the regular Economy fare is cheaper and that he will be b ooked to that instead. it's absolutely stupid IMO as well.
The Chrome extension that shows legroom for flights on Google flights also shows which fares have baggage restrictions now as well by displaying a suitcase with a cross going through it. right next to the legroom number.
It's impossible to code out of basic economy for UA, DL, and AA while also eliminating fares for F9 and NK in the same line of code in ITA Matrix.
If Kayak shows you a Basic Economy fare, it (generally) indicates this by showing "+ $__ Economy" for United or "+ $__ Main Cabin," etc. I've found that useful.
Unfortunately, the Basic Economy fares will often clog the search results. (E.g. multiple pages of $42 BE tickets on United appear first with $40 up-charge to regular economy, followed by regular economy on other airlines for $60.)
@DB - agreed. I used to book UA...
If Kayak shows you a Basic Economy fare, it (generally) indicates this by showing "+ $__ Economy" for United or "+ $__ Main Cabin," etc. I've found that useful.
Unfortunately, the Basic Economy fares will often clog the search results. (E.g. multiple pages of $42 BE tickets on United appear first with $40 up-charge to regular economy, followed by regular economy on other airlines for $60.)
@DB - agreed. I used to book UA whenever possible for a shot at using a family member's RPUs, but they are so hard to come by now that I just book whoever's cheapest (with a special preference to Virgin America).
It's not unusual for a lower class of service to be more expensive than a higher one. I notice this on BA a lot, where premium economy is sometimes cheaper than economy, and First can be cheaper than Club World.
I guess computers control all this and sometimes do things that look odd to a human
I encountered the same thing recently. I needed to fly from Orange County to Sonoma County and had been watching the fares for several weeks. Basic economy had been pricing at $72 each way and regular economy was pricing at $112 each way. Last week mysteriously the basic economy fare had jumped to over $200 on the outbound flight while the regular economy was now pricing at the rate that had previously been marketed as...
I encountered the same thing recently. I needed to fly from Orange County to Sonoma County and had been watching the fares for several weeks. Basic economy had been pricing at $72 each way and regular economy was pricing at $112 each way. Last week mysteriously the basic economy fare had jumped to over $200 on the outbound flight while the regular economy was now pricing at the rate that had previously been marketed as basic economy ($72). On the return flight basic economy was no longer even available and the economy fare was still $112.
As a premier flyer I am not booking Basic Economy. But you are right - I do book away sometimes - if it's extremely cheaper on AA or Alaska I just can't justify it.
Totally ok with the direct competition to low cost carriers creating this idea of basic economy - for example, spirit showed $35 one way to DEN-DFW, United regular economy was $84. By the time I factored in seats and carry...
As a premier flyer I am not booking Basic Economy. But you are right - I do book away sometimes - if it's extremely cheaper on AA or Alaska I just can't justify it.
Totally ok with the direct competition to low cost carriers creating this idea of basic economy - for example, spirit showed $35 one way to DEN-DFW, United regular economy was $84. By the time I factored in seats and carry on bag Spirit was $94 - so more than United. It's when there is a $30 markup just because that I'm livid.
I am actively booking away from United because of this whenever I can. In fact I'll pay an equal fare to the buy up cost on UA on another carrier just because of how much I loathe what UA is doing here.
David UA: Thanks. Of course, you're right. Fixed.
Google Flights and the OTAs are losing their usefulness if they only show BE. There needs to be a box to tick to exclude that, or people who want nothing to do with this bait and switch scam will no longer trust Google Flights and the rest for fare searching.
Travis, Scott Kirby is not United's CEO - he is UA President. Oscar Munoz is still at the helm.
@Janeway : i guess UA BE and Russian hookers are similar - you pay them to piss all over you =p
not "anomaly" but large gap observed anecdotally - a last minute quote (like 1 day before) gave me $105 basic econ versus $192 regular econ. I had no luggage and didn't need the PQM to re-qualify so I took the BE option.
In the end, I still got E+ window seat automatically assigned and Group 1 Boarding. It was nearly the best case scenario one could imagine under a BE fare. YMMV
When I thought "you'd have to pay me to do this" I didn't think they'd take it literally. Basic Economy a bad idea, and United makes it especially punishing.
I've noticed this issue since day one. Strange but not new, oddly.
Basic Economy is the devil! United is foolish to drive away loyalty this way.
As for this pricing, looks good to me. Hope it becomes a trend.