United revealed its plans for the no-frills fares during an "investor's day" presentation on Tuesday, confirming a move that many industry observers had expected.
The stripped-down fares come as those carriers are increasingly faced with head-to-head competition against so-called ultra low-cost carriers (ULCCs) Spirit, Frontier and Allegiant. Those airlines are known for rock-bottom base fares but they charge extra for virtually everything beyond a spot on the plane. Seat assignments, beverages and stowing a bag in an overhead bin all cost extra.
That’s made it harder for big airlines like United, American and Delta to compete with their ULCC rivals on price, especially in an era where customers can easily compare different carriers’ fares via Internet booking sites. For example: A $49 one-way fare on a ULCC like Spirit or Frontier often compares favorably on such sites, even though prices on full-service carriers typically include fewer add-on costs.
The Basic Economy fares are an attempt by those full-service airlines to offer bargain fares that can rival those offered by their ULCC rivals. But the tradeoff is that fliers don’t receive all the perks that they may be used to when flying on one of those big full-service carriers.
As for United, its Basic Economy fares will roll out next year in select markets, presumably where United faces significant ULCC competition. Rules of the fare type will mimic some of the restrictions in place on the ULCCs.
The biggest change for most customers will be United's new Basic Economy policy for fliers' carry-ons that don't fit under the seat in front of them. United won’t charge for such carry-ons as Allegiant, Frontier and Spirit do. Instead, United will prevent Basic economy fliers – with some exceptions – from bringing full-size carry-ons onto the plane.
“The new offering provides the added benefit for customers and employees of simplifying the boarding process, as fewer customers will bring overhead bags on board,” United says in a statement about its introduction of Basic Economy fares.
Flight attendants applauded the move, agreeing that it would help alleviate the crush of carry-on bags that's become common on many U.S. airline flights.
“United’s move to encourage fewer carry-on bags, similar to practices at Frontier and Spirit, will create a safer cabin for passengers and crew," Sara Nelson, president of the Association of Flight Attendants union, said in a statement. "Excess bags in the cabin lead to flight attendant injuries, slower boarding times, and passenger altercations. Flight attendants manage these safety and security issues often under the pressure of on-time departures and during a critical period for ensuring the overall security of the flight. Footage from recent aircraft evacuations show that passengers grabbing these bags risks the lives of everyone onboard."
As for the carry-on exceptions, several options exist for Basic Economy customers to avoid the prohibition on full-size bags. Elite members of United’s frequent-flier program will be exempted, as will members of United’s Star Alliance partners who have achieved “Gold” status or higher. Primary cardholders of United’s branded credit cards also are exempted from the prohibition.
Customers booking Basic Economy fares also will not be able to choose their seats in advance; they will be assigned to one of the remaining open seats on the day of departure and will be among the last group called for boarding. United adds that Basic Economy customers must "acknowledge at the point of a multi-seat purchase that seating together is not guaranteed."
The fares will earn miles that can be redeemed for award travel, but fliers will not earn credit toward elite status in United’s frequent-flier program. Ticket changes will not be permitted, not even for a fee.
However, United says Basic Economy customers will still receive other items that are part of its standard economy service. That includes snacks and access to United’s more robust for-purchase food options.
Beyond the Basic Economy announcement, United said it is still evaluating on whether it should add a true international style premium economy cabin. Such cabins have become common on large international airlines like British Airways, Qantas, Air France, Cathay Pacific and others. They include more than just a few extra inches of legroom, typically recliner seats that mimic first-class seats on U.S. domestic flights. Such cabins also include perks and meal options that are closer to what's given to business class customers.
U.S. carriers had been slow to adopt those cabins, but that changed this fall when American introduced the first of its new premium economy seats. Delta is expected to begin rolling out its premium economy cabins in 2017.