According to the Dallas Morning News, the Dallas-based airline will now offer basic economy fares across its entire domestic route network.
Basic economy fares are targeted at the most price-sensitive customers. American’s basic economy ticket does not include a carry-on or an advance seat assignment. The airline began rolling the fares out in March.
Airlines like American have introduced these fares to compete with ultra-low-cost carriers like Spirit. Spirit aggressively challenged American on a number of routes, including many in Dallas. American was forced to lower its fares in response.
This gave consumers the ability to purchase legacy airline tickets, with amenities, at almost the same price as a ticket from an ultra-low-cost carrier.
That situation was not economically sustainable for American, especially on last-minute fares.
Instead of raising all economy prices and scaring off price-sensitive customers, American decided to introduce basic economy. American’s legacy competitors, Delta and United, also have similar fares.
Don Casey, senior vice president of revenue management, said of the fares: “That’s going to allow us to continue what we are already doing, which is matching the fares of anybody that flies in and out of our hubs.”
“But, it’s also going to give us the opportunity to generate more ancillary revenue and generate more upsell to the product that we offer to customers today,” he said.
So, what does a basic economy fare get you? Not much, as it turns out.
Basic economy customers will be in the final boarding group and are not entitled to a carry-on, at least on American and United. All passengers may carry one personal item aboard.
During the flight basic economy passengers will be treated the same as other economy passengers.
Basic economy fares will be $20-40 cheaper than economy fares. However, passengers will need to factor in fees like the $25 checked bag fee when arriving at the final price of the ticket.
So far, the fares have not been attractive to business travelers. Leisure travelers who want to avoid basic economy don’t need to fear making an accidental booking either. American’s website includes pop-out warnings that list the fare restrictions. Online travel aggregators are also starting to specifically label basic economy fares.
Industry experts predict American will tweak the fare over time. However, they believe that basic economy – like premium economy – is here to stay.