United Airlines is changing the way it sells Basic Economy fares. President Scott Kirby was adamant just one month ago that the basic economy fares would always be on offer, down to the last seat on the plane. That appears to no longer the case in many markets.
$UAL will always offer a basic Y fare, even if there's just one seat left on a plane, says Kirby.
"It gives customers choice."
— Edward Russell (@e_russell) June 7, 2017
At that time Kirby acknowledged that other airlines were behaving differently on the matter, placing United at a “disadvantage.” But investors seemed to like the plan so he stood strong. In the past week or so, however, a number of markets have seen the BE market nearly disappear for one-way trips. Where multiple fare classes previously offered one-way basic fares now far fewer do.
The change has also necessitated filing more fares with a round-trip calculation rather than one-way as the traveler choosing a return trip is still liable to run in to the Basic Economy fares. In the Newark-Los Angeles market, for example, United essentially did not sell round-trip fares since the introduction of Basic Economy. That is now changed, with round-trip pricing filed for multiple fare buckets from W (mid-level) up through Y. In the examples I’m seeing, however, the round-trip BE fare is simply double the one-way non-BE fare. In that scenario the BE fare is not offered to passengers even though it exists.
The changes are very much route-specific so far. Last week I purchased San Francisco – San Diego on Southwest, both because of the flight times and because the UA option matching the price was a Basic Economy offer. This week the W fare is no longer Basic Economy but did not increase from last week’s filing. Not only are Basic Economy fares being pulled in some markets but the associated price hike is being rolled back, at least in higher fare buckets.
Looking at other markets, however, suggests that the reprieve from Basic Economy is not yet ready to go network-wide. Flights between LaGuardia and O’Hare still have BE fares published up to the higher levels, for example. Perhaps that is because Spirit competes on that route and United is choosing to honor the originally announced intent of the BE fares: competing with the ULCCs, something it never really did with the initial implementation. Or maybe it just hasn’t made it around to “fixing” those fares.
Kirby was optimistic about hitting the target of $1 billion additional revenue as a result of the fare segmentation by the end of the decade. It is unclear how this shift in sales tactics will affect that plan.
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