The One Potentially Fatal Flaw with Basic Economy Airfares
U nited Airlines and American Airlines once again appear to take the lemming approach to the policies implemented by Delta Air Lines — this time, emulating the basic economy airfare model where you can purchase an airfare at a lower price while foregoing benefits normally associated with being a member of the frequent flier loyalty program of the airline — whether or not you have elite level status; but there is the one potentially fatal flaw with basic economy airfares which I will address later on in this article.
The purpose of basic economy fares is to compete with ultra-low-cost carriers such as Spirit Airlines and Frontier Airlines, which have been adding more routes. One example is in Atlanta — in which Delta Air Lines is the dominant carrier and Southwest Airlines is secondary after its takeover of AirTran Airways — where more routes and more flights have been aggressively added by Spirit Airlines and Frontier Airlines.
Route Maps of Spirit Airlines and Frontier Airlines
Spirit Airlines and Frontier Airlines apparently see a golden opportunity to give the legacy carriers a run for their money: while the legacy carriers keep trimming or charging more for the very amenities and benefits for which they have been known, these two airlines have been launching routes — many of which are in direct competition — and charging low airfares.
Notice on the route maps below how both Spirit Airlines and Frontier Airlines have been “attacking the hub fortresses” — Atlanta, Chicago, Denver, Houston, Minneapolis-Saint Paul, Detroit and Dallas; as well as Las Vegas, Los Angeles, Fort Lauderdale and Orlando — of the legacy airlines instead of concentrating on point-to-point service for airports in smaller markets, as is the model of Allegiant Air:
Notice all of the new routes which Frontier Airlines is implementing over the next few months.
Examples of Comparisons of Direct Competition
The following are two examples of where Frontier Airlines and Spirit Airlines compete with legacy airlines and offer potentially significant savings — without including those nefarious ancillary fees, of course.
For a round-trip flight between Atlanta and Los Angeles departing on Sunday, April 24, 2016 and returning on Thursday, April 28, 2016, notice how Frontier Airlines charges $168.00 in total for the flight. The next cheapest option is provided by Spirit Airlines at $267.00 — basically $99.00 more, give or take a few pennies. Both are nonstop flights…
…but then, the third least-expensive option is provided by American Airlines, which at $310.00 has a stop involved — likely either Chicago or Dallas-Fort Worth — at almost double the price of airfare offered by Frontier Airlines; and takes almost two hours longer to arrive in Los Angeles on the outbound flight.
Taking a look at another example — which is a round-trip flight between Atlanta and New York departing on Tuesday, April 26, 2016 and returning on Saturday, April 30, 2016 — notice how Frontier Airlines charges $138.00 in total for the flight. The next cheapest option is provided by Delta Air Lines at $187.00. Both are nonstop flights…
…but investigating the airfare offered by Delta Air Lines reveals that the $187.00 airfare is actually a basic economy fare of $186.20 with restrictions…
…and notice how there are plenty of other options available throughout the day for only an extra nine dollars where you do not have to deal with all of the restrictions of a basic economy fare.
As an aside, the screen shot shown directly above may be an example of where it is less expensive to simply purchase your ticket to sit in the premium class cabin and enjoy the benefits instead of going through all of the financial and opportunity costs of what used to be known as loyalty, working hard to try to attain elite level status for the next year and eventually earn your “free” flight. Instead of current fares for that seat in the first class cabin as low as $372.20 and $404.20, I remember not too long ago when they were significantly more expensive — approximately double, if I recall correctly.
This example seems to demonstrate the point I was attempting to make in this article pertaining to simply purchasing your premium experience when you like — with lower airfares for domestic travel seated in the first class cabin as a positive aspect of negative changes — as opposed to possibly spending more time, effort and possibly money trying to earn enough frequent flier loyalty program miles to redeem for “free” travel.
Why Pay Higher Economy Class Airfares on Legacy Airlines Anymore?
There may still be valid reasons to purchasing an airfare for a seat in the economy class cabin offered by a legacy airline at a higher price than one offered by a ultra-low-cost carrier at a significantly less expensive cost; but here are some reasons which might no longer be valid.
- Earning frequent flier loyalty program miles for “free” flights, which has been the basic core of frequent flier loyalty programs for almost 35 years; but if Delta Air Lines — and, assuming, other lemming airlines — has it their way, you will eventually not be able to redeem them for “free” flights in the future
- The basic economy fare on legacy carriers such as Delta Air Lines is usually more expensive than those offered by ultra-low-cost carriers; and if you really wanted to fly as a passenger of a legacy carrier, the basic economy fare is usually not worth the few dollars you would save because of the benefits for which you would not qualify to use
- Products and services of legacy carriers have eroded and seem to continue to do so: cramming more seats into an airplane as United Airlines will purportedly do on some Boeing 777 aircraft as the latest example — but at least American Airlines and United Airlines brought back a complementary snack for passengers of domestic flights within the United States
- Ancillary fees at one time were the main equalizer for legacy carriers which used to include benefits into the cost of a ticket versus ultra-low-cost carriers which always charged them on just about everything; but now that there are more ancillary fees with legacy carriers than in the past, that equalizer is not so distinct anymore
The One Potentially Fatal Flaw with Basic Economy Airfares
Although that time has arguably not yet arrived, this is simple: the one potentially fatal flaw with basic economy airfares is that the strong loyalty component with legacy airlines has either significantly eroded or disappeared altogether with many passengers; and combined with the loss of amenities and benefits in product and service amongst the legacy carriers, eschewing ultra-low-cost carriers is not such a clear decision anymore for passengers seeking to save money.
In the past, loyalty would have easily trumped low cost if the passenger had a choice of airlines. More comfortable seats, elite level status benefits, selection of seats, luggage allowances and free snacks and beverages are some of the products and services which at one point would have had many passengers not even think twice pertaining to choosing a legacy carrier over an ultra-low-cost carrier…
…but ever since amenities and benefits have significantly eroded, the choice is not so clear cut anymore. For the first time recently, I actually considered purchasing airfares on both Spirit Airlines and Frontier Airlines, thinking to myself that if I am going to be on a domestic flight for two hours or less, why would I pay more to be on a legacy airline?
The airlines may still have international routes and more frequent schedules to allow for more flexibility on their side — but if you have not earned elite level status on an airline, you will not enjoy such benefits as changing to an earlier flight or accessing a lounge at an airport anyway.
In other words: the legacy carriers seem to be making the choice between them and flying as a passenger aboard an airplane operated by an ultra-low-cost carrier that much easier. Why else would such ultra-low-cost airlines as Spirit Airlines and Frontier Airlines not only be significantly growing; but also be profitable?
Frontier Airlines was the fifth-most profitable airline in the United States as late as this past September, according to this article written by Laura Keeney for The Denver Post; and despite its problems and issues, Spirit Airlines has been one of the most profitable airlines in the United States in recent years.
The airlines are trying to have their cake and eat it, too; but I am not so certain that that strategy is good for the long term — unless that strategy is to have a chasm between legacy carriers who provide that so-called “premium” experience and the ultra-low-cost carriers who provide simple and basic transportation from point A to point B.
In other words, that middle ground of a low price but with amenities seems to be disappearing — with no one at this time stepping in to fill that void — except, perhaps, for Southwest Airlines and JetBlue Airways, which are typically not considered or classified as ultra-low-cost carriers nor legacy carriers.
Yes, there are still issues with service from ultra-low-cost carriers which are not typically pertinent on legacy carriers — such as having to wait nine days after a flight was canceled due to weather until the next flight operated by Spirit Airlines with seats available can take you to your destination because the airline does not have an interline agreement with any other airline — but as route maps grow and more flights are available, that may or may not be as much of an issue in the future.
As ultra-low-cost carriers continue their rapid growth while legacy carriers simultaneously continue to slowly and purposely dismantle the loyalty which had been built with their passengers over the years, it will be interesting to see which strategy wins out in the long haul; whether they will simply co-exist; or if there will be a form of disruptive technology which could eventually enter the space…
…but in the meantime — demonstrating the one potentially fatal flaw with basic economy airfares — would you really pay a premium of almost $50.00 just to experience a heavily-restricted basic economy airfare offered by Delta Air Lines instead of simply flying as a passenger on an airplane operated by Frontier Airlines between New York and Atlanta round-trip, as shown by the aforementioned example?
Photograph ©2015 by Brian Cohen.