The Brancatelli File By Joe Brancatelli
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Less for Them Still Isn't More for Us
January 19, 2017 --We established this a baker's dozen years ago: When airlines seize perks or basic services from travelers who pay the least, it does not benefit the flyers who tend to pay the most.
As I said then, less for them isn't more for us.
If you must be Biblical, I refer you to Matthew 25:45. "Whatever you did not do for one of the least of these," it reminds us, "you did not do for me."
It's wise to remember both the Biblical and the Brancatelli as the airlines mount their latest assault on the least among us.
American and United this week both made significant moves into the so-called Basic Economy segment. That's the sub-coach fare category pioneered nearly five years ago by Delta as a response to the incursion of sub-human carriers such as Spirit Airlines.
In introducing its Basic Economy, American Airlines stripped even more from the fare than Delta. As you can see by the chart, Delta doesn't allow Basic Economy flyers to upgrade, standby, make changes or get refunds. The fares cannot be combined with other coach fares and you won't be switched to another airline during a travel disruption.
But American says you'll only get to carry on one bag if you buy a Basic Economy ticket from them. If that bag doesn't fit, you'll have to check that, too. You won't only pay $25 to check that bag, you'll pay a $25 penalty to gate-check it. And, just so you know you mean nothing to American, you'll only receive half of the AAdvantage elite credit you would receive for a traditional coach price.
United Airlines, which introduced Basic Economy last November but won't roll them out for purchase until after American launches next month, is worst of all. It'll have all the restrictions of Delta and American and you won't get any elite status credit at all if you buy a United Basic Economy fare.
In this week's fourth quarter earnings call, United president Scott Kirby, who recently defected from American, praised the arrival of Basic Economy. He predicted a financial windfall. Hundreds of millions in new revenue. Perhaps a half a billion in a year or two.
Bullshit. That's the technical term for Kirby's outlook. Delta once promised similar gushers of cash from Basic Economy. It's not happening. With the fares now in 40 percent of Delta's domestic markets, Basic Economy is no windfall.
Even with high-pressure upsells--Delta ominously warns buyers before they book Basic Economy of all that's denied them--and the fact that perhaps half of the travelers who start out to buy Delta's cheapest price choose less-restrictive higher prices, the less-for-you rate isn't a big contributor to the airline's bottom line.
"You are not talking about a huge amount of money," Delta president Glen Hauenstein admitted last week during Delta's fourth quarter earnings call. "I think it's more of a competitive tool than a huge value driver in the long run."
In other words, Basic Economy at Delta has already essentially returned to its initial purpose: To show customers that Delta can match Spirit's low-fare, high-fee, bait-and-switch pricing. Delta would very much prefer you didn't, of course, but Basic Economy is there if you're willing to put up with the stripped-down, no-options price.
And that's only part of it. Unlike what you may have read elsewhere this week, Basic Economy is not a new, cheaper fare that the three remaining legacy carriers have introduced. All they're doing is taking their existing cheapest fare in a market, stripping out functionality and rebranding it.
You're not saving any money if you buy Basic Economy. You're just getting less than ever.
Don't believe me? Believe American Airlines. In its introductory palaver this week, American at least was honest enough to admit that this is just a con job.
"It's not a new discount," American explained, "but a new set of attributes for our lowest fare."
Got that? New jargon. When airlines take away perks and basic functionality, they aren't ripping off customers. They're just introducing "a new set of attributes." It's kind of like when airlines raise prices or reduce perks "to remain competitive."
It goes without saying that you shouldn't buy a Basic Economy fare. Your elite status will offer no protection and almost none of the perks.
Remember what I said last week about the death of travel loyalty?
Basic Economy is a perfect example. Discount shoppers who buy Basic Economy get less than ever before. And if we buy the cheapest fare, the airlines don't give a rat's patootie about our previous high-priced loyalty.
As I also said last week: They really do expect you to pay them to be loyal to them. What better proof is there than Basic Economy? You give them business, they give you less than ever in exchange for the money you pay--and then they say the money you just paid for less than ever before isn't enough to count as loyalty, either.
My response to that kind of incredible arrogance? Same as it was last year: Screw 'em.
This column is Copyright © 2017 by Joe Brancatelli. JoeSentMe.com is Copyright © 2017 by Joe Brancatelli. All rights reserved. All of the opinions and material in this column are the sole property and responsibility of Joe Brancatelli. This material may not be reproduced in any form without his express written permission.