It’s only been a couple of months since United started selling Basic Economy fares, but the availability has grown rapidly. Unlike American, which seems to be taking a methodical approach, United tried it, liked it, and then put it pretty much everywhere in the US (except Hawai’i). I suppose that’s not entirely surprising with President Scott Kirby at the helm since he’s a true believer in the product, but what I find most interesting is how things have changed since it first launched. There are a couple of surprises here.
Let’s start with a refresher. United now prices Regular Economy at a fixed amount above the Basic Economy fare. Here’s a modified version of the chart I rolled out to examine how United was pricing each of the first 7 routes from Minneapolis/St Paul to its hubs. (The modification was just to remove a couple columns that are irrelevant to this post. See the original here.)
| City Pair | Spread Between BE and Economy | Spread Between BE and Economy Flexible |
|---|---|---|
| Minneapolis-Chicago | $15 | $5 |
| Minneapolis-Denver | $20 | $5 |
| Minneapolis-Houston | $20 | $5 |
| Minneapolis-Los Angeles | $25 | $5 |
| Minneapolis-Newark | $20 | $5 |
| Minneapolis-San Francisco | $25 | $5 |
| Minneapolis-Washington | $20 | $5 |
As you can see, the spread between Basic Economy and Regular Economy was roughly distance-based with the longer flights having Regular Economy as a larger bump over the Basic Economy fare than shorter flights. For the Economy Flexible fare, however, it was a flat $5 bump over Basic Economy.
I figured they’d review this and make changes after bookings started coming in. Sure enough, there have been a couple of tweaks that may or may not give us some insight into how this is performing.
The Spread Between Basic Economy and Regular Economy Has Shrunk
It does look like United has kept the same basic $15/$20/$25 each way sell-up from Basic to Regular, but it has changed the mileage bands it’s using to determine which ones fit in which bucket.
| Distance | Spread Between Basic Economy and Regular Economy |
|---|---|
| < 1,200 miles | $15 each way |
| 1,200 – 2,000 miles | $20 each way |
| > 2,000 miles | $25 each way |
This means that the spread in all of the original 7 Minneapolis markets has dropped by $5 each way, except for Chicago. Denver, Houston, Newark, and Washington are now $15 over the Basic Economy fare while LA and San Francisco are $20 over the Basic Economy fare.
It’s hard to read the tea leaves on this one. On one hand, we could guess that on the mid to longer-haul flights, people thought the spread was too much and weren’t buying up enough to Regular Economy. On the other hand, it could also be that when they expanded this to nearly all domestic markets, they just arbitrarily decided the best mileage cutoff for each split and that was different from the original test. I’d like to think it’s the former, and United is trying to learn from historical buy-up data. But in reality, I doubt that’s what happened.
The Spread Between Basic Economy and Flexible Economy Has Disappeared
One of the things that really bothered me about the initial roll-out was that United decided to sell a Basic Economy fare at all times, even if there was only one seat left on the airplane. That meant you could have been looking to buy a $2,000+ roundtrip full fare ticket, and Basic Economy would still price as the lowest available fare. So there was a very real possibility of someone buying a last minute ticket for $2,000 only to find it non-refundable, non-changeable, ineligible for an advance seat assignment, and disallowing carry-on bags. To add insult to injury, the spread was only $5 each way. That meant if people had only paid attention (or known they had to pay attention), $10 would have made all this go away on a roundtrip. It was a mean-spirited strategy that provided almost no revenue benefit. And now it’s gone.
Well, technically, the fares aren’t gone. There are still insanely high Basic Economy fares (that require a roundtrip) filed, but they are now equal to the Economy Flexible price. It’s the flexible fare that appears to be the one that auto-prices every time.
Again, it’s hard to read the tea leaves. On one hand, the airline could have received vicious feedback from burned, high-dollar customers, and backed off. On the other hand, someone with a customer service brain may just have won the battle to not be terrible when someone is buying a high fare. Regardless of the rationale, it’s nice to see some common sense win the day on this one.
With the structure now likely set, now we get to see if more people begin the like Basic Economy over time. There continues to be a lot of whining about the introduction of Basic Economy at all, but it’s not going anywhere. And some people may find they like it when they’re actually flying.
United says that about 30 percent of people are buying Basic Economy while the rest buy up. Of those 30 percent, some are elites and some have the credit card, so they can still bring on a carry-on bag. But if you assume that even just 15 percent of people are no longer carrying a bag, that’s a big decrease in the number of bags that need to go into the overhead bin. I’ve heard a mix anecdotally but it’s still early with many summer travelers likely having bought tickets before this rolled out nearly-nationwide. It’s a benefit that may not truly show its colors for a couple more months, but it may be something that can help soften the perception that Basic Economy is awful.
33 comments on “United’s Basic Economy Has Expanded With a Small Twist”
“It’s a benefit that may not truly show its colors for a couple more months, but it may be something that can help soften the perception that Basic Economy is awful.”
It’s only a benefit for passengers not flying on Basic Economy fares. For those buying Basic Economy – and while OTA disclosure kinda sorta exists it’s still insufficient, I saw a finance guru of sorts yesterday note on Facebook that he was caught off guard not realizing he had bought Basic Economy — it’s still quite awful.
Basic Economy is a hugely cumbersome mechanism that’s really just a fare increase, structured so that it’s a fare increase only on most customers.
Wow, a finance guy on Facebook, that totally proves your point.
Gary, you’re a smart guy, what do you suggest instead? What billion dollar ideas with operational benefits do you have for the airlines?
Gary is knowledgeable about how to leverage loyalty programs, which flavor of ice cream sundae is served on a given AA route and which subsidized gulf carrier serves the best champagne but when it comes to labor relations, network planning and commercial/operational matters he as usual is way off base.
Amazing he is a self-professed “Thought Leader”, thought leadership comes from the likes of McKinsey, BCG, Sabre Airlines Solutions and PwC in the airline industry. The level of understanding, intelligence of questions and follow-up comments here is light years ahead. People on OMAT, TPG, VFTW, and FT are all looking get something for nothing. Brett has worked in the industry for several carriers and has forgotten more about airlines in the last month than Gary has ever known.
I don’t think Gary-or any one-needs to have ‘billion doallar ideas’ to carefully analyze an offered product and call it bs when it is.
Not true
Before you buy it you have to go through so many acknowledgements until the ticked is finally purchased, that b/s of people not knowing what they are buying is an old song!!!
I agree with Gary that the disclosure should be stronger with Expedia at least (which I just tried). Note that he’s talking about OTA’s, not united.com. There are notifications, but not any separate, pop-up notifications that this is not a standard fare like there are on the airline websites.
Gary – I’d argue it’s still a benefit for those who are on Basic Economy since they know for certain that they can’t bring a bag on. Previously they might have shown up with a bag and had it turned away, which is far more annoying than knowing your fate in advance. But either way, with 70+% of people buying up, it’s still the vast majority who benefit either way.
United.com does a great job and informing the customer that they are purchasing a BE ticket and the rules that go with that fare. United really needs to press on the Expedias, Pricelines, Travelocity’s etc. to get them to plainly display those rules to the customers that utilize those outlets. I looked on Priceline at a BE fare and it is not plainly displayed unless you make multiple clicks to open additional windows.
FWIW, I just noticed Kayak displaying the BE label on UA this morning.
Expedia lists United BE with a clicky that shows you the fare restrictions as well.
I do wish they would give an option to remove it and show standard economy fares, but I suppose that would be up to the sites themselves.
Because I normally travel with a checked bag (luggage with change of clothes, etc) and a large laptop backpack carryon that won’t fit under the seat in front of me, United’s BE restrictions won’t work for me without changing my travel routine.
Lets make it even more complicated to fly. Besides the idiots that jam seats into planes (and who have probably never sat there themselves) to booking a ticket, doesn’t anyone at the airlines ever use common sense?
Wild Bill, didn’t you take stagecoaches in the Old West? Remember how slow and uncomfortable they were.
Wow, that $20 or $25 “savings” can go right to the bag charge.
Flew MCO-SFO last week. Up until 24 hours before the flight the seat map showed the back of the bus as empty. After 24 hours it was full.
I with no status was moved to econ plus, and even at the gate and on the plane the FAs were trying to move people around so families could sit together.
So, sure, it works, I guess, but in heavy leisure markets its comical to watch.
PS. The free “upgrade” to econ plus actually worked in a way. I am for sure willing to consider to purchase an econ plus seat, whereas before I just always chose the very back of the bus.
I’ve not yet purchased one of these fares, but as a Platinum, would I still get a free bag and Economy Plus seat if available? Also, would I be eligible for first upgrades if available.
Free bag – yes, award miles – yes but they won’t count towards building status, upgrades – no, Economy Plus – same chance that any other BE passenger has
What is “Economy Flexible”?
Anthony – That’s just the name United is using for refundable fares.
Hmm, that’s not much of a markup to have the refundability option… I wonder why anyone would buy the BE fare?
Anthony – The only reason would be by mistake, I think. Someone must have decided it was a terrible way to run the airline and fixed it.
I flew Basic Economy for the first time last weekend (LGA–ORD roundtrip, $211). I was traveling solo and only for two days, so I didn’t mind the lack of seat assignment and the carry-on restrictions. I was only carrying a small backpack (i.e., a personal item) and had no other bags.
What I did find somewhat bothersome though is that because I was (i) not checking a bag and (ii) not paying for a full-size carry-on, I could not check in and receive my boarding pass until going to the United check-in counter and having a representative verify that I indeed only had a personal item.
In the end, not a big deal, but it was an annoyance I wasn’t originally expecting. I agree with other comments that United otherwise does a good job of warning you of the Basic Economy restrictions, just not this one.
JeffNYC – I agree that’s really annoying, but I wonder if it’s just a temporary measure to make sure nobody sneaks through the cracks and makes it to the gate without knowing the score. Hopefully that’s something that gets fixed over time as awareness grows.
How can the representative verify that? You could easily leave your carry-on bag somewhere while checking in.
Jim – They warn you, so when the bag gets charged the extra handling fee at the gate, there’s no way you can say that you didn’t know.
Oh please! Sell 20 levels of fares for every city-pair, then “voila,” hello America! It’s our new, super “Basic Economy” fare! It’s “huge!” Well, what it is, is “Spirit by United!” Personally, if I want to fly Spirit, I’ll go to it and buy a ticket on it, not worrying about UA. Given all the complaints I’ve read about people who bought “Basic” then found out what they bought, I can just imagine all the new DOT “disclosure” rules that’ll be coming out. By then, of course, UA will be hyping “Super Basic,” “Super, Super Basic,” better than Spirit, Frontier, and Allegiant combined! Whatever!
The one difference is that Spirit by United actually has multiple frequencies instead of one flight every three days with no interlining on other airlines. Big difference when dealing with IRROPS.
I tend to be pretty price conscious when I book flights on my own dime. However, the IRROPs issue, the bone-crunching seat pitch, and (to a much lesser extent) the well-documented sketchy maintenance procedures are what generally keep Spirit and Allegiant out of my consideration set when considering flights to book, and why I recommend to friends and family that they avoid these airlines.
If Spirit or Allegiant cancel a flight or have IRROPs, half of your week’s vacation can be ruined pretty easily. If one of the other carriers does that, it sucks, but you lose a few hours generally, perhaps day at most.
>>> Of those 30 percent, some are elites and some have the credit card, so they can still bring on a carry-on bag.
I have the credit card but I was not allowed to bring a carry on at EWR. I was made to check in my small backpack (for free thanks to the credit card). It was a hassle, and given the inability to check in online for these fares, I will be avoiding away from United. They didn’t get any more money from me but made my travel so much more unpleasant with intentional and ridiculous obstacles.
If there is anything more unpleasant that Basic Economy, I’m loathe to find out. Jam me into a seat with a shoehorn, bring a neighbor in front of me on my lap so close that my wife is jealous and tell me that I can save $15.00 to $25.00 — big whoop!
As another poster noted, you’ll pay out in baggage fees what you saved in basic economy.
I don’t get it. I just don’t. I don’t need an international first class seat between Chicago and Newark, or Chicago and Indianapolis. But I don’t think blood flow into my legs is optional. Apparently Spirit, Allegiant and the Big 3 do!
I thought United, American and Delta stood for more than this. I guess I was wrong.
Interesting evolution…I haven’t had trouble differentiating BE on United but I’m curious how it interfaces with corporate travel departments. My wife has shared with me communications from their corporate travel agents telling people to not book the Basic Economy fares as they have had a lot of these accidental bookings and people were not happy. Do you know if this fare category has had any issues showing up clearly on corporate travel booking sites or is this just a user error issue by her colleagues?
chris – If they don’t want people booking BE, then corporates can turn it off. I’m not sure why here company would tell people not to book it and then not disable it. But then again, I’ve seen stranger things…
United does a good job of warning you if you attempt to purchase a BE fare accidentally. A prompt box pops up essentially asking, “Are you really sure you wanna buy this?”. I’ve also noticed on my most recent purchase that UA was offering up-sell packages. I was booking in standard Economy and one package offered Economy Plus and one checked bag for $44 and the other was those features plus I believe a second checked bag? (it could have been premier access) and a Club Pass good for the duration of the trip and was about $75 I think. I’ve also noticed on recent trips UA seems to be more aggressive in pitching discounted upgrades to Economy Plus and First Class.
I accidentally got a Basic Economy United ticket in a “combo” from Expedia, whom I spoke with and booked by phone. The rep, if he mentioned it at all, didn’t explain what a Basic Economy ticket was. Now I’m insecure about actually being able to get on my flight home, and have to pay an additional $50 to check on a bag. I could have had a free carry on with American, but need to check a bag because I can’t bring one on with United. I’d never heard of a Basic Economy fare until I tried to select our seats later. This was about a month and a half ago. If there’s overbooking, we’ll be the first off the flight. This all leaves a bitter taste for this long time United customer.