Delta’s Basic Economy is Going to Generate a Ton of Complaints, Leave Money on the Table

Last week I wrote about Delta’s cabin rebranding efforts, but I failed to really grasp something that is likely going to become a big issue. The lowest fare, Basic Economy, is going to roll out into more markets and become much more restrictive. It’s structured in a way that virtually guarantees a segment of people who buy it are going to be really pissed off. Those who may not understand what they’re buying have no way to remedy their situation. Not even ultra low cost carriers like Spirit do that, probably because it doesn’t make financial sense to do it that way.

Spirit computer via Shutterstock

Delta Seats Basic Economy

Basic Economy was introduced a couple years ago as an anti-Spirit move. Delta wanted to compete with Spirit’s low fares, but it also wanted to give travelers a reason to pay the prevailing rate. So Basic Economy, with restrictions, was born. Delta was simply dipping its toes in the water when Basic Economy launched. But with ultra low cost carriers growing incredibly quickly, the time has come to ramp things up. The fare still won’t be in every market, but it’s become a core part of Delta’s product offering. And the list of restrictions is growing.

With Basic Economy, you cannot change your ticket for any fee (not even a same day change to an earlier flight). You also can’t get an advance seat assignment. You get it at check in and you can’t change it. You board last, and you can’t even pay for priority boarding if you want it. Elites get limited special privileges. Most importantly, they can’t upgrade to First domestically even if a seat is open.

That is incredibly restrictive, so you would expect a huge discount. But at this point, it’s tiny. The fare difference is $10 each way. At least if you book it on Delta.com, it’s easy to understand what’s happening.

Delta.com Basic Economy

The most restrictive rules are posted at the top of the column, and if you click at the top, you’ll get the full comparison. Will people still buy this and not realize what they’ve done? Sure. But Delta is being fairly clear here.

On the other hand, what if you book at an online travel agent? Well, that’s where it gets uglier. Orbitz only shows the Basic Economy option, but when you click through, it spells out the restrictions and gives you a $10 upsell. Priceline also only shows the Basic Economy option but when you click through, you have to initial saying you understand that you can’t change your ticket and you can’t assign a seat in advance. (None of the other restrictions are noted, so that’s not good.) Then there’s Expedia. Expedia actually downright lies about how this works.

On the flight results page, Expedia only shows the higher regular economy fare. But when you click through, you get this:

2014_12_15 expediabasicecon

Surprise, you’ve been put into Basic Economy. And look at the bottom right. It actually says that the ticket is changeable for a $200 change fee. Further in the process, it tells you the change fee again, and if you click the fare rules, it just says they aren’t available. Wow. Something tells me Expedia might be looking at a fine from the DOT here.

But let’s get back to the point. With a product like this, you’re going to have a certain number of people who don’t really pay attention to the full details of what they’re buying. There will be few of those on Delta.com, slightly more on Orbitz and Priceline respectively, and probably a ton on Expedia. No matter what, there will be a group of people who don’t quite get it and are looking to fix the situation.

Here’s where it gets ugly. Spirit’s CEO Ben Baldanza told me long ago that tickets booked through online travel agents were about a quarter of the airline’s bookings but 100 percent of the complaints. I’ll assume that’s an exaggeration, but you get the point.

People book through online travel agents and don’t get the same level of information that they get when they book directly. But here’s the thing. With Spirit, at least there is a remedy. If you need a carry on, you can pay for it. If you want a seat assignment you can pay for it. Everything you might want is available for purchase. You might not be happy about that and think it’s extortion, but at least it’s an option.

That’s not what’s happening with Delta.

If you buy a Basic Economy fare, you can’t pay more to change your ticket. You can’t pay for a seat assignment. You can’t pay for priority boarding. You’re locked in.

That means if you’re unhappy about how Spirit does things, you’re going to be downright livid about how Delta’s doing it. If you don’t fully understand what you’re buying (and you know plenty of people won’t), then you’re out of luck. You are stuck with what you bought.

The Basic Economy fares are only offered at lower fare levels (it’s not just $10 off any regular coach fare, only the cheapies) so it’s not like a change fee is even really that important. You’d be better off throwing the ticket away than paying a $200 change fee on many of these. But if you want a seat assignment or you’d like to board earlier, you simply can’t have it. That seems dumb to me.

If someone later decides they really want a seat, go ahead and charge them $20 for it, Delta. Why wouldn’t you? It makes the airline more money than if the traveler bought the more expensive Main Cabin fare in the first place. And it at least gives people an option to get what they want if they didn’t pay attention when they originally bought the ticket.

I just don’t understand the rationale for doing this the way Delta is setting it up. It reduces ancillary fee opportunities, and it will piss people off. That’s not a good combination.

[Spirit computer and Delta computer via Shutterstock]

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Seagar
Guest
Seagar

I’m sure some B-school CFO determined that the airline will actually make more money by not allowing constant changes to the systems offering more predictive inventory and on-time departures. Add in current marketing bozos and together they see this making regular economy appear more valuable The days of the customer first is gone and especially in the bus, I mean airline industry.

Nick Barnard
Member

Most customers have spoken that they want the cheapest fare possible. Don’t complain that the businesses are giving them that.

Mark Skinner
Guest
Mark Skinner

But being cheaper by not allowing them to pay more, even if they finally decide they want to?

SEAN
Guest
SEAN

What’s that saying… oh yeah – let the buyer beware.

Widgetblogger
Guest
Widgetblogger

Cranky, I concur with your points. IMO the simple fix here is to allow changes, seat assignments, etc, but with the fees set at a higher price which in most cases negates the price benefit between Basic and Economy. This way both sides win: if the customer wants to take the chance of booking Basic only to pay more if they have to change, say $225 versus $200 for other classes of service (plus or minus the differerence in fare) – they can. There is also a way out if the fare is inadvertently booked by an online agency. The… Read more »

southbay flier
Guest
southbay flier

We’re talkingabput Delta IT. The same people who can never produce a working award calendar.

Zack Rules
Guest
Zack Rules

I ran into this a few years ago on United. I booked a restrictive ticket using Student Universe and when I tried to change it, United told me no. I said I would pay a large change fee, several hundred dollars, and was still told no. They had tons of seats on their Accra flights too. I told him that he was failing his fiduciary duty to his company and booked a one way flight on Delta/KLM using miles (ironically enough). The point is that even when a customer is willing to pay a lot, the company wouldn’t budge

gobluetwo
Guest
gobluetwo

I don’t think you know how this whole “customer support job” thing works. The people you’re speaking to – even the supervisors – don’t have the latitude to just make up rules and accept money from customers for things that aren’t allowed just because they or the passengers think it makes sense. And you weren’t speaking to any policy-makers, just one of the front-line people who has limited latitude in terms of how s/he can support you. That you bought the ticket from a consolidator like Student Universe made your options that much more limited.

noahkimmel
Member
noahkimmel

This will hit Delta particularly hard in its core corporate business. Most of us book on corporate portals that force us to book the lowest price available ticket. So if basic economy shows up for $10 cheaper, I am forced to book it, leaving Delta without the revenue, and me, a Platinum Medallion, frustrated that I cant use any of my benefits.

Nick Barnard
Member

I wonder if they’re going to be filtering these out of the corporate portals and only offering them in the consumer channels?

MeanMeosh
Guest

That was my thought as well, though how would that work? Based on Cranky’s screenshot, it looks like Basic Economy is a separate fare basis code. Can corporate portals be set up to ignore specific fare buckets? At my old job, I don’t think our portal could do that; it was Orbitz-based, and by default would just return whatever the cheapest fare bucket was for a particular itinerary. You’d have to call the call center if you wanted to override with a specific higher bucket (and either pay the difference out of pocket, or hope expense compliance didn’t find out).

Alex Hill
Member
Alex Hill

It seems to me like making the E fares only available directly from Delta for everyone (not just corporate travel agencies) would address the biggest issue with these fares (lack of transparency when purchased through other ticket agents) and also drive more traffic to delta.com. Spirit doesn’t show up on online travel agents, so they’re not competing head-to-head for views on Expedia anyway.

Nick Barnard
Member

Alex, good point.. I wonder if Delta is putting these out there to compete against more than just Spirit?

stan
Guest
stan

i work for a giant consulting company where a large number of employees fly every week. currently our online booking tool is NOT filtering E class fares. it’s becoming a real pain to try to get a fare that is not an E using that tool.

the nature of our business means that we have people who are changing flights. i would think that the company would want to filter E fares to at least enable people to do this and not forfeit the entire fare.

A
Guest
A

I agree, it doesn’t make sense not to charge people for the services they decide they want after the fact. This sounds akin elitism, if you don’t pay enough up front you’re lower class and we will bar you from our benefits even if you find the $$$ to pay up later.

Seems to me that the airlines don’t want to cater at all do the price conscious leisure traveler so they go out of their way to make their “cheap” booking as miserable as possible.

Jason Steele
Guest
Jason Steele

Pretty devastating. Great find on Expedia!

Oliver
Guest
Oliver

Someone at Delta didn’t understand this whole unbundling thing.

Carl
Member
Carl

Maybe the reason that the upsells aren’t available is a DL IT limitation? It’s not like they have the most informative or functional website.

Nick Barnard
Member

Yeah. I was thinking it might be an IT limitation that hopefully they’ll be removing soon.

The side of the IT stuff that pleasantly surprised me was that the OTAs are starting to move and communicate these things a bit more clearly. Sure it isn’t perfect but four years ago, there would’ve been nothing. They’re not perfect, but at least the IT groundwork has been laid so marketing and customer service can actually tweak the thing better.

Alex Hill
Member
Alex Hill

Why would that be true? DL has the IT to do upsells on every other fare. I expect that it actually took some IT work to prevent upsells from E fares.

Carl
Member
Carl

I presume the bag fee upsell is available. But they don’t want these pax to be able to buy up to Comfort, and they don’t have an upsell for seat selection, nor one from no-changes to change-fees available. I’m sure these fares would require custom IT to make upsells work.

southbay flier
Guest
southbay flier

At this point, the up sell is the $10 you would pay for the next lowest fare code (V) that gets you a seat assignment.

I’m just waiting for families who buy this E fare and get scattered middle seats and then they try to negotiate with other people who paid more for their better seats. That could be very entertaining.

Nick Barnard
Member

I think the real problem lines in when families are on different bookings. It’d behoove Delta’s IT team to first aim to put each booking in seats together. If they can’t do that, then split up the bookings with people older than 20 but younger than 60. The goal here is to keep kids near their families, and older people near their families. Delta knows how old passengers are since they have to provide their birthdate when booking.

David SF eastbay
Member
David SF eastbay

You are right, and people will get mad since it’s DL (or UA/AA old established carrier). Anyone flying Spirit/Allegiant for the first time as an example have heard or read stories about them and how everything is extra, so may read everything more carefully or just expect to get nothing beyond the price of the ticket. But those who have flown DL before may not, assuming they are just saving $10 (or whatever the difference is) and not read everything since they would be used to DL and paying to change, get a seat, etc. They are the ones who… Read more »

jaybru
Member
jaybru

The airlines are risking a major backlash from the general public, with lots of lawyers, over pricing, pricing transparency, such that airline service will become subject to the general rules of commerce established by the Federal Trade Commission and DOT’s authority scrapped. Eventually, ticket restrictions against re-sales will be ruled a violation of commerce law. The secondary market will be the rage. Write and give me a ticket and I will be allowed to do with it what I want. What, this ticket has no value? Who says I can’t re-sell it? I own the ticket to ride and you… Read more »

Henry Harteveldt
Member
Henry Harteveldt

At its Investors Day presentation, DL’s Glen Hauenstein stated that 80% of the people who were presented with the Basic Economy option chose Main Cabin instead. Now, that says a lot about the appeal – or lack thereof – of the basic product. Whether intentional or not, it doesn’t seem like Basic Economy will be a “barn burner” of a fare. Basic Economy was clearly created to not appeal to the business/frequent traveler. DL has said corporate clients can request “E” Class inventory (Basic Economy’s booking inventory) be suppressed. Given its rather minimal savings, draconian restrictions, and lack of elite… Read more »

Jim
Guest
Jim

I think Delta is ruining its reputation here by lowering itself to Spirit’s level. It would be like Whole Foods starting a bargain bin to compete with Walmart. When you book Spirit, you know what you’re getting. When you book Delta, you expect a certain standard, and if you aren’t paying attention, you will be livid that they let you down.

Henry Harteveldt
Member
Henry Harteveldt

Agree.

Chico Flyer
Member
Chico Flyer

The real winners seem to be Southwest & Spirit. Delta seems confused about what airline it wants to be. Does it want to be an airline catering to premium fliers (who are its core market) or a sometimes-bottom-of-the-barrel no-frills carrier (but only on certain routes). Southwest and Spirit are much more clear in their identity. The next step (and it will be coming) is that these fares won’t be eligible for miles. It also seems like it will lead to not only complaints against the airline, but also outbursts against the airline employees, gate agents, and flight attendants.

Henry Harteveldt
Member
Henry Harteveldt

How is Delta going to be a “no-frills” carrier? Nothing about its onboard experience has changed. Basic Economy fare passengers receive the same onboard experience as all other “Main Cabin” passengers.

Nick Barnard
Member

Well.. Delta is continuing to work on the old idea that American came up with in the 80s. They figured out you could compete with the leisure charters by putting them on the same plane and just tweaking the pricing rules.. Delta is doing the same thing, the leisure market has just gotten that much cheaper.

Henry Harteveldt
Member
Henry Harteveldt

That’s a pricing strategy, not a product strategy.

Nick Barnard
Member

Why can’t it be both a pricing and a product strategy?

Justin
Guest
Justin

“Surprise, you’ve been put into Basic Economy. And look at the bottom right. It actually says that the ticket is changeable for a $200 change fee”

I’m guessing Expedia will be on the hook to actually honor changes for $200. As a travel agent with direct access, they should be able to do so procedurally. They’ll probably upgrade their IT if they end up giving away enough to Delta. They may know this discrepancy and just figure they’ll spend less this way–honoring the changes for $200.

manolin
Member
manolin

Delta at their investor day mentioned that 80% of the travelers click thru and buy the higher fare i.e. economy instead of basic economy. Essentially a smart way of making sure you appear price competitive for the tier of travelers looking for s seat and no more…and not losing the other economy passengers to Spirit.

Josh V
Guest
Josh V

I think another problem is that the various online travel agent sites are showing the Delta E class fares up front in search results, meaning Delta will appear to be cheaper than United and American. It will in fact BE cheaper if you’re willing to accept the minimalist product they are offering (“Just get me there, darn it!”). DL claims this is to compete with the low fair guys like Spirit and Allegiant, but it will also give them a leg up over their cousins at UA & AA, which means you can expect to see those two copying this… Read more »

Dissed in MN
Guest
Dissed in MN

I just walked into the Expedia trap – Our family of four haven’t flown in a while so weren’t aware of the new basic economy class that Delta has. When I called Expedia, the rep says their contract doesn’t allow them to sell the X class fare (so it’s not an IT glitch as assumed in a previous comment above). He offered to upgrade us to the X class, for $200/person plus any fare difference. So they can’t sell X class, but can upgrade you to X class for a fee and make some more money out of you. This… Read more »

Henry Harteveldt
Member
Henry Harteveldt

Dissed in MN, did Expedia not advise you that you were booking Basic Economy? On Delta’s website, the customer must check a box acknowledging the various restrictions/limitations associated with the fare.

Dissed in MN
Guest
Dissed in MN

Wow, I didn’t expect anyone would respond (and so quickly too). Expedia doesn’t tell us specifically that it’s basic economy, just that a seating chart is not available. We thought this may be an IT problem, since everytime we searched for this route, it generates the same no seating chart available comment. After we realize what happened, just for curiousity, we searched for the same flight but picking “economy premium” under advanced option. This time, Expedia says no flights can be found for that option. Bottom line, my reason for posting our experience here is so other people can avoid… Read more »

Dissed in MN
Guest
Dissed in MN

Just want to give an update – we ended up on the standby list just like the other poster below (John). However, the list also says there are still open seat (around 16- 19 both for outbound and inbound) although the seat assignment chart was shown as full. We got to the gates as soon as we could, and luckily both times the agent was able to seat us together, at the last row. Since we travelled with kids, they also let us board early and we were able to find space for our carry-ons. Both flights turned out to… Read more »

John
Guest
John

I booked one of these garbage fares in November under the pretense that I could pick my seat at check-in. Wrong. My seat will be assigned at the gate, and I am currently on the STANDBY LIST. I don’t even know if I have a seat. I just wrote this to Delta. Hopefully they respond. To Whom It May Concern, In November 2014, I booked a “basic economy” roundtrip fare. I had the choice of booking through Southwest at the same price, but chose to book the Delta fare to be with my brother, who is a Delta medallion flyer.… Read more »

BigBaldJon
Guest
BigBaldJon

@John – Did you get a reply from Delta, and more importantly did you get on the flight. At no point has anyone mentioned standby, and now im person number 10 on tomorrow flight…

I’ve just fallen into this trap via a dodgy flight sale site (yes serves me right), but I bought in good faith with no obvious / clear indication of these restrictions

Going to be a tough nights sleep waiting to find out..

Don
Guest
Don

It now appears that adding insult to injury, you can’t earn skymiles with a basic economy ticket either. I have to wonder why anyone would bother to be a skymiles member if the vendor is now essentially forcing you to pay more for a ticket to earn what is essentially a loyalty award that is provided for selecting a premium airline. This is madness. If I get stuck in these tickets for work, i am done with Delta and I make Platinum status every year. What idiot came up with this brilliant idea?

Cassandra
Guest
Cassandra

Made the mistake of a life buying this fare. I don’t anticipate changes to my plans and I only travel with a purse and a small backpack so I didn’t have a problem with the restrictions which state “Seats will be assigned at check-in” – I checked in about 23 hours before my flight and was not given a seat assignment. I called Delta twice and the reps said “your definition of check-in may be different than ours.” I replied that, I got an email from Delta telling me to check-in so I am using their terminology. The boarding document… Read more »

Nick Barnard
Member

23 hours before the flight or 15 minutes before the flight. Why does it matter when you get your seat assignment if you don’t get to choose it?

Henry Harteveldt
Member
Henry Harteveldt

In fairness, if Delta stated “at check-in,” it’s not unreasonable for a traveler to think “when check-in opens.” If Delta’s policy is, indeed, that seats are assigned immediately prior to departure, then they should say so, to avoid ambiguity, customer confusion, and customer dissatisfaction.

Skip
Guest
Skip

I just became a “victim” of this dumb Delta policy and it is ironic you mention Spirit because I flew on them a couple of weeks ago. I booked a Delta flight through Orbitz and I assumed it was just a normal main cabin fare. My friend wanted to upgrade me to First Class, as a gift, and he couldn’t because, as we both discovered, I am on Delta Basic Economy. I thought there must be someway around this so I called Orbitz and they could do nothing at all. Delta, of course, would not do anything. What burns even… Read more »

Dave
Guest
Dave

I completely agree! I don’t even want to travel anymore. It is complete BS now and too expensive anyway.

Dee
Guest

Thank you for this explanation. I never had this problem before and have been booking mostly through Orbitz for over 10 years. Although I noticed at the time of booking you can’t change your flight details, I found out later when I went to choose my seats that it wasn’t an option. Next time I’ll pay more attention.