American’s Rationale For Expanding Basic Economy to Mexico and the Caribbean Sounds Like Garbage, But It’s Probably Not

American, Fares

Though American and United both began rolling out Basic Economy fares around the same time, United rushed it and made mistakes. American, however, has been more cautious, only introducing it slowly throughout most of the lower 48 US States (with a few test routes beyond) in the last couple months. Now, American has leapt forward by putting these fares into most of Mexico and the Caribbean. The rationale given in its announcement to travel agents sounds like bull even though it technically, probably, isn’t. Still, I wish somebody would write these things like a normal human being.

In the announcement, American said Basic Economy fares were rolled into most Mexico and Caribbean markets for sale on November 29. Here’s why:

There is probably not a single travel agent whose gut reaction will be to believe that. When I read it, I just rolled my eyes, because it sounds like such standard corporate-speak that it couldn’t be true. Whenever an airline makes it sound like it’s doing something out of the goodness of its heart to help travelers, the airline sounds ridiculous.

And of course, a quick look at fares seemingly proves that point. Here’s a screenshot of what filed fares looked like before the change for a random travel date next July between LA and Cabo.

Don’t worry about all the shorthand in here. What you need to know is that the lowest filed fare before taxes was $89 one way. Now here’s how it looks now.

You can see the lowest fare is still $89, but it’s now Basic Economy. Meanwhile, the regular coach fares are $25 each way above that.

So what does this mean? Well, it’s a de facto fare increase for American. Basic Economy fares do not allow a large carry-on (except for elites/credit cardholders). Travelers can’t get a seat assignment, and changes aren’t allowed. They also board last. In other words, while the fare appears the same, to get the same product as you would have received a few days ago, you have to now pay $50 more roundtrip.

American has told us that about half the people who are presented Basic Economy options opt to buy up to the regular coach fare. That means that about half the people who will be buying low fares on American on trips to Mexico and the Caribbean will pay more than before.

It’s hard to reconcile that truth with the pitch that American is doing this for the benefit of the traveler. But of course, it’s all in the wording. Let’s break this down.

In an effort to provide better access to lower fares…

We just talked about how half the people buying low fares will now be paying more than before, so how the heck does this provide better access to lower fares? Think about it this way. Before, if you walked into Doug’s chocolate shop, you might be able to pay $1 to buy the best chocolate on the market. Doug may not have made all that much money on it, but Bob’s chocolate shop was selling lower quality chocolate for the same price. During the slow months when Doug couldn’t find enough discerning chocolate-lovers to buy his chocolate for a fair price, Doug had to lower prices to remain competitive.

But then Doug came up with an idea. He would still sell that $1 chocolate, but instead of selling his best stuff, he’d substitute that cheap crap you get in the drug store checkout lane. Then he’d raise the price of his really good chocolate to $2. What he found out is that having that $1 chocolate was necessary to get people in the door. But once they were in Doug’s shop, half the people were willing to pay more to get the better chocolate. Knowing that, Doug was willing to make that $1 chocolate available more often, because he wouldn’t actually sell that much of it.

When you translate that into American’s situation, you run into two problems with the way this is worded.

  1. Half the people will pay more, so while they may have “better access” to lower fares, they’re going to be less likely to take advantage of them. The statement may be technically true, but it doesn’t feel right.
  2. More importantly, there is absolutely no way to verify that American actually is making that low fare more readily available. We just have to take the airline’s word for it, and of course, nobody will.

Let’s look at the other half of the statement.

…and continually meet your travelers’ needs…

*sigh* We’re back to that say-nothing corporate-speak. It lacks substance, but the canned nature of the wording just makes it sound false.

So yes, it may very well be true, but American is doing itself no favors here with this kind of stilted statement. What should it have said?

American shouldn’t beat around the bush here. It should just be honest.

Our introduction of Basic Economy in the Continental US has shown us that we can continue to be competitive with low fare airlines by adding restrictions to our lowest fares and making them widely-available instead of having to offer our full product on a more limited number of seats. Because of this success, the next phase of the roll-out began November 29 with Basic Economy going into many US to Mexico/Caribbean markets. We understand that this adds complexity to your search, so we want to make sure to provide you with as much information as possible about the product and how to sell it so you can be prepared.

With that, American could go into all the details about the product not only help travel agents sell Basic Economy properly but also encourage upselling. There may very well be a benefit to travelers here in that lower fares are more widely available. But we don’t know that for sure, and American isn’t doing a good job of convincing anyone. Maybe I’m just reading too much into a simple travel agent communication, but this kind of stuff just bugs me, because it could be fixed so easily.

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27 comments on “American’s Rationale For Expanding Basic Economy to Mexico and the Caribbean Sounds Like Garbage, But It’s Probably Not

  1. They should have said there was an “enhanced travel experience” in basic economy. You sit closer to the lavatories and it’s safer sitting at the back of the plane.

    1. Add to that less bothersome carry-on luggage to mess with and it’s win-win all the way around! [rolling eyes].

  2. While your statement has less corporate-speak, it is also likely one that will bring a truth in advertising claim against American at the FTC as it claims to offer more availability of their lower fare.

  3. I’d like to know how the “buy up” rate to regular economy varies across routes and markets. With vacation travel and visiting friends and relatives presumably accounting for a higher proportion of trips to Mexico and the Caribbean, which would imply a more price sensitive crowd, perhaps the buy up rate to regular economy for those destinations may be a little lower.

    It would be interesting to know how well American can estimate the “buy up” rate on new routes based on its historical data of price elasticity of demand on the same routes.

    1. Kilroy – I’d like to know that too, but I’m not sure we can get that out of the DOT data, and AA sure as heck won’t tell us. For leisure, I think there may be the opposite effect. When families fly together, they want to sit together, so they may be more likely to buy up despite the cost. (Yes, if you have little kids you’ll be sat together at the airport, but that’s stressful and many families don’t want to wait and take the chance.)

      1. Makes sense. One could definitely posit theories either way on that issue.

        From what little I have read (and seen at gates), Caribbean basin natives flying to/from their home countries frequently bring a lot of stuff with them, including things that may seem odd by American standards, but it’s tough to blame them.

        1. Kilroy – Agreed. Yes, Caribbean residents tend to bring a ton with them but not onboard. That’s more about checked baggage which is the same either way.

  4. The only time basic economy might be “worth it” is if you have no luggage to carry-on or check and you can live with a probable middle seat. Other than that, they are ripping people off. While it looks like a $25 savings, all the aggravation and inability to check a bag without paying that $25 that you just “saved” nullifies everything. Awful.

    1. American’s price differences aren’t always $25. I’ve seen fares where Basic Economy was $100 cheaper.

  5. This is exactly the argument being made against basic economy from its inception: It is a penalty fare increase. Instead of LOWERING the fare and making it ‘basic’ these carriers have decided to take the lowest existing fare and just re-brand it ‘basic’. It also makes elites have to PAY in order to use the benefits they’ve EARNED, and that’s beyond infuriating. If there ever was a case to be made about lipstick on a pig, these basic junk fares are textbook examples.

    1. Instead of RAISING *ALL* the fares and keeping the inclusions, these carriers have decided to take the lowest existing fare, strip out some features, and re-brand it ‘basic’.

      Yes, it’s a fare increase if you want to keep the features of the previous fares. Airlines have been increasing/decreasing fares since deregulation and they’ll keep doing it. Would we have been happier if they introduced the new fares at $15 less than the originals and then increased both basic and standard by $25 a year later? Probably…

    1. Exactly! I have been looking at flights from DC to Vegas. Spirit and Frontier came up as the cheapest but with bag fees (we’re checking one each at least), Southwest was cheaper so I booked them. For Salt Lake to Portland (OR), Delta offers basic economy but Alaska doesn’t so I will probably fly them.

    2. Substitute JetBlue and you’ve got my plan too. Or Alaska. Might even fly Southwest on one trip because I’ll have golf clubs with me (normally I avoid WN because of the “bingo boarding”, the frustrated entertainer FAs, and the fact that every time I’ve flown then within Florida the FAs have been about as cheerful and helpful as Kim Jong Un’s border guards. YMMV.)

      Heck, even Spirit and Frontier are, at least, transparent about what they do with prices, they don’t go around calling fare increases for half a given group “making lower fares available”

  6. Thanks for shining a light on American’s corporate speak, which intends only to confuse and mislead.

  7. by not offering real lower fares they are leaving Spirit to get more market… they do offer real low fares and now they are more reliable than one year ago, an “they tell it like they act and do”. So, The more lies or half trues AA and other legacy tell, the better Spirit will do..
    specially in the Caribean

  8. Doogie’s running a chocolate shop? How many hours a week is he there? I mean, he is running an airline…

  9. Nice analysis. I’ve been seeing the basic economy for a while on DL and found that on the coveted time slots they are usually offered but if I’m willing to fly the red-eye I can fly standard economy at the same fare. In that instance I haven’t been upset as it makes sense to get a little less for the cheapest fare on the best flight. Now I’m not sure if that fare was std. economy prior to but at least as it appears now. I wouldn’t ever limit myself in that way for $25 but unfortunately I think all too often people buy price alone and then make a scene at the airport. The drama is probably worth it to Wall Street but if I were a gate agent I’d probably be none too happy.

  10. I think you got it right the first time.  It’s a de facto fare increase, just in time for the winter season.  As for the wording, I’m pretty sure most travelers have long ago abandoned the thought that airlines have the slightest concern about either our comfort or convenience, except as far as those qualities are likely to increase their revenues.  It’s flam in a can, but we’re used to it.

  11. I was going to defend the chocolate sold at the locally based drug store here in Seattle, but then more of you Californians might move here and we already have enough people..

    So, has there been any progress better explaining these things at the point of sale when it’s not or

  12. So Doug “baits” people into his store with his low priced chocolate and then “switches” 50% of them to the higher priced chocolate. Got it.

    1. Robert – Uh, that’s not baiting. The people who want cheap chocolate can get cheap chocolate for $1. Some people may want to pay for more, and they can.

  13. Avoid American Airlines all together. They pulled a bait and switch at the Charlotte airport promising a $750 voucher to fly to Savannah instead of Hilton Head. Whisked 4 of us off to airplane handing us tickets and vouchers that turned out to be $500. “Customer Service “ said they would not investigate and there is no appeal process-not even a supervisor. Not a reputable airline.

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