United Rushes Out a Semi-Basic Economy Transatlantic Offering

Fares, Lufthansa, United

When I first saw the announcement that United and its joint venture partners Lufthansa Group and Air Canada were rolling out Transatlantic fares without the first bag free, I glossed over the communication thinking it was just an extension of Basic Economy (BE) into a new market. I was wrong. In what I can only assume is a concession to Lufthansa in order to speed up the roll-out of this de facto fare increase, United has opted to introduce what it calls “the first step towards a Basic Economy product” over the Atlantic.

What makes this a “first step” instead of an actual Basic Economy roll-out? Well, let’s start by looking at what’s different from a regular economy fare:

  • There is no first checked bag included. As with Delta in its Transatlantic BE fares, United will charge $60 for the first bag.
  • Fares are non-refundable and non-changeable.
  • These fares can’t be combined with non-“almost Basic” fares.
  • Upgrades are not allowed.

If this sounds like a Basic Economy fare, well, it’s because it is almost a Basic Economy fare. So what’s different? Three things up front and one big thing behind the scenes.

The three things you’ll notice are:

  • Seat assignments are still allowed as normal.
  • Carry-on bags are not restricted
  • Boarding occurs in normal boarding groups, not at the end.

This just leaves me wondering which of these three things United is looking to implement to make it a true Basic Economy fare. If it wants to match Delta and American, it will put some kind of restriction on seat assignments. (Delta doesn’t allow them, but American will let you purchase them.) United will also likely push everyone to board last. But carry-on bags have not been restricted by the others, so it’s likely United will fall in line on that policy.

Behind the scenes, this is implemented in a much different way than Basic Economy. Let’s see if I can find a way to explain this clearly.

Airlines file a variety of fares that book into specific fare classes, or “buckets” if you will. For United, the lowest fares internationally fall into K class with L, T, S, W, etc being for increasingly-high fares. United may have fares filed in K class on a specific route, but then separately it determines how many seats to sell at that fare. If the flight is doing well, then K will be closed off so only higher fares will be available for sale.

With Basic Economy today, United has a slew of fares that are filed as discounts off the regular selling fares. For example, the KAA3AXDS fare basis is the lowest regular economy fare. But United has the KAA3AXBS at $25 less in Basic Economy. Usually the first letter of the fare basis is the class it books into. But with Basic Economy, United actually has it book into a separate class, “N” class. The fare, however, is still tied to the lowest selling economy fare. This means United has two checks on itself. First, to sell this Basic Economy fare, K has to be available and selling in regular economy. Second, N has to be open for sale as well.

With this new almost-BE offering over the Atlantic, United is not using N at all. Instead, it is filing fares in K, L, and T for travel originating in the US and K, L, T, S, and W for trips originating outside the US. This doesn’t mean that all fares in those buckets will be almost-BE fares. They will also have an upsell fare available in the same class. United just loses the ability to turn off BE fares by shutting off N class as it can domestically.

From the customer perspective, this doesn’t matter. It’s just how United structures things behind the scenes. I know I’ve probably last half of you right now either out of confusion or sheer boredom, but this seems like an awfully strange way to handle this kind of roll-out. So why is United doing it this way? I honestly don’t know for sure, but I am happy to speculate that this is Lufthansa’s doing.

Remember, United is in a joint venture with Lufthansa Group and Air Canada for travel over the Atlantic, so it can’t just file any fares it likes. It has to coordinate with its joint venture partners. The way this is being set up is exactly how Lufthansa does it within Europe today. Lufthansa’s Light fare (also what it is calling this Transatlantic fare) has no checked bag, isn’t changeable/refundable, and requires payment for a seat assignment. The Classic fare has none of those restrictions. The existing intra-Europe fares all book into the same fare classes, just as this new product will. Lufthansa offers Light fares all the way up the fare ladder, however, and even does it on the most expensive full Y fares. (Remember, United started out doing this with Basic Economy but reversed course quickly.)

I assume this means either Lufthansa can’t technically create a Basic Economy-style product with N class (or something similar) or it just doesn’t want to do it. Either way, I’m assuming United has agreed to follow the Lufthansa model just so it could get something in the market to boost revenue. Like Basic Economy domestically, this is a fare increase for those who need to check a bag or have ticket flex. With oil prices rising, United was probably eager to get some kind of revenue boost even if it’s only a half-measure. Better to get some now and then do a full roll-out later when it can address the other lingering issues.

Now all we can do is speculate about what other restrictions will follow when a true Basic Economy product gets introduced sometime down the line.

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15 comments on “United Rushes Out a Semi-Basic Economy Transatlantic Offering

  1. N is used for one of LH´s Premium Economy fare buckets.. is it possible that would be the reason? Otherwise, given the experience with LH und UA´s IT, some LH PE passengers might be in for a really surprise in irregular operations and rebooking scenarios.

    1. Hermann – It’s possible, but they already run into this problem with Air Canada, which uses A as a coach bucket while everyone else uses it as a First Class bucket. (You want to talk about a downgrade during irregular ops!) So it’s something they could get around if that were the only issue.

    1. “You really need to start doing a spelling and grammar check* before you click “post”.*

      Just helping you out there buddy.

      1. Not in American English. The full stop goes after the quotation mark in British (and Australian) English (except when it’s part of the quotation) but the period goes before the quotation mark in American (and I think Canadian) English.

        (I personally choose to ignore the silly-I-think American convention when not bound by a style guide with a preference, but I certainly don’t consider someone wrong for following it.)

        1. No, Canadian English follows international norms, not American. Not to say that there are not many Canadians who use Americanisms given the overwhelming presence of US media…

  2. I think they will want to wait until they fix the booking class issue until they roll out seat assignment restrictions. Imagine how miserable gate agents will be when 150 pax booked basic economy to go to europe and aren’t sitting next to their families. Being able to control the number of basic economy bookings is probably more important before they upset the unions even further, though i doubt Scott Kirby really cares.

  3. Semi-basic, or basic-semi, nobody explains this stuff better than you do, but…! When I see the word “buckets” used in reference to inventory and fares, I know I am getting into the weeds. I think most airlines have 3 basic “buckets” of inventory/fares: “M” for misleading, “D” for deceptive, and “*” for contact airline.
    So, I’d love to take a nonstop UA Dreamliner from IAD to Zurich in the month of July, 30 days out. Lowest daily fares (checking here on May 31) for the first 30 days of July: $1,302 to $1,647 round-trip or just one-way, outbound, $2,907. To me, just a simple consumer, this pricing is nuts, with or without buckets.

  4. who knows maybe it’s just a way to achieve more flexibility in pricing instead of shoe-honing a stupid fixed negative-differential against the going non-BE rate.Current form of B/E (of all US airlines) isn’t an LCC offering ——

    it’s simply a negative feedback mechanism to get folks to pre-pay to avoid pain down the road the same way the overly commission-incentivized car rental agent would incessantly shove LDW coverage in your face.

  5. Airlines that have partnerships do not need to use the same booking class to do the same function; they have conversion tables between their revenue management and reservation systems.

    United simply should not be forced to offer a disconnected experience from its domestic product because of technical issues. It might well be that LH told UA that they did not want a UA-style of basic economy product as part of their joint venture. UA’s decision to not allow a full size carry-on was not well in the US (along with AA) and is less necessary on widebody aircraft which operate the majority of transtatlantic flights. Given that UA’s domestic basic economy product is more restrictive than DL’s and DL offers a basic economy product with its joint venture partners which compete with LH, I suspect that the decision to offer a different product was competitive and influenced by UA’s partners rather than for technical reasons.

  6. United is last to market here as both the Delta/SkyTeam/Virgin and BA/OneWorld JV’s brought this out a couple of months ago (and DL started on its own more than a year ago on select routes). And I suspect that in the low fare wars between the legacy carriers and the likes of Norwegian, WOW Air and Primera, UA has been squeezed by having to lower its full service fares with no buy up and ancillaries in the way the DL and AA/IAG led partnerships have.

    And I also see Lufthansa holding them back. Firstly, LH isn’t seeing competition from Norwegian et al in its hubs, as the LCCs are primarily targeting western and southern Europe (not that Norwegian in its current form and perilous financial position is going to last much longer). Secondly Lufthansa already has a more established “low cost” transatlantic subsidiary in EuroWings that offers a more basic experience for “less” so another reason for LH not to see this as a priority (yes I know IAG has Level and AF/KL has Joon but they’re a few years behind EW). And as far as I’m aware EuroWings isn’t in the JV so LH keeps all that revenue, which mitigates the loss of JV revenue by having to absorb the costs of less ancillary. That’s what a revenue sharing JV gets you, whereas a revenue and cost sharing one (DL style) brings all parties together to solve the problem as one.

  7. And oh well, back to my company’s travel department and corporate travel agent to see what they’re going to do with these fares. It took them a while (and several complaints by senior managers who got burned) to pull domestic BE out of their system. Let’s see how long it takes them to act over TATL BE, though as mentioned before the others (DL/SkyTeam and AA/IAG) are already selling them, so maybe they’ve fixed the policy already. In the meantime I’ll bookmark this thread and the link to make sure I can avoid them for my flights.

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