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How ‘Basic Economy’ Actually Makes You Pay More to Fly  

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misman
(@misman)
Joined: 10 years ago
Posts: 14912
June 10, 2017 4:10 pm  

https://www.bloomberg.com/news/articles/2017-06-09/how-basic-economy-actually-makes-you-pay-more-to-fly

This pricing shift represents a structural change for an industry that’s struggled to make fare increases stick. Network carrier efforts to boost airfares are often undone by a variety of factors: JetBlue Airways Corp. or Southwest Airlines Co. may decline to join in the hike, a growth airline might offer even lower fares, and a market swoon or terrorist attack might dent demand.
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American Airlines Group Inc. has said that roughly half of buyers in its initial test markets trade up from the lowest basic fare to the more expensive economy counterpart, while United said 60 percent to 70 percent of its buyers choose standard economy over basic. (It’s worth noting that United’s basic fare has more onerous restrictions than those at American and Delta.)

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NYCUA1K
(@nycua1k)
Joined: 9 years ago
Posts: 4971
June 11, 2017 8:04 am  

The did predict this very phenomenon back in February. The purpose of 'basic economy' is to get you to pay more:

NYCUA1K, post: 2781379, member: 43667 wrote: I just love the warnings because they are a dead give away that United does not expect or want to sell very many basic economy (BE) tickets. The BE fare class is designed to be a “scarecrow fare” that gets people horrified about how little BE offers and then, transitively, it would expose just how 'awful’ “similar service”, or lack thereof, offered by Frontier, Spirit, etc is in relation to UA’s standard economy. Therefore, the whole point is to get people to buy standard economy tickets by scaring them away from both their own BE and from budget carriers.

The truly unethical aspect of this ploy is the deceptive marketing, which wants to make you believe that BE tickets cost about the same as tickets offered by budget carriers (false; the latter remain cheaper) and that they are much cheaper than their own standard economy tickets (also false; the differential seems to be around just $20).

The result will be that the ploy will “generate a billion dollars in incremental revenue” as UA executives boldly predicted. It will be $20 more here or $5 more there earned as folks shun BE tickets in favor of standard economy. Voila, Mission Accomplished!

Q.E.D


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satman40
(@satman40)
Joined: 7 years ago
Posts: 4851
June 11, 2017 3:14 pm  

Even Amazon is getting in on the game with EBT Card Prime [email protected] $5.95, budget members increase returns, and maybe purchases, lot to be said for supplemental incomes.,

We have to wonder if they will no be pledged with returns, as for the airlines, one buy a budget access, and someone else carries their luggage on the plane, and saves them a seat.

Many services gained popularity by allowing their security to be compromised, as in the case of DirecTV, and even the cable company.

It is just a game, and the companies know the game..

Reminds me of Credit Card Churning,,,:D

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Andrew98
(@andrew98)
Joined: 3 years ago
Posts: 3
August 9, 2017 10:34 am  

Airlines are playing a big game and we people are not even aware of it. Its quite possible that this game will go on forever without us even realizing it.


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Geo
 Geo
(@geo)
Joined: 10 years ago
Posts: 1815
August 12, 2017 11:03 pm  

Of course it ups the overall revenue. Why would you ever think it would do differently? That's what businesses do. They increase the price of the stuff you want until demand equilibrates with supply.

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Tivoboy
(@tivoboy)
Silver
Joined: 10 years ago
Posts: 471
August 17, 2017 4:05 pm  

We predicted this last fall when we saw the United Investors day slide deck.. the writing was on the wall back then already. It's really trite that UA continues to market this as LOWER pricing, when in reality its the same lowest price that was already in the market (to compete in various markets with competitors and fare sales) and jacked up the AbBE (anything BUT basic economy) fares for all flyers who want to maintain some semblance of benefits. This too shall change, next recession.


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kkua
 kkua
(@kkua)
Joined: 7 years ago
Posts: 12
August 23, 2017 4:55 pm  

You also have to see how the accounting itemizes the overall picture. Anything not part of the fare base is not taxed. Hence, the airlines get 100% of the auxillary upsold services.

I've stopped looking at cumulative comparing sites because of this bait-and-switch effect. Now, I just do directly to airline's website. Paying a bit extra means I may have a chance of an upgrade, priority queues, using a lounge and less headaches. As humans, we are myopically trained to see immediate results without seeing the bigger overall picture.


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JaneJohnson
(@janejohnson)
Joined: 2 years ago
Posts: 12
September 11, 2018 7:03 pm  

The market requires companies to do so, otherwise they will become bankrupt.


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