Booking flights this summer has become more expensive due to the introduction of Basic Economy, a lower carrier than Economy
Statistics have shown that the introduction of the Basic Economy airline carrier has triggered passengers to level up and choose Economy. The reasoning behind it is that nobody wants the cheapest anything, so they make an effort to level up.
Usually $15 to $30 lower than traditional economy, these tickets aim to allow American, Delta, and United airlines to compete better with the ultra-low-cost carriers such as Frontier Airlines Holdings Inc and Spirit Airlines Inc. Their target is clients for whom price is more important than convenience, as these tickets come with additional restrictions. For example, there is no advance seat assignment.
Predictably, basic economy has been understood as another step in the industry’s drive to eliminate all the comfort from steerage class. More than that, there is an interesting game going on: along with adding the new bargain-fares, carriers also raised the prices for the traditional economy seats. The strategy is that if a consumer sees that there is an even lower class, he will pay a little something more for better quality.
On the other hand, restaurant wine lists have demonstrated that most people run from price extreme. The cheapest bottles are suspect, while the most expensive ones are unaffordable. The same thing is what’s going on with airfares. American Airlines has mentioned that half of buyers who were part of the initial test traded up from the lowest basic fare to the more expensive economy fare. United, on the other hand, said that 60-70% of its buyers choose standard economy over basic.
“Customer segmentation, to me, is one of the hallmarks of what’s different about the industry this time,” Paul Jacobson, chief financial officer at Delta Air Lines Inc., said in a statement