The Economics of Airlines' Basic Economy Strategy

www.wsj.com

The rise of cheap basic economy fares loaded with restrictions is the latest strategy in the chess match between airlines and corporate travelers. Delta, United and American airlines, are expanding basic economy fares to all their domestic routes, not as a means to compete against discount carriers like Spirit, Frontier, and Allegiant, but to get business travelers to spend more. Basic economy tickets lack advance seat assignments, typically board in the last group, often prohibit carry-on bags in overhead bins and aren’t eligible for upgrades or any kind of changes - these frustrations have led most corporations to block economy fares from their displays, according to travel management companies.

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