United Airlines will roll out a new “Basic Economy” fare class early next year as it becomes the latest big U.S. carrier to take on a new wave of encroaching discount rivals. In a notable restriction, United says its Basic Economy fares will preclude most customers from bringing full-size carry-ons onto the plane.
United revealed its plans for the no-frills fares on Tuesday, confirming a move that many industry observers had expected.
Delta Air Lines has already rolled out a similar fare type while American has said it will introduce its own Basic Economy fares next year. American, Delta and United are the three biggest U.S. carriers.
The stripped-down fares come as those carriers are increasingly faced with head-to-head competition against so-called ultra low-cost carriers (ULCCs) Spirit, Frontier and Allegiant. Those airlines are known for rock-bottom base fares but they charge extra for virtually everything beyond a spot on the plane. Seat assignments, beverages and stowing a bag in an overhead bin all cost extra.
That’s made it harder for big airlines like United, American and Delta to compete with their ULCC rivals on price, especially in an era where customers can easily compare different carriers’ fares via Internet booking sites. For example: A $49 one-way fare on a ULCC like Spirit or Frontier often compares favorably on such sites, even though prices on full-service carriers typically include fewer add-on costs.
The Basic Economy fares are an attempt by those full-service airlines to offer bargain fares that can rival those offered by their ULCC rivals. But the tradeoff is that fliers don’t receive all the perks that they may be used to when flying on one of those big full-service carriers.
As for United, its Basic Economy fares will roll out next year in select markets, presumably where United faces significant ULCC competition. Rules of the fare type will mimic some of the restrictions in place on the ULCCs.