Implications of "Business Basic" testing
 

LALF reveals that a recent investor call confirms the testing of "Business Basic" fares. I know that was an earlier thread that was all speculation, but it seems Delta acknowledges it is currently in survey/test mode.

Besides the obvious concern that it will, yet again, affect upgrade availability and space for purchasing F/J last minute, how it will affect SDC? Will RUC/GUCs pre-confirmed go into Business Basic or regular Business, etc? Delta is always going to try to get every penny possible for up front, but I really can't see how this ends any way but poorly for status fliers.

For context (skipping the bloggers and going directly to the primary source), here is what was said on Thursday's earnings call (in summary, they won't reveal details at this point).

https://s2.q4cdn.com/181345880/files...nings-Call.pdf


Leslie Josephs
Reporter, CNBC

"Hi. Good morning, everyone. Thanks for taking my question. Just curious on the segmentation at the front of the plane. Is that something that you plan to roll out in 2025 or 2026? And would it look something more like a basic business where you – the customer doesn't have a seat assignment or something like that? Or do you plan to have kind of a fancier or more desirable seat within Delta One or one of the other first-class cabins? Thanks."


Glen William Hauenstein
President, Delta Air Lines, Inc.

"I think we're going to reserve comments on that until we roll it out. I think we're testing it with customers today, and we're doing a lot of surveys. And we haven't rolled it out yet, not because we don't have the technological capability, but we want to make sure that customers understand what we're putting in market and that they find value in it."


Leslie Josephs
Reporter, CNBC

"Okay. Could you tell us what you're testing exactly, currently?"


Glen William Hauenstein
President, Delta Air Lines, Inc.

"No. No, we can't. But thank you for the question."

This has been discussed / speculated on ad nauseam and I think there is a separate thread that this may get merged into but to answer your questions directly based on some reasonable assumptions:

1) It will only impact upgrade availability and purchasing F/J last minute only so much as this will be another tool in the toolbox to increase paid F/J penetration (if Basic Business remove SkyMiles earnings on fares, it will likely be 5-7% cheaper on that basis since that is a real cost to Delta which could increase uptake for those who just care about flying F/J.. of course, in exchange, "Classic" Business will then be increased 5-7% as well so you're paying more for what you used to get).

2) SDC may be restricted on Business Basic fares - no one knows exactly what the fare restrictions will be

3) I would imagine that RUC/GUCs will continue to book into "regular" business because the differentiators between Basic Business and Regular Business will incur zero marginal cost to Delta (SkyMiles earnings will still be generated off of the base fare, seat selection costs Delta nothing, Medallions will already have access to free checked bags via their original fare combined with status, and most PM/DM will have some way to access lounges already - perhaps there would be a small marginal cost difference for Skyclub vs. Delta One lounge for GUCs but we're talking about a few bucks and nothing super material).

Who knows, it may never come to fruition anyways. Delta is rightfully taking their time because the "Basic Economy" levers don't apply (they want premium flyers to be in their loyalty program, they need it to feel sufficiently differentiated, etc... but just not allowing seat selection alone isn't a compelling enough value prop to force people to pay hundreds of dollars more for that privilege).

Oh no! This will not be good for business class on Delta or its travelers. Anytime Delta unrolls these "innovative" ideas it make it worse for all of the flying public. We have seen this with the huge downgrades to SkyMiles programs and lounge access at Delta. When Delta implements these "enhancements" it has made the industry worse as airlines like United copy. The lack of competition in the U.S. and past mergers has allowed Delta the ability to make "enhancements" as airlines like United just follow and copy and the consumer has little choice in many U.S. markets.

We’re going to close the speculation threads until there’s actual information. There is an existing thread for the sales user interface.