lincolnjkc

The way fares (and revenue management) works, I'd argue that comparing a "today" fare (e.g. the BE fare you saw) versus a "yesterday" fare i(e.g. what you booked) s not a valid comparison -- the valid comparison is "today" economy to "today" BE or "yesterday" economy to "yesterday" BE...eg. the fares available to someone making a purchase decision in that instant.

Searching lowest available fare, I would expect virtually all fares (J, Y, and BE) to be more expensive the closer in you get so someone who bought as "last minute" BE fare (still somewhat surprised that RM is allowing cannibalization like that) is paying more than an advance purchase Economy ticket, but less than someone buying a regular economy ticket on the same day.

emcampbe

jsloan

Good point. Cardmembers will pay the bag fee if checking in with a partner airline. 1K should get one free bag (for *G status), but would have to pay for the second bag.

emcampbe

findark

LH currently sells its own Economy Light fares on TATL sectors, with a baggage allowance of 0 for the ticket, but allows +1 piece for *G. This is likely to be degraded in the future, but for now the policy is pretty clear.

Kacee

So DL management asserted in yesterday's Q2 earnins call that UA (and AA's) punitive BE fares are a "contributing factor" to DL's better revenue performance.

Delta President: United and American are Losing Business Because of Harsh Basic Economy

smxflyer

https://t.co/QYGqsTw7w0

AA is pulling back from the carry-on restriction, validating DL's impression

Kacee

Interesting. Unusually candid admission by Parker that these fares are costing them market share:

I would imagine UA can't hold out long as the only carrier not allowing a carry-on.

And ya gotta love how the market is working - googleflights now provides accurate information about the real "price" of these fares, and consumers choose to buy elsewhere. (If you select, "Overhead bin access included," UA and AA will drop below DL, AS, and B6 in the search results, because their BE fares will be excluded.)

dilanesp

A heck of a lot of chicanery would disappear if fare comparison tools would do that more often.

I recently searched LAX-Edingurgh and WOW was priced at $420 r/t, with DL at $780. But if you factor in WOW's fees, the DL fare may actually be cheaper.

Kacee

Yes. The airlines pitch unbundling of services as providing "consumer choice" but it's really about deceptive sales practices. Just like hotel resort fees.

threeoh

There's a critical difference in that hotel resort fees aren't optional.

There exist people who would rather pay $20 less and not bring a carry-on, just like there are people who'd rather pay $25 less and not check a bag, even if those people aren't you. That's not true of resort fees. Even if, initially, the "without bag" price matches the legacy price, eventually the market will bring it down again.

In my mind there are three problems:

(1) Different airlines including/excluding various services in their sticker price is a search engine problem, one that Google is going to fix shortly. "I'm bringing one checked bag and one carry-on, I'm United Silver and have the AAdvantage credit card, I'm purchasing from a Canadian POS, I'd pay $50 extra to fly out of IAD instead of DCA and I'd pay a $100 premium for a non-stop. If F is less than $150 more than Y and not more than $450 total, I'd prefer that, otherwise Y. Please show me the best flights and the prices I'll pay."

(2) Reduced competition through mergers slows down the "eventually the market will bring it down again" process. And yet,

(3) The market is fractured enough the average non-savvy consumer can't keep track and makes a non-optimal decision (buying up to regular Y on Delta because they want a carry-on, not realizing it's included because they flew United BE recently) or they get screwed (bringing a carry-on to a Spirit flight and paying $100 at the gate).

Kacee

At the most basic level, it is exactly the same practice: using a deceptive "teaser" price that advantages your product vis-a-vis the competition in online search results.

And in fact, UA and AA have both reiterated they don't want consumers to buy BE fares - they want to upsell them to the higher fare, which was not disclosed initially. So in this sense the BE penalty is exactly like a resort fee.

Finally, the resort fee is in fact "optional" in the sense the consumer can choose not to book the hotel room once the "all in" price has been disclosed. The problem is that the deception has already occurred, and the industry knows that a certain percentage of consumers will not pay attention to the details once they've decided a certain product is cheaper than the alternatives.

spin88

I posted part of this in the 3Q thread, but nearly 10 times Delta used the phrase " industry-leading product" singling out the extra width in the seats in specific on the call. Clearly they intend to - and have started to advertise - how their product is better.

To give some color, here was the entire exchange (thanks to Seeking Alpha which posts the transcripts"

Duane Pfennigwerth Hi. Thanks. As you watch how the rest of the industry has implemented basic economy so far, have you detected any positive share gain versus some of the more punitive implementations of it, no carry-on, et cetera? Any sense the customers really don't like it?
Glen Hauenstein Those are not a very, very difficult things to isolate and I think you know what we look at is our relative revenue performance in aggregate and are we supplying the right products and services that people want to buy from us and I think as the quarter unfolds over the next couple weeks here, as everybody announces the details of their earnings, you will see that we, I think, took another step function improvement in aggregate and produced the highest level of revenue premiums we have in our history. So it's very hard to isolate which individual piece contributed to the whole brand impact, but I think that's certainly a contributing factor.
Ed Bastian Part of that, Duane, also is the net promoter scores that we see and mentioned our domestic net promoter scores were up three points year-over-year, which is huge when you measure net promoter scores to drive an improvement at an already good base of further improvement. So clearly, customers of all classes are preferring Delta in increasing numbers.

Delta said over and over again that relatively higher quality products was helping both their NPS and profitability. I doubt Kirby (aka Smisik II) gets the message, but Parker seems to have picked up part of the thread....

p.s. and funny to be posting this, having just flown AS vs DL yesterday because DL wanted $15 for BE on SFO-SEA on a last minute relatively high value ticket. I was annoyed enough not to play the game.... That said, BE is not as bad on DL as you get status credit and a bad. What you really loose is an upgrade (to C+/F).

DELee

What's a "bad"? Unsure/unclear what word was meant here...

David

TWA884

Probably a typo. Should have been "bag".