A not-quite-Basic Economy across the Atlantic

The Star Alliance A++ joint venture airlines launched a new fare product this week for transatlantic travel. The six carriers – Air Canada, Austrian Airlines, Brussels Airlines, Lufthansa, Swiss, and United Airlines are launching a not-quite-Basic Economy option available for travel and purchase starting on or after 5 June 2018. Most notably, these tickets do NOT include a checked bag as part of the fare. As United says in its message to travel agents, “these lowest-priced fares are the first step towards a Basic Economy product on trans-Atlantic United flights.”

Unlike the domestic Basic Economy fares the new TATL option does not limit carry-on bags nor advance seat assignment (though some carriers do have other limits on seats or carry-ons for economy fares). Similar to the domestic Basic Economy fares this new offering does not permit any ticket changes, even with a change fee. And, similar to domestic Basic Economy fares these new options are not to be combined with higher fare classes when constructing a round-trip ticket. This could lead to higher fares where a traveler is willing to accept the limitations one way and not the other or where the associated fare buckets are available one way and not the other.

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The burgeoning Transatlantic LCC model serves as the catalyst for the new product. Norwegian’s base fare does not include meals nor checked bags. Some other LCCs such as XL Airways and Thomas Cook do include the first checked bag. The legacy carriers are responding, but with some variety in their approach.

In this case the Star Alliance partners follow their SkyTeam and OneWorld brethren in this space. The SkyTeam partners launched similar fares in late 2017 for flights on/after 10 April 2018. The SkyTeam version is more aggressive than the Star Alliance offering, limiting advance seat assignment in all cases. The OneWorld version was announced later but also launched in April, also without advance seat assignments. Making the rules work consistently across multiple airlines is part of the challenge. So is ensuring that the various ticketing systems involved can all deliver the same fares and restrictions consistently within the joint venture structure.

Within the Star Alliance airlines the new fares will apply to a range of fare classes that varies based on the trip origin. For point of origin U.S. the fare is planned for booking classes K, L and T. For point of origin E.U. and Canada the fare is planned for booking classes K, L, T, S and W. Booking classes are subject to change and may vary by route.

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The implementation of the new fares varies slightly across the member airlines. Air Canada is calling the new fares Basic Economy while Lufthansa Group carriers dubbed them Economy Light. United chose “Economy (1st Bag Charge/ No Changes)” as its moniker. On Air Canada the tickets will receive Zone 6 boarding, though elite benefits will apply. For United and the Lufthansa Group of airlines the regular boarding group will be used. Fortunately all member carriers appear to be honoring the Star Alliance Gold status benefit of one free checked bag, so long as bag check is handled by the member airline.

Ultimately the transition to these basic economy offerings is a fare hike. The airlines try to spin them as increasing options and flexibility but the fares do not decrease for the bottom end options as the new offerings are added. And, for the most part, the airlines have stopped pretending that the fares are only used in markets where the direct U/LCC competition exists. At least with this version passengers are not completely shut out of the on-board and elite benefits they’ve become accustomed to when traveling. Though it is also clear that this is not the end game for the A++ JV partners. Expect more to come as they get their systems aligned to support further restrictions.