Could major US airline create an economy minus cabin?


A US legacy airline is shopping around the idea that it’s planning to create an “economy minus” cabin in a move to a new model of domestic four-class service.

RGN spoke extensively and off the record with the airline at the recent APEX Expo in Anaheim, California. The front-to-back domestic US model mooted to us would comprise a premium cabin, enhanced economy, regular economy and “economy minus” offering.

The big economy change — which may well be a fishing expedition to provoke comment in the industry or see whether its two primary competitors are interested in showing their hands — would be truly groundbreaking if implemented. Economy would come in three flavors – enhanced economy with around the 35-38” pitch range, regular economy at 30-31”, and the new “economy minus” at 30” and below.

Some US carriers are already quietly offering an “economy minus”-type product similar to what the airline is mooting.

Frontier Airlines has been at the forefront of this trend, providing amenities most other airlines include in every economy fare exclusively for passengers booking through the airline’s own website. Delta, similarly, launched a Basic Economy fare in 2012, coded as the E fare bucket, lacking any refund or change options whatsoever or any seat choices. Delta this week made further amendments to its Basic Economy fare, with The Points Guy blog noting that the offering now entails:

  • Non-refundable/changeable fares
  • No advance seat selection (prior to the check-in window)
  • No Same Day Confirm or Same Day Standby
  • No Complimentary Medallion Upgrades
  • No Preferred Seating or Economy Comfort
  • No paid upgrades allowed

Meanwhile, overseas, Air New Zealand has experience offering fare families on its flights to Australia and the Pacific Islands, and is experimenting with the “seats to suit” fare family model domestically, where it dominates flight bookings.

The big economy change mooted to us would be a significant change from the status quo where an economy seat sold by the global distribution systems is the same as every other economy seat, so far as pricing and amenities are concerned. A significant part of the value proposition of online travel agents and metasearch engines is that they compare economy fares like-for-like. Any observer of the OTA and meta end of the industry would instantly highlight the exceptions to that rule. Would it be too far to go to suggest that an airline might create a model to profit from those loopholes? If the airline were to distribute the “economy minus” fare as its standard economy option, it would naturally be undercutting its competitors.

If the airline’s concept of US travel came to pass, flyers and the entire airline distribution ecosystem would need to adjust to what this airline hopes will be the new reality. It would be a bold move from a legacy airline that clearly has money to spend battling the bottom-dollar LCCs like Spirit Airlines, which recently announced an eyewateringly yellow livery that has all the hallmarks of an early 2000s Ryanair “cheap and nasty” brand positioning.

Clearly, the full-service airline would hope to leverage its brand positioning — especially the halo effect in in the premium service category, where it advertises extensively — to woo customers who might otherwise be a “hate flyer”, the category that Spirit has cleverly dominated within the US.

For prospective travelers at the cheapest end of the market, the move would reopen the question of whether to travel back of the bus on a legacy carrier, or on a low-cost airline. The passenger experience (#PaxEx on Twitter) will likely be slightly better than an LCC overall, but there will doubtless need to be some differentiation compared with the current state of a “domestic three-class” offering, with first, enhanced economy and regular economy.

Regardless, the airline wouldn’t be making an unprecedented move. Already, carriers are making significant shifts to pull travelers towards their home-brewed ticket distribution systems, which allow for myriad options at the time of purchase, while attempting to reducing their reliance on GDS, metasearch and OTA sources of ticket bookings (though, it should be noted that GDSs still account for 50% of all bookings).

It’s an interesting model — and the airline will be on top of the world if it steals a march on its two primary competitors.