Basic Economy, you say; how about Basic Business?

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Is it time to consider a “basic business” class product as viable? According to one major airline CEO who spoke with your author, the answer is a resounding yes, and the expectation is that such a product will be incredibly successful.

In this context, basic business would be fully unbundled, much like coach products have evolved. Advance seat assignments, meals, lounge access and checked baggage allowance would be separated from the base fare. Even the amenity kit or onboard pajamas might be offered as separate items for purchase rather than as part of the package.

Since the most important component of business class on long-haul flights is generally the bed for sleep, this sort of approach could make sense. A passenger would theoretically save on ticket price, thus making the base hard product more appealing to buy and increasing the number of premium seats the airline sells. The traveler who seeks a more indulgent experience would buy the ticket plus the various additional components.

But the concept is not without challenges.

Finding the right price point for the economy class ancillaries proved relatively easy. There is some variation among airlines, of course, but the key factor is that the component prices are not directly tied to the cost of delivering that service. That disconnect becomes more challenging when trying to figure out the price to charge for a business class meal, for instance. A passenger might be only mildly annoyed at paying $12 for a hamburger in coach; what could an airline charge for a business class meal that would not be seen as insulting and overpriced, especially considering that at the end of the day it is still just airplane food? Is a $50 price tag too high? Maybe not, given that Swiss is selling meals in coach at that price point today.

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There is also the question of how much to discount the ticket price when removing these components from the all-in price. Of course, it is possible that, like with Basic Economy, the fares won’t be discounted at all and the introduction of basic business is really just a price hike. That rarely goes over well with consumers.

The other major challenge is how to make the transition to an unbundled business class model while maintaining the appeal of the full-service product. The unbundling of economy class began with low-cost carriers, not the airlines traditionally offering lie-flat beds on long-haul routes. The CEO I spoke with acknowledged this challenge but believes his airline and business class product is sufficiently respected as not to take a hit should unbundling be introduced. But he was also clear that the new offering is not imminent. The ability to effectively sell this offering depends in part on broad implementation of NDC so that ancillary options are more readily exposed to consumers.

Unbundling of business class tickets is already in place in limited circumstances. British Airways charges for advance seat assignments, for example. But this idea of a “basic business” product takes that to the next level and at least one major airline is considering the move seriously enough to talk about it with press. Don’t be too surprised when it happens for real.

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28 Comments

  1. For us old fogies, it was tried way back. . . long before the current experiments like BA’s seat assignment charge .

    I remember flying Frontier Den – Lax just after People Express bought them out of bankruptcy about 1985. I had paid for a first-class Frontier ticket, which People Express honored with seating up front in the old FL cabin, but then charged us for Coke and coffee. I had read the news stories, so paid the damn two bucks or whatever it was — but my seatmate bitched and said ” I thought this is first-class and I paid a higher fare.” To which the attendant said yes, and with us your higher fare gets you the wider seat.

    Went over really well. As will this Basic Business crap. At least it won’t with traditional ol’ me! We want to feel we’re special and appreciated when we pay a higher fare — not be nickled and dimed.

    • Seth Miller

      One need not be an “old fogie” to remember such; it happens today on Spirit as well.

      And, yes, I do remember paying for snacks on board with PeoplExpress.

  2. trouble is you’re paying £2000 for space and privacy; the improved catering, wine, and noise cancelling headphones only cost the airline about $80; if the cost to the punter is ramped up its still only a few hundred bucks, not sure it really makes sense to offer them separately, if you’re paying $1800 or $2000, when you’re talking about those kind of sums it’s all the same

    • Indeed, Charles, I think you and I agree on where the real problem is with the numbers on this idea. I struggle to see how it would be cheap enough to justify not paying for the “full” version while also making sense for the airline to continue selling the cabin that way. The seat and the space it takes up on board has a much greater cost than a couple meals or an amenity kit.

      • Arthur Glain

        “The seat and the space it takes up on board has a much greater cost than a couple meals or an amenity kit.”
        Right, the real cost of a seat is the space its takes on the floor plan. The “Basic Business” is probably more about a denser cabin integration than having to pay for you meal and amenity kit. Maybe giving up on the full direct aisle access or staggering living spaces.

    • Seth exactly, they just stick the $50 meal, decent wines and a toothbrush on to be inkeeping with the hard product, you pay the big bucks for the real estate (and a seat that costs $150,000 to manufacture)

    • reeves35

      A comparison of this type of service is available here is Australia. Malaysia Airlines and Air Asia both fly MEL-KUL several times a day with very similar schedules. Both have a lie-flat J class offering though the D7 option is much more bare-bones with only luggage and limited IFE included. Meals are extra and lounge access is not available.

      A typical comparison has the D7 option (MEL-KUL-MEL) for around AUD2100 whilst the MH equivalent is around AUD3300.

    • Seth Miller

      Same thing said about Basic Economy, right? Companies can exclude it if desired but that’s a policy decision.

  3. I haven’t eaten, watched a film, or cared about a lounge on an eastbound TATL in over a decade. Same with the family. I’d be interested if the price point was tempting, but as pointed out the cost savings of not service me the soft stuff is pretty small.

  4. Aren’t we just skinning the same cat…Intl First, Intl Biz Class and Prem Coach, Coach….NO MORE INTL FIRST; but super awesome BIZ class….hey whoa, we need some BASIC biz class….INTL First, INTL Biz, Prem Coach, Coach.

    The sad thing, is that people are getting paid to just repackage what was standard 10 years ago

  5. Anne

    What a terrible idea. I am a marketer and you need to understand the market: people who can afford business class feel entitled to afford to escape nickle and diming. That’s why a luxury car doesn’t come unbundled (e.g. cruise control built into the price) but an economy car does (cruise control? It will be an extra)! Also people who can afford business class are generally numerically literate and can see through scams, while those on the lower end, at least in America where numeracy is abysmally low, have serious difficulty in understanding the true cost a complex (unbundled) offer.

  6. Fergal

    AerLingus sell a Basic Business fare (no changes/refunds) for about 30% of the fully-flex fare. And 300% higher than the cheapest economy fare.

    Empty seats make no money… Fill’em.

    • Seth Miller

      Lots of airlines offer non-refundable biz fares, often at a significant discount from “normal” prices. That’s not what this is about. The “basic” concept is about changing the service received in the terminal and on the plane.

  7. Joelfreak

    I don’t drink, or eat much of whats served in J or F…why shouldn’t I be able to do this? I don’t WANT this product because I hate unbundling, but if you are looking for someone who is a good example of WHY someone would want this, I am the perfect example.

  8. Junhao

    What about Premium Economy then? I think this Basic Business idea will simply kill the need for Premium Economy and to think that all those airlines that invest so much in this so-called “fourth cabin” product is going to waste. Maybe the good thing about anything “basic” is that you don’t need to modify the hard product.

    • Seth Miller

      This wouldn’t kill premium economy, depending on the price point. They’re not going to slash the price by a third just to pull meals & lounge access away is my guess.

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