United sells upgrades from basic to regular economy
Gary Leff at 4. February 2021.
Perhaps with the conversion of United Cargo to economy, United will offer customers who purchase economy tickets the ability to convert to regular economy after purchase.
Zach Griff writes that these offers often cost more than the difference between buying basic and conventional products. Since even basic economy tickets are subject to fluctuations due to the pandemic, it is often best to call and use a credit from your basic economy fare to purchase economy tickets immediately if you change your mind.
Nevertheless, it highlights some interesting elements of the UN strategy and the people who are on the move today.
- United’s basic economic restrictions are the most stringent of any airline offering fares. Not only are tickets not changed at regular intervals, but you can’t take large luggage on board (unless you have elite status or a co-branded airline credit card). And if you can’t pay the check, you may not even register online.
- It was the idea of new CEO Scott Kirby. When he became president of United, he delayed the introduction of the basic interest rate on savings, making it even more draconian.
- His work in Basic Economics in America began the same way, but since Kirby left the firm, basic American economics has changed little or nothing (aside from the pandemic) and has not become elitist.
- In contrast, Southwest Airlines does not have the Basic Economy option, tickets can be exchanged, and the first two checked bags are free. Delta, which started the basic economy craze, has never stopped banning customers from bringing luggage on board or blocking online check-in.
Basic Economics is more than a tool that allows customers to spend an extra $20 to $60 per trip. The key value for airlines is to segment business and leisure travellers. They can offer low fares to compete with the lowest fares on the market without offering those fares to business travelers who would pay more (who are often not even offered the basic economy options).
The advent of the fundamental economy allows airlines to eliminate transfer fees on regular tickets, since transfer fees are no longer necessary to distinguish between leisure and business fares (moreover, transfer fees have obviously been meaningless for some time – too much uncertainty for passengers who would otherwise be willing to buy tickets).
Not a lot of business travelers at the moment, though. And even former business travelers are flying less frequently for their vacations. Lots of new travelers with the lowest fares in the air. I wrote that all airline passengers are now Spirit Airlines passengers. So even though they are basic economy travelers, the buyback offer generates revenue without losing the revenue of the business travelers who buy the basic.
In other words: It’s a matter of Benjamins (extra).
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