American Airlines just gave us one more reason to avoid its basic economy fare.
Overnight and without warning, the Fort Worth, Texas-based airline added a new checked bag fee for travelers booking the cheapest tickets on many long-haul flights.
As of June 7, basic economy flyers to and from Asia, India, Australia, New Zealand and Israel will now be charged a $75 fee to check their first standard-size suitcase. If you already purchased a basic economy fare on one of these routes, you’ll be grandfathered into the old policy, meaning you’ll still receive the one checked bag included with your ticket when it was purchased.
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Note that a second checked bag will continue to cost $100, and a third will still cost $200. All bags are subject to size and weight restrictions.
With these new fees, American has become the first major U.S. airline to charge checked bag fees on every basic economy ticket. Both Delta Air Lines and United Airlines offer one free checked bag on transpacific itineraries, but both competitors charge bag fees on long-haul transatlantic routes.
“We are simplifying our product offerings to make it easier for customers when they are shopping for travel. With this change, our Basic Economy product will include all of the same features whether a customer is purchasing it for a domestic or international itinerary,” American said in a statement to TPG.
All of American’s basic economy fares include one standard carry-on bag and one personal item, with no destination restrictions.
That said, American recently tweaked its basic economy fare earlier this year to limit the number of miles and Loyalty Points you earn from these tickets. As of March 1, you now earn award miles and Loyalty Points at a rate of 2 miles and Loyalty Points per dollar spent — down from the 5 per dollar spent rate (before any status bonuses) previously in place.
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Even with the new checked bag fee and reduced mileage earnings, you can still purchase many ancillaries on these fares, including:
- Priority boarding.
- Preferred and Main Cabin Extra seating.
- Same-day confirmed flight changes.
Elites can also enjoy their benefits, including the ability to receive free upgrades and checked bags, on basic economy tickets.
Basic economy tickets were first introduced to better compete with ultra-low-cost carriers. Allegiant Air, Frontier Airlines and Spirit Airlines fly many of the same routes as the legacy, “full-service” carriers, but the ultra low-cost carrier fares are often substantially cheaper.
When flying with a budget airline, your ticket only covers transportation; advance seat assignments, bags, snacks and drinks all come at an additional cost.
With basic economy, the mainline, legacy carriers say that they can more closely match the fares of low-cost competitors by stripping out many of the inclusions you’d typically get with a regular economy ticket. Such fares now exist at all major U.S. airlines, save for Southwest Airlines.
What’s interesting is that these ultra low-cost carriers don’t actually fly any of the aforementioned long-haul routes that are now subject to checked bag fees in basic economy.
In those cases, adding more restrictions to the cheapest tickets acts as a segmentation strategy to extract as much revenue based on each passenger’s willingness to pay, Savi Syth, managing director of equity research for airlines at Raymond James, recently told TPG.