Itineraries: ‘Basic Economy’ Airline Service Squeezing Business Travelers

2017-01-23 13:24:10

 

Itineraries: ‘Basic Economy’ Airline Service Squeezing Business Travelers

As more airlines embrace “basic economy,” many business travelers are feeling the pinch.

Bevan Lindsey doesn’t mind trying to save his company money when he flies for work. But lately he has been getting squeezed — literally.

Mr. Lindsey, an industrial salesman who is more than six feet tall, says he already pays out of his own pocket to get a seat with a little more legroom, at an average of $50 per flight. He worries that he soon might have to start self-subsidizing even more of his business travel, as airlines continue to add fees to even the most basic features of economy class while his employer wants him to find the lowest fares available.

Like many other work travelers whose bosses will not spring for business-class tickets, or even economy-plus fares, Mr. Lindsey is caught between corporate travel managers who want to save money and airlines that want to wring every last dollar from the least expensive seats on the plane.

“The company is definitely trying to move toward the cheapest option, and if not, you have to get approval,” Mr. Lindsey said of his employer.

The bind for business travelers like Mr. Lindsey may seem an unintended consequence of the airline industry’s race to the bottom in economy class. But travel consultants say it is partly a deliberate strategy by airlines, which are trying to nudge — or maybe shove — more passengers into paying business-class or economy-plus fares.

“The basic economy fares have the added restrictions, which the airlines have created to make them deliberately unattractive to business travelers,” said Henry Harteveldt, a founder of Atmosphere Research Group, an airline industry consulting firm.

For Mr. Lindsey, the choice is either pressing his knees into the seat in front of him or spending his own money to secure bulkhead or similarly roomier seats.

“They’ve taken every single thing and just nickel-and-dimed consumers,” he said of the airlines. “They have done some upgrades as far as entertainment, but I’d rather pay for that and not get squished.”

The mainstream airlines, aiming to compete with low-fare carriers like Spirit and Frontier, have adopted “basic economy” fares that strip out options like choosing seats and using the overhead bins.

United Airlines said in November that it would begin selling basic economy fares in the first quarter, starting with flights for the second quarter of the year. Initially, the airline announced last week, travelers will be able to buy basic economy tickets on routes between United’s seven domestic hubs and Minneapolis.

The trade-off for passengers with those bare-bones tickets will include having no choice in seat assignment, being last to board and not being allowed to stow a carry-on bag in the overhead bins, although the airline won’t impose these last two restrictions on some loyalty program members or holders of some United-affiliated credit cards. (Passengers will be able to check their carry-on bags for a fee, and an airline spokesman said passengers would be alerted at check-in about the carry-on regulations. Passengers will still be able to bring a personal item like a handbag that fits under the seat in front of them.)

These ticket holders also will not earn frequent-flier miles that count toward their totals for premier status. Nor will they be eligible for free or even paid upgrades. And they will not be able to rebook or otherwise change flights.

American Airlines also announced last week that it would start selling its own version of basic economy fares in 10 domestic markets next month. The terms are similar to United’s, with some of the more onerous restrictions — such as not being allowed to use the overhead bins and having to board last — waived for elite loyalty members and holders of some airline-affiliated credit cards.

Delta Air Lines was the first legacy carrier in the United States to adopt a basic economy fare, in 2012, and it has revised it slightly since then. As with United’s and American’s planned ticket tier, Delta’s basic economy option prohibits ticket changes, seat selection and upgrades, although Delta travelers can still use the overhead bins and earn frequent-flier miles that count toward their status requirements.

Peter Ooi, an information technology engineer who travels regularly for work, said that his employer’s policy required him to book tickets within $50 of the lowest fare available. He is unhappy about the prospect of not being able to use overhead bins or accrue as many — or any — frequent-flier miles.

“As a business traveler, that’s a huge problem,” Mr. Ooi said.

Those in the business of corporate travel say they have been scrambling to address the changing fare restrictions and the complications they can pose in booking.

“It’s been kind of a surprise to a lot of travel managers in terms of: What does this entail, what does this include?” said Jeremy Quek, the air practice line lead of the Global Business Consulting division of American Express Global Business Travel.

“As we look forward into 2017, as both United and American are looking to introduce theirs, it’s very important to remember that not all basic economy fares are going to be the same,” he said.

While travel managers can, and often do, choose not to include low-fare carriers like Spirit in their booking engines — because of contractual relationships with full-service carriers, for instance — that is not an option when the cut-rate tickets are being offered by full-service airlines.

“It’s going to become more difficult for companies,” said Bob Neveu, the chief executive of Certify, a provider of travel and expense-management software. “If it’s really important to them, they’re going to have to put the fare class categories into the search parameters.”

Some travel professionals see merit in enabling employees to view all fare options. A traveler taking a one-day trip, for instance, might not need to tote more than a laptop bag.

“We try to include all fares whenever possible; we want people to see all the fares that can be booked,” said Eric Bailey, the director of global travel and payments at Microsoft.

In Microsoft’s case, employees are not required to base their bookings on price alone. “We’re really looking for people to fly based on value,” Mr. Bailey said. “We leave that up to the traveler’s judgment.”

Many travel managers also know that there can be false economy in insisting on basic economy tickets.

Rock-bottom fares have additional, indirect costs — especially if they do not contribute toward travelers’ attaining frequent-flier status, said Greeley Koch, the executive director of the Association of Corporate Travel Executives.

“I think the better travel programs out there realize it’s in their best interest to have travelers be able to earn status,” Mr. Koch said, noting that travelers with status often get fees waived for perks like checked bags, and that they are more likely to be eligible for the upgrades that let them sleep or be more productive in-flight.

And if a basic economy fare means that a flight cannot be changed or rebooked, the employee might end up with a worthless ticket.

If the employee with the nonrefundable ticket misses the flight — maybe because a client meeting ran late — there may be no choice but to pay the last-minute, walk-up fare price.

“The risk of nonrefundability is a very big piece here,” said Mr. Quek of American Express. “Those fares are basically use-it-or-lose-it fares.”

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