The big airlines generally think bottom line over customers. 

That’s gotten worse in recent years as new airfare classes have been created and strip away things that used to be included.

That attitude created a niche that left room for Southwest Airlines (LUV) – Get Free Report to disrupt the industry. By including checked bags in its fares and posting no-hidden-fee prices, the upstart airline became a major player.

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In different ways, JetBlue, Spirit Airlines and Frontier Airlines also have succeeded (to very varying degrees) by being open about their pricing. Spirit and Frontier, for example, offer basic fares that include nothing. 

Those fares are a lot like basic economy on American, Delta and United Airlines. The difference is that customers of Spirit and Frontier have very low expectations. They understand that those airlines use a nickel-and-dime a-la-carte model, which they don’t expect from the big carriers. 

Essentially, United and Delta have made their cheapest basic economy fares punitive for customers. They will sell them to you, but they’re incredibly restrictive and generally aren’t products people want (even if cost sometimes forces them to buy them).

That’s a situation American Airlines (AAL) – Get Free Report does not want to duplicate. The company offers basic economy, but it’s trying to make it a product its customers actually want.

American Airlines offers a better Basic Economy   

Basic economy generally means you buy a ticket that entitles you to be on the plane. You don’t get to choose your seat and you pay extra to check bags.

Aside from that, what’s missing from those basic fares varies a bit by airline. That’s something View From the Wing’s Gary Leff recently called out.

Unlike United “American’s basic economy isn’t designed to be awful. United Airlines doesn’t allow basic economy customers to bring a full-sized carry-on bag onto their flights or even check in using their mobile app or website if they aren’t checking a bag,” he wrote.

Leff also called out Delta for not giving any frequent-flyer mile credit for basic economy passengers.

American Air has taken a different approach to basic economy, according to Chief Commercial Officer Vasu Raja.

“For us, with things like basic, in fact for all of our fare products, we do not make products that are so odious no one will buy it,” he said during the airline’s fourth-quarter earnings call. 

“The whole point of them is to actually have customers experience, travel and join AAdvantage. And for us, basic economy is not about a competitive product. It’s our entry-level product that gets customers in the door and signed up for AAdvantage.” 

American Airlines wants to be ‘nimble’

American Airlines has been investing in its ability to quickly meet customer demand. Chief Executive Robert Isom discussed this issue during the earnings call.

“I just want to add one other thing here, which is that we’ve built technology to enable us to react to whatever may come our way,” he said. “So as Vasu has [said,] our goal is to make sure that we can deliver a product to the customers the way they want to receive it. It also has to be done in a way that is incredibly nimble and can be changed.” 

That’s a change to how the airline operated in previous years.

“[In] the past you may have seen carriers, even American, unable to react very quickly. That’s not the case right now,” he added. “So whatever happens in the marketplace, we’ve got the technology, we’ve got the product to be super competitive and whether it’s us developing it on our own or having to compete, we’ll be ready.”

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