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How to Navigate the Boom in 'Bare Fares'
Is scoring the lowest airfare price actually worth it? Experts weigh in.
Consider the caveats to discounted fares.(Getty Images)
With an increasing number of airlines set to roll out bare-bones ticket options that offer low-priced fares with few perks and amenities (think: no seat assignments or ticket changes), the big three legacy carriers have begun to shake up air travel as we know it.
Delta was the first legacy carrier to launch a minimalist fare option to compete for price-sensitive customers with discount carriers such as Frontier Airlines, Spirit Airlines and Allegiant Air. In 2017, American will unveil its own low-cost fare option, and United Airlines will debut a new Basic Economy fare aimed at delivering consumers the cheapest price, with no added perks you might expect, including the chance to pick your seats or bring on more than one carry-on item. "The Basic Economy fare will allow us to meet the needs of our price-sensitive customers by offering our lowest available fare while at the same time serving travelers wanting – and willing to pay for – more amenities on their trip," says Jonathan Guerin, a spokesperson for United.
"Over the past 10 years, everything has become unbundled," explains Jason Clampet, co-founder and editor-in-chief of Skift. While consumers understand that fares have fallen sharply in recent months due to low fuel prices and heightened competition among ultra-low-cost carriers, the airline industry is turning a rich profit due to ancillary fees (fees from extra non-ticket amenities and services such as baggage fees and in-flight meals, along with revenue from loyalty programs). In fact, United raked in more ancillary revenue than any other airline in 2015, at $6.2 billion, Clampet explains. And those tacked-on extras can quickly translate to a hefty price for fliers.
While deeply discounted fares offer the chance to get from point A to B at the lowest price, there are clearly some caveats. Here's what you need to know about the latest bare fare products, as well as advice from experts for choosing the best ticket option for you.
Consider Your Goals, Companions and Budget in Your Fare Selection
United's Basic Economy is aimed at the same budget-minded fliers who purchase tickets from discount airlines such as Spirit and Frontier, explains Tim Winship, editor and publisher of FrequentFlier.com. "To take advantage of these fares, travelers must be willing to forgo such niceties as seat selection, boarding priority, changeable tickets and so on in exchange for rock-bottom prices," he says. "To ensure they're getting good value, travelers will have to do the math, comparing regular coach fares with all-in basic fares," he adds. And while these tickets offer an ideal option for someone who wants to get somewhere very cheaply, you could be "inviting disaster for a family of four," Clampet explains, pointing out that you're unable to select your seat with the discount fare option.
Guerin also cautions that these fares are not suitable for every passenger's needs due to their restrictions. Fliers who want extra perks are better off selecting discounted coach ticket options, he says. "If you prefer to bring a carry-on item to stow in the overhead, you should consider booking a standard Economy or Economy Plus fare," Guerin advises.
Avoid Hidden Fees (and Use a la Carte Pricing to Your Advantage)
Basic economy fares offer a "high value proposition for consumers as long as they clearly understand the add-ons and hidden fees that are associated with these fares," says Tom Spagnola, senior vice president, supplier relations at CheapOair. "This will be new territory for United Airlines and American Airlines, and I believe they will focus heavily on making sure their customers are aware of the rules," he says.
With United and Delta's Basic Economy tickets, travelers have the option to purchase additional services such as checked bags and in-flight meals, but those costs can add up quickly. "If a traveler chooses to purchase a ticket under the basic economy fare, they are agreeing to restrictions like automatic seat assignments, nonrefundable fare, no full-size carry-on bag allowed on board; but customers can check a carry-on item in the lobby at the time of check-in," Guerin explains. And though a checked bag costs around $25 for the first bag with major carriers, low-cost carriers often impose much higher additional charges, so experts agree that it's key to read the fine print and factor all costs and extras into your fare price. Spirit, for example imposes higher $30 to $150 baggage fees, depending on the size and weight of luggage and a $10 fee for printing a boarding pass from an airport agent, among other extra charges.
Don't Forget About Frequent Flier Miles (and Perks)
If you hold status with United's frequent flier program, you'll be rewarded with fewer restrictions than standard passengers. For starters, you'll be able to accumulate frequent flier points (though you won't be able to obtain miles that count toward elite status) with a Basic Economy ticket. And if you're a United MileagePlus Premier member, a Star Alliance Gold member or you hold a United-affiliated credit card, you're not restricted to one personal item, and you will be able to stow a carry-on in an overhead bin.
Comparison Shopping Will Become More Challenging
"These new bare-bones fares make shopping for air tickets more difficult. You have to really do your homework and make sure you know exactly what you’re getting and not getting so you can be sure you’re comparing apples to apples," says Jeff Klee, CEO of CheapAir.com. With major carriers offering deeply discounted prices, it's become easier for them to "match the low prices of the ultra-low-cost carriers," he explains. Ultimately, that translates to more options for consumers and the opportunity for fliers to select basic benefits such as in-flight entertainment options and Wi-Fi (for a fee) that some discount carriers don't offer at all, he adds.
According to Winship, the overall value proposition of bare fares will be more or less attractive depending on how many extra fees fliers must pay to maintain a degree of ease and comfort. "Without performing an itemized comparison, consumers won't know whether bare fares are really a better deal than regular discounted economy fares," he explains.
It's also likely that there will be a greater incentive for consumers interested in the no-frills fare product to book directly with their preferred major airline rather than going through third-party meta-search sites like Expedia, since it's difficult for online travel agencies to offer the same level of transparency, Clampet adds. With a more precise price and easy-to-understand value proposition when booking directly with the airline, it may become difficult for third-party sites to compete.
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