Delta’s ‘basic economy’ bare bones fare concept spreads

It has been six years since Delta Air Lines rolled out its first "basic economy" air fares.

Atlanta-based Delta launched the fares -- which do not allow advance seat assignments, upgrades or ticket changes, even for a fee -- in markets where it competed with ultra low-cost carrier Spirit Airlines.

In the years since, Delta has expanded basic economy to much of its route network, and rivals United and American have launched their own version of basic economy fares.

Along the way, basic economy has evolved into something used for much more than just competing with bare-bones competitors.

The concept is also spreading globally, with Delta's partner carriers including Aeromexico and most recently Virgin Atlantic rolling out similar fare tiers.

Virgin Atlantic last month rolled out three different flavors of economy class: Light, Classic and Delight.

The U.K. carrier’s Economy Light is the lowest fare, and does not allow advance seat selection, does not include a checked bag, earns miles at a 25 percent rate and has other limitations.

Virgin’s Economy Classic is like Delta’s Main Cabin, while its Economy Delight tier is similar to Delta’s Comfort+ with extra legroom and priority boarding.

Some observers say the basic economy fare has been playing a role similar to that of the old Saturday-night-stay requirement for discount fares, which enabled airlines to charge business travelers more for jet setting during the week without losing the business of budget-minded vacationers.

J.P. Morgan airline analyst Jamie Baker during a Q&A session with Delta executives after a presentation by CEO Ed Bastian last month said basic economy fares are "walled off" for his corporate travel.

“In my mind, it’s as efficient as the Saturday night stay once was in terms of walling off certain fares from consumption by corporate travelers,” Baker said.

Delta president Glen Hauenstein said most of the airline's corporate clients have also walled off basic economy fares, and Delta is focusing on upselling them from the Main Cabin to higher fare tiers such as Comfort+ or first class.

As companies try to “recruit the best people...we've seen a lot of  opportunities to encourage corporations to buy, allow their customers to buy into products they like better,” Haeunstein said.

He added that even if an employer doesn’t allow an employee to book a higher fare class, Delta plans to add an option to use miles “to be able to seat yourself where you want to sit after your company pays for whatever fare you qualify for.”