American Airlines is a top leader in the aviation industry, holding the first position in the world in a number of metrics. However, the airline has recently released information on its financial performance during 2018’s second quarter, the most challenging one for the company since 2013.
The airline has been going through a difficult time, both operationally and in terms of staying ahead of the competition. Apart from the financial point of view, the airline has been criticized by many for its Basic Economy services, which have cut passenger benefits to zero in attempts to stimulate the purchase of more expensive tickets. However, the carrier has clearly learned the lesson from its approach and is making amendments.
American Airlines’ Basic Economy
The Basic Economy of American Airlines is quite similar to the one created at Delta Air Lines, one of the largest competitors of American. Passengers flying with Basic Economy have no opportunity to make ticket changes, no right to make upgrades to their ticket, no option to select and assign seats and the worst of them all – no right to take full-sized carry-on bags on board. Full-sized carry on bags would have to be checked, which is an additional fee that passengers must pay to American. The hand luggage allowance on American Airlines is not great, in other words.
Passengers flying with Basic Economy have no opportunity to make ticket changes, no right to make upgrades to their ticket, no option to select and assign seats and the worst of them all – no right to take full-sized carry-on bags on board
However, the airline has now officially announced that it will be making changes to its rules and the Basic Economy hand luggage allowance AA will be improved for passengers. From the 5th of September, 2018, passengers will be allowed one free carry-on bag, in addition to a personal item, to all destinations, as stated on the company’s website. The decision has been made in attempts to make American Airlines’ Basic Economy fares more competitive and attractive to customers. The President of American Airlines, Robert Isom, shared that Basic Economy has been successful in the markets where it is available and the upgrade of bringing back the free carry-on bag would open doors to providing the low-fare service to a larger number of passengers.
What the Competition is Doing
United Airlines was the first airline to introduce the Basic Economy version of their service. However, United’s attempt was not a success as the carrier suffered from $100 million of losses as a result when customers chose to fly with its competitors as the Basic Economy was too restricted. When American Airlines followed the example and launched their own Basic Economy, United’s customers were left with little alternative. In comparison, another rival from the market, Southwest, has no charges for checked bags. Delta Air Lines Basic Economy is believed to be more flexible and open to customers and Delta does not agree with United and American’s approach to the service.
The cheapest travelling options with carriers such as American, United, Frontier, and Spirit are not much differentiated. The only question is if the Basic Fare of American Airlines had gone too far in restricting passengers. With the recent announcement of bringing back the free carry-on bags, American is likely to win back a number of passengers who had given up on the service.