MIAMI — As Delta Air Lines continues to expand its Basic Economy product, an industry analyst expresses mixed feelings on its implementation. Basic Economy offers travelers rock-bottom fares in exchange for no advanced seat selection and no refunds if plans change.
Delta started exploring what a Basic Economy product would look like back in March 2011, said spokesman Paul Skrbec. “We also looked at some of our product strategy we put in place post [Northwest Airlines] merger in January 2010 as we started to announce things like full lie-flat seats and inflight Wi-Fi,” he said.
Even at that point, the plan was to differentiate the Delta experience and products for customers, and with a large and varied fleet, it took time to get things introduced into the marketplace, said Skrbec. “Once we got to critical mass, we knew it was time for the next step, which happen on December 5, with our five different products,” he said. Those products are:
- Delta One, formerly BusinessElite, on long-haul international routes; also between New York-JFK and Los Angeles or San Francisco;
- First Class, on short-haul international and domestic routes;
- Delta Comfort+ Plus, an upgraded experience on all two cabin aircraft;
- Main Cabin; and
- Basic Economy offers Main Cabin service with fewer flexibility options available in select markets.
Henry Harteveldt is the founder and travel industry analyst and advisor for the Atmosphere Research Group and a long-time observer of passenger experience trends. On the one hand, he feels that Delta has responded to the challenge from ultra-low-cost carriers (ULCCs) in a thoughtful and effective way.
“What they have done is create a fare that certainly has the lower price point that the most price-sensitive travelers will focus on. And Basic Economy will give Delta a tool to compete in third-party distribution partners on price basis with ULCCs,” said Harteveldt. “Delta has also done a very good job of removing any of the perfume associated with this fare that would attract corporate travelers or SkyMile Elite travelers.”
Basic Economy offers no seat assignment until check-in and travelers forfeit 100 percent of their fare if they cancel and they can’t get upgrades to premium cabins, said Harteveldt. “All this helps the airline focus Basic Economy fares to the purely price-focused, brand-neutral traveler,” he said.
When thinking about inflight products, there’s a wide spectrum of different customers, said Skrbec. “We recognize that we have consumers who have a price sensitivity where that is the number one driver in travel purchase decisions,” he said. “Elements of a fare may not be the most important to them. Business travelers, for example, need flexibility for same-day confirmed options for earlier or later flights.”
But Harteveldt is also concerned about the Basic Economy product. “Delta has become a company that has evolved into a brand as a premium carrier, so should they offer product like BE,” he asked. “You do not see premium retailers offering bargain basements in their own stores. They have sales and discounts, but Nieman Marcus and Saks don’t try and compete with Walmart.”
Depending on how Basic Economy is implemented, Harteveldt feels it could undermine Delta’s position as a premium airline. “I think Delta has done things that are good with Basic Economy, because it’s not Economy Minus or a cabin-within-a-cabin,” he said. “Once a traveler gets on the plane, they get the same experience that any main cabin Delta passenger gets. From that standpoint, Delta did a good job.”
Right now, it’s all window dressing, said Harteveldt. “What I want to see six months to a year from now is how the changes manifest through Delta’s website and GDSs,” he said. “I’m also concerned with naming and positioning, because it could cause confusion on the part of customers.”
But clearly Delta is going in the right direction, said Harteveldt. “Based on their comments, Delta said that 80 percent of their customers given the choice of a Basic Economy fare choose another one,” he said. “It shows that Delta is keeping a sharp eye on growing ancillary revenue.”