American Airlines unveils ‘basic economy’ fare to compete with low-cost carriers

Following the lead of United and Delta, American Airlines unveiled its new “basic economy” fares Wednesday, a no-frills option that the nation’s three largest carriers have adopted to compete with increasingly popular low-cost airlines.

“American Airlines now has something to offer every customer, from those who want simple, low-price travel to those who want an ultra-premium experience via First Class,” American Airlines President Robert Isom said in a statement.

Like the no-frills tickets offered by its competitors, American Airlines’ basic economy fares won’t allow changes, cancellations or upgrades. Basic economy fare passengers are assigned seats in the main cabin, with access to free entertainment, snacks and drinks. If passengers want to choose their seats, they will be charged extra.

The basic economy fare won’t be offered on every route but will be limited to those routes where American Airlines competes with a low-fare carrier.

American plans to begin sales of the new ticket in February in 10 markets, but the airline has not offered more details.

American Airlines will allow basic economy passengers to bring only a small carry-on bag that fits under the seat and won’t allow them to bring a larger carry-on bag to be stowed in the overhead luggage bin. It’s the same policy for basic economy passengers on United Airlines.

But American Airlines is going one step further: Passengers who buy the basic economy ticket and bring a larger carry-on bag to the gate must pay a $25 “gate fee” to have the luggage checked, plus the regular checked baggage fee, which is typically $25 for the first bag.

United Airlines also imposes a limit on the size of carry-on bags for basic fare passengers and also charges a service fee if fliers bring a bag that won’t fit under the seat. On Delta, however, basic economy seat passengers can bring a standard size carry-on bag to store in the overhead bin at no extra charge.

Although American, Delta and United have reported strong profits through 2016, all three carriers have been losing customers to ultra low-fare carriers such as Spirit and Frontier Airlines.

Spirit Airlines reported a 20% increase in total passenger miles flown in 2016 compared to the previous year. The Florida-based carrier last week announced the addition of 10 new routes, including flights from Houston, New Orleans, Baltimore and Detroit.

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UPDATES:

1:50 p.m.: This article was updated with details about the bag fees charged at United and Delta Air Lines for basic fare passengers.

This article was originally published at 11:15 a.m.