Expenses, Hotel, Policy, Technology

Basic Economy Fares are Not ‘Logical’, and Nobody Will Convince Me Otherwise!

I read with interest a recent article in The New York Times suggesting that the major U.S. carriers, American, Delta and United either had or would soon be offering fares designed for the purely price sensitive customer (full article here).

These ‘Basic Economy” fares as Delta calls them, strip away things like advance seat assignments, bags both checked and carry-on and inflight entertainment, in an effort to match fares offered by the likes of ultra-low cost carriers Spirit and Frontier. 

This seems like a reasonable response to a competitive threat and on the surface what’s the harm in a new lower class of fare, provided the other fare options normally offered are still available.  But as I considered the managed travel program and how many are guided by airfare policies based on the ‘lowest logical airfare’, I wondered if Basic Economy could be viewed as ‘logical’ for a business trip.

My short answer? No! These fares are not logical for business travel, but despite my protestations (travel managers didn’t listen to me five years ago, so they’re not likely to now), I believe these fares will become part of the consideration set for many a managed program. 

As if often the case, many of the business travel issues we face are not new, and this one is no exception.   Almost five years ago yours truly opined in a piece for Business Travel News, about the definition of lowest logical airfare and how it was about to change forever.  It was still relatively early in the days of change and ancillary fees, and at the time I suggested that travel managers were missing the mark and needed to take action.  My exact words were:

Today's travel managers must expand their definition of "logical" beyond price, scheduling and corporate discounts--to the benefit of both business travelers and their organizations.  

Fast forward to 2016, and has that happened?  I don’t think so.  In a recent Phocuswright business travel study, the responses to the question of a travel manager’s top priorities have not changed much if at all. Cost containment and compliance were the overwhelming priorities, with duty of care a fairly close third.  Only 31% of respondent suggested ‘improving traveler satisfaction and well-being’, which ranked it just below getting their arms around their data.  As someone who finds himself on the road quite frequently, I take offense to the thought that the travel data I produce is more important than I am to my company, but that seems to be the case in many instances.  

With that in mind, if the economy doesn’t react favorably in the future, will CFO’s looking for ways to manage expenses be tempted by the savings provided by Basic Economy fares?  

Given the historical knee-jerk reaction to cut travel expenses without much reflection, I say they will definitely be on the table despite the hue and cry of the company’s travelers. As to the question of should they, you know where I stand -but putting personal feelings aside, my answer is still no.  Maybe they are ok for a short day trip, with no bags, not enough time to work, and for a traveler who uses mobile devices for everything.  Obviously that’s a pretty narrow use case and there might be others, but regardless, my recommendation is that travel managers get in front of this situation and modify their policies to ensure these basic economy fares become the exception and not the rule.   That’s right, it’s time to put travelers ahead of data.  Trust me; they will thank you for it!