Product/Are your frequent-flier miles about to lose value.

Product/Are your frequent-flier miles about to lose value.docx

Are your frequent-flier miles about to lose value?

Savvy travelers fear the rise of basic-economy and premium-economy seats could cause rewards and upgrades to cost more points

By Scott McCartney, Wall Street Journal, 19 December 2018

Are Your Frequent-Flier Miles About to Lose Value?

Photo: Pep Montserrat

Brace yourself for what may turn out to be the next big devaluations of your frequent-flier miles.

Delta is testing basic-economy awards—letting frequent travelers use miles to pay for the carrier’s bare-bones, or basic-economy, tickets, which are a tier below the standard economy level. That includes no advance seat assignments, inability to change or upgrade and last-group boarding, so your carry-on likely will be gate-checked. Veteran travelers fear this change could easily lead to frequent fliers spending more miles for a regular economy ticket.

And as Delta, American and United roll out premium economy on international routes, changes are coming to upgrades. Premium economy typically costs $500 to $1,000 more than regular economy. You get an extra inch of width, more recline and legroom than standard economy and sometimes better food. Still, it’s a far cry from business class.

Delta Air Lines says frequent fliers have asked for basic-economy awards, though United Airlines says it hasn’t received such requests.

Delta Air Lines says frequent fliers have asked for basic-economy awards, though United Airlines says it hasn’t received such requests. PHOTO: CHARLES KRUPA/ASSOCIATED PRESS

Right now, you can upgrade a coach ticket to business class if you spend enough miles or have top-tier status and an international upgrade certificate. But on many airlines outside the U.S., an upgrade goes up only one class of service—economy to premium economy, not business. So you’d need to buy a premium-economy seat to upgrade to business class. American’s rules suggest it’s headed in that direction.

Airlines say they are adding options for travelers and improving their loyalty programs by giving you more ways to use your frequent-flier miles. To road warriors, both moves make the seats they really want more expensive.

Economy and business-class award ticket prices have gone up and your ability to upgrade from economy to business has gone down, says Andrew Gold, a Tampa, Fla., university professor. “Now they are complicating things further so your baseline, instead of an economy fare, is going to be basic economy.”

American, Delta and United all reduced many travelers’ ability to earn miles when they switched to paying out miles based on fare rather than distance traveled about three years ago.

The best perks of loyalty programs lie in top-tier status, where you get early boarding, bag-fee waivers, better service and quicker rebooking. If you are in the very top tier of a program, you may get upgrades.

To many travelers, the Delta test of basic-economy awards is part of a pattern—reducing what’s included with the lowest price and forcing people to pay more to get what used to come standard. Basic-economy fares started as tests in select markets, originally pitched by airlines as a countermeasure to discount airlines, then spread world-wide. Since regular economy is about $60 round-trip more expensive than the lowest price, frequent travelers figure they’ll soon have to pay more in miles for regular award tickets, too.

“I have no doubt at all that this will become the standard. Once you lose something, they don’t give it back to you,” says Lucian Chen, a Delta platinum-level frequent flier and a New York-based attorney. “The systematic devaluing of miles is upsetting.”

Frequent travelers shun basic-economy tickets because of the restrictions and have little appetite for basic-economy award tickets, especially if they have lots of miles in their accounts. But for frugal travelers, those tickets can be an option to get an award when they otherwise might not have enough miles.

Delta says it is testing basic-economy awards on a handful of routes: between Minneapolis and Phoenix and routes out of Charleston, S.C. Basic economy is often priced about 5,000 miles or so less than standard. That’s consistent with the cash price being about $50 or $60 higher for standard economy over basic economy. If you don’t care about a seat assignment in advance and are willing to live with the other restrictions, a basic-economy award ticket can save you some miles.

Since Delta no longer publishes an award chart, the price in miles for trips varies significantly, following the cash price. It’s hard to compare different markets, since demand for seats changes rapidly. But a spot-check of flights roughly the same distance as trips from Charleston gives some credence to road-warrior fears.

A Charleston-Los Angeles round-trip for Feb. 8 to 15 priced out on Monday at 32,000 miles for basic economy. Delta requested fewer miles for standard-economy trips to Los Angeles from Charlotte, Columbia, S.C., and Orlando, Fla., suggesting the basic-economy price was no bargain.

Are Your Frequent-Flier Miles About to Lose Value?

Delta says since it ties its award price to the cash price of the ticket, basic-economy awards will be cheaper, in miles, than standard. “The price of a ticket isn’t changing, necessarily,” Delta spokeswoman Kate Modolo says. “The rollout of basic-economy awards is not designed to impact main-cabin pricing but instead to offer more reward options.”

Ms. Modolo also says that by giving customers more ways to use miles, “we are making them more valuable,” not devaluing them.

While Delta says basic-economy awards are something customers have asked for, United says it has had no such requests.

Premium-economy cabins haven’t yet degraded business-class upgrades on U.S. airlines. But some of their international partners have.

American doesn’t yet offer premium-economy upgrades and awards—a spokesman says the airline is “working on it.” American’s upgrade rules already say that “upgrades are valid to the next cabin of service.” Once premium economy becomes the “next cabin of service,” an upgrade from an economy ticket may get you only premium economy, not business class.

United started offering premium-economy awards on Dec. 3. Michael Covey, managing director of MileagePlus premier programs, says early sales have been good for premium-economy awards on longer routes, such as San Francisco-London.

Both United and Delta have started premium-economy upgrades with flexible policies that allow top-tier frequent fliers to use certificates to upgrade to business class or premium economy. On United, if a business-class seat isn’t available, the upgrade certificate gets you a premium-economy seat and on a wait-list for a business-class seat.

“We felt it was important to retain that benefit,” Mr. Covey says. “I don’t see, at this time, a future in which we put a system in where it’s only one cabin allowed. We’re really proud of the flexibility that we have.”

You can also use miles, or cash plus miles, to buy an upgrade as long as you’re not on the cheapest economy fares. Business class costs more miles than premium economy, but both are available on United and Delta. On United, if you buy a premium-economy ticket, you get priority over people with economy tickets for business-class upgrades.

© Dow Jones & Company, Inc.

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Product/Why Alaska Airlines’ basic economy fare will be better than most.docx

Why Alaska Airlines’ basic economy fare will be better than most

By Cailey Rizzo, Travel + Leisure, 30 April 2018

Alaska Airlines will join the other major U.S. airlines and introduce basic economy fare later this year — however it’s not nearly as bad as it could be.

Alaska Airlines’ “Saver Fare” will make it the fourth major airline in the country to introduce basic fares (after American, Delta and United). But Alaska’s version of the product will have a few more perks than other bare bones options.

Unlike many other basic economy fares, customers who book Alaska’s Saver Fare will still be able to pre-select their seats and bring aboard one personal item and one carry-on. Other major airlines have removed seat assignments and carry-on bags from their basic fares, meaning you get told which (middle) seat you get when you get to the airport, and you better fit everything you’re traveling with under the seat in front of you unless you want to pay more.

However, the Saver Fare seats for sale will not be glamorous. They are at the rear of the aircraft, and those who book them will be among the last to board the plane. Passengers who book Saver Fare tickets also give up their ability to rebook, cancel tickets, or upgrade their seats.

Saver Fares will be introduced in the fall of this year, Alaska Airlines executives said in an earnings call last week.

Although basic economy fares are unpopular among passengers, they’re unlikely to go away anytime soon. Airlines created basic economy to stop passengers from booking their trip on other competitive low-cost airlines. In fact, airlines measure their success by how many passengers don’t choose basic economy tickets.

As Alaska Airlines takes over the former Virgin America airline, changes abound. According to Business Insider, Alaska will start selling exit rows and initiating dynamic pricing for premium seats, among other changes in the next couple months. And earlier this month, Alaska Airlines decreased the allotted size for carry-on luggage.

© Meredith Corporation Travel & Leisure Group.

Copy created under fair use guidelines for education.


Product/Basic economy is a success for airlines, even if travelers don_t buy the tickets.docx

Basic economy is a success for airlines, even if travelers don’t buy the tickets

By Cailey RizzoTravel + Leisure, 22 October 2017

basic economy seating airplane passengers airline flight

Getty Images

Airlines are unlikely to get rid of basic economy fares any time soon. And they don’t even care if nobody buys the no-frills tickets.

Basic economy is “more of a defensive product than it is an offensive product, because we need to have a product for people who are just price conscious,” Delta Air Lines president Glen Hauenstein told reporters last week, according to Air Transport World. “Our sell-up [from basic economy] continues to remain high and I think that’s the key part.”

In other words: traditional airlines only created basic economy as an option for people who generally fly on budget airlines. It was never meant to provide a price break for its average customer base. In fact, airlines gauge their success on how many people choose not to buy basic economy tickets.

The trend has only continued to grow over the past few years. Delta was the first legacy airline to offer this airfare category, introducing basic economy back in 2015. And in February of this year, United and American Airlines jumped onboard.

Even if, as a collective flying society, travelers decided never again to buy a basic economy ticket, airlines would be unlikely to eliminate the option.

Airlines make billions off the tricky venture (possibly $3.1 billion by next year). In addition to retaining customers who would have otherwise been poached by budget carriers, airlines often profit from travelers who don’t fully understand the limitations of a basic economy ticket. Hauenstein noted that these customers often end up paying more to upgrade their trip (fees for checked baggage, for food, and for seat selections, among others).

The best defense against overpaying for lower class service is to read up on the specific policies for individual airlines. Those traveling with extra luggage will likely find that a general economy ticket is the cheaper option.


Product/Congress is trying to set a minimum distance between airline seats.docx

Congress is trying to set a minimum distance between airline seats

That is likely to harm rather than help passengers

By A.W., The Economist, 27 September 2018

CONGRESS may soon pass legislation compelling airlines in America to keep a minimum seat pitch, as the distance between rows of seats is known. The reauthorisation bill for the Federal Aviation Administration (FAA), a regulator, must be passed by September 30th. The House of Representatives passed it on September 26th and the chairman of the Senate committee in charge of the bill expects it to pass the Senate quickly. “Relief could soon be on the way for weary airline passengers facing smaller and smaller seats,” declared one senator.

But will it? There is good reason to believe that the bill will backfire and hurt the flyers it is meant to protect. If it sets seat pitch above the smallest levels employed by some airlines, passengers across the industry could end up paying more to fly. Gary Leff, a travel writer, makes this point persuasively on his blog, View From the Wing. Right now, the smallest seat pitch on American carriers is 28 inches (70cm) on ultra-low-cost airlines such as Spirit and Frontier. Travellers choosing to fly with these airlines know they are in for a cramped experience. But they fly with them anyway because of the low prices on offer. Meanwhile, legacy airlines such as American, Delta and United have been forced to reduce some of their own fares to remain competitive with these no-frills rivals.

Seat-pitch regulation would change the equation. If the FAA mandates 29 or 30 inches between rows, low-cost airlines would have to spend money moving seats around and would sell fewer tickets on each flight. The costs of all of this would be passed on to flyers in the form of higher fares. Legacy carriers would be the biggest winners. With less pressure to maintain low fares in order to compete with the likes of Spirit and Frontier, they could raise their prices as well. In other words, it is likely that travellers on all airline types would face higher fares, even if they do not always get to enjoy more legroom.

And what if the FAA sets a lower minimum? At best, this would do nothing in the short term. But at worst, it could actually hurt flyers, too. Christopher Elliott, the founder of, a consumer group, told MarketWatch, a news website, that he expects the FAA to put the minimum seat pitch at 28 inches. That is a reasonable bet, given the money that some airlines would have to spend on replacing seats if a higher number is chosen. The likelihood of the FAA being challenged in court as a result of such a ruling is high. Mr Elliott argues that airlines would see such a change as permission to set their seat pitches at 28 inches—less than the 30 to 32 inches that can be found on most major American airlines. So there is a chance that some airline rows could actually shrink as a result of legislation aimed at ensuring more legroom.

A better course would be to allow the market to continue to determine airline seating arrangements. Flyers have indicated that they are happy with tighter seats, so long as they cost less. It is hard to see what Congress hopes to achieve by overruling them.

© The Economist Newspaper Limited

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