Economy basics

Even Qantas has been mooting the idea via a survey, highlighting its trans-Tasman network as a potential target, taking the temperature of an advisory panel on whether passengers fancy “unbundling” the Qantas economy experience: notionally paying less for their basic ticket but adding on “extras” like luggage, meals, movies, seat selection and so on for an extra fee.

(That “notionally” is in there because, as a general rule, the airlines overseas that have introduced basic economy fares only reduced fares at the very start of their basic economy experiment, lifting them to the old regular economy pricing after people stopped paying attention, and then trousering the price differential between basic and regular economy.)

In other words, as Air New Zealand put it when introducing domestic Seats to Suit fares in 2011: “In the vast majority of markets our lead-in fares will be reduced with the introduction of a Seat fare level”.

This strategy has worked well for US airlines in particular, with American, Delta and United all firmly entrenched in the world of basic economy. Not only do they get to pocket the “upgrade” fee to what passengers used to expect as a minimum, but it also helps them in the race to the bottom of the fare barrel on flight price comparison websites, which have been slow to make it clear exactly what passengers are buying, and where the cheapest comes first.

‘This strategy has worked well for US airlines in particular.’

Basic Economy helps when filling up planes too. Clearly, there are passengers whose priority is getting the absolute lowest fare: that much is clear from the low-cost carrier competition. If full-service airlines can serve this market with the less desirable middle seats at the back of their aircraft — while at the same time making the experience of passengers willing to pay a little more for a little more service a little better by giving them more chance to secure a window or aisle — that’s all for the good.

But it seems that the market isn’t so hot on having an unbundled Qantas experience after all. “We have no intention on unbundling our fares,” said a Qantas spokesperson.

The wider context in the passenger experience world is that more passengers are flying on budget airlines, driving prices down and making passengers ask, entirely reasonably, what they get for their money. The Asia-Pacific region is filled with low-cost carriers offering a fair service for a fair price, with less-nimble established flag carriers struggling to keep up with the pricing Joneses — not to mention the Fernandeses (AirAsia), Kiranas (Lion Air) and Gangwals (IndiGo) — and often the convenience factor as well.

The rise of the independent contractor economy, where more passengers are paying for their own work travel, and the fall in the number of larger companies that see business class as a good investment, plus the fact that low-cost carriers often operate a very tight ship in terms of schedules, have also meant that they are becoming increasingly attractive to business travellers.

Moreover, beyond the rise of the long-haul, low-cost carriers, the airlines formerly seen as beyond-the-pale budget cattle-trucks by many experience-sensitive passengers are no longer quite so unpalatable. Internationally, some of them, like AirAsia X, WestJet and Eurowings, even offer business class seats competitive or superior to the products on full-service carriers.

At the end of the day, full-service airlines have created their own problems in many ways. Qantas’ dual-branding strategy, while effective, has meant that many Australians’ primary (or even only) Qantas Group option is on Jetstar. If airlines make the no-frills, nothing-included experience people’s default expectation, then they can’t turn around and complain that passengers aren’t willing to pay for what used to be the base-level of passenger comfort and amenities.