American Airlines courts 'new customer base' with fare revamp
Basic Economy has become the main driver in helping the airline fill seats, officials say
American Airlines is wooing "a new customer base" by relaxing restrictions on its basic economy fare.
Six months ago, when air travel was still booming thanks to business travel and a surge in Millennials who preferred spending on experiences to amassing possessions, Basic Economy was a no-frills option intended to maximize affordability.
Purchasers couldn't obtain upgrades such as priority boarding, preferred/Main Cabin Extra seating -- which offered extra room -- or same-day confirmed flight changes.
By October, passengers will be able to make those purchases as needed as the Fort Worth-based carrier adapts to plummeting demand for air travel during the coronavirus pandemic.
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As it stood before, "Basic Economy didn’t show the full potential of the travel experience on American because it was so restrictive," an airline spokesperson told FOX Business.
Chief Revenue Officer Vasu Raja told Bloomberg that the Basic Economy fare has been used differently over the past several months than when it was introduced. The low-cost fare is now a main driver in helping the airline fill seats.
U.S. air travel plunged 95% in April, just a few weeks after the first significant coronavirus outbreaks in the United States, and although it has since recovered slightly, it is still a far cry from where it was a year ago.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AAL | AMERICAN AIRLINES GROUP INC. | 13.92 | -0.31 | -2.18% |
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Raja told Bloomberg that more than 85% of passengers grabbed the low-end tickets during an uptick in travel in June. Of those travelers, a majority were under 30, and two-thirds weren’t enrolled in American’s loyalty program.
Since June, Raja said, the low-fare tickets have accounted for the majority of the carrier's customer base.