Jun 26, 2025 07:00:00

Why are airlines introducing 'Basic Economy' that is cheaper than economy class?

Some airlines have set up a seat class called 'Basic Economy' that is cheaper than economy class as a countermeasure against low-cost carriers (LCCs).

JetBack , which develops ticket cost saving services, explains the impact that this Basic Economy has had on users and airlines.

The Economics Behind 'Basic Economy' – A Masterclass in Price Discrimination
https://blog.getjetback.com/the-economics-behind-basic-economy-a-masterclass-in-price-discrimination/

Basic economy has been introduced by airlines around the world, mainly in the United States. Basic economy is basically set as a lower class than economy class. For example, Delta Airlines' basic economy has the same seat types and meals as economy class, but there are restrictions such as 'there is a charge for carry-on baggage (larger than personal items)', 'there is no free checked baggage allowance', and 'there is no seat reservation'.

Although each airline's basic economy service content differs slightly, they all have one thing in common: they are 'less wasteful, less flexible, and offer various inconveniences, both large and small, to differentiate them from economy class.' JetBack also points out that the introduction of basic economy was accompanied by a price increase for economy class, forcing users to choose between paying the same amount for a simplified product or paying a higher price to receive services that were previously available for free.

Until now, economy class was the 'lowest-ranked class,' but with the introduction of basic economy, it has changed to 'a class that allows you to avoid various restrictions.' According to American Airlines' announcement, the average upgrade price from basic economy to economy class is $23 (3,300 yen). For this reason, some users who are considering basic economy will choose economy class, thinking that 'you can avoid various restrictions by just paying 3,300 yen.' Also, when trying to book basic economy on airline reservation sites, restrictions such as 'seat reservation is not possible' are displayed in large letters, so many users end up choosing economy class.

The introduction of Basic Economy has brought great benefits to airlines. For example, Delta Airlines is estimated to have increased its revenue by $20 million (approximately 2.9 billion yen) in the first quarter of 2016 as a result of the introduction of Basic Economy, and United Airlines is estimated to have increased its annual revenue by $150 million (approximately 22 billion yen) as a result of the introduction of Basic Economy. On the other hand, there are also opinions that 'Basic Economy is a clever ploy to make passengers pay higher ticket prices in the end,' and it has been pointed out that some kind of regulation may be imposed.