Earlier this morning, Alaska Airlines announced on their earnings call that they will introduce Basic Economy fares in the fall of this year.
Alaska basic economy customers will board the aircraft last, and also sit in the back of the aircraft. Further, there will be no reservation changes permitted and elite upgrades will not be possible. Unlike other basic economy fares we have seen in the marketplace, Alaska's fares will provide advanced seat assignments.
“We plan to roll out a fare segmentation platform in the late fall, which is essentially Alaska’s response to the industry’s basic economy fares, which are now prevalent,” said Alaska Air Group CEO Brad Tilden on the company’s first-quarter earnings call.
As with other carriers who have already rolled out basic economy, Alaska expects customers will opt out of the basic economy fares and pay more for what they used to receive for free. The airline expects the new fare class to drive an additional $100 million in annual revenue in 2019.
Alaska Basic Economy
- Alaska basic economy customers will board the aircraft last
- Alaska basic economy customers will sit in the back of the aircraft
- No reservation changes permitted
- No elite status upgrades
- Fares will provide advanced seat assignments
- Fares will include a free a carry-on bag
Our Analysis
This news doesn't come as much of a surprise. It was only a matter of time before Alaska rolled out a basic economy fare class. My guess is they were waiting to finalize the merger with Virgin America before they did so.
Basic economy fares are becoming a necessity to compete with the legacy carriers in the US who have already implemented them. With this news, Southwest Airlines is the only remaining domestic carrier without a basic economy offering.
Bottom Line
This news comes as no surprise as this is the world we are living in when it comes to US-based carriers. They all have shareholders to answer to and rolling out a basic economy fare class is one of the quickest ways to bolster their revenue numbers. Alaska's basic economy product isn't nearly as bad as American or United as you still get advanced seat assignment and a free carry-on bag.