Legacy Airlines Missed a Golden Opportunity to Get People to Like the A La Carte Model, But They Ble
Over the last decade, the definition of “coach” has changed a great deal in the US. Seats have become closer together and ancillary fees have sprung up where they never existed before. Unsurprisingly, this has pissed off a lot of people. While I’m a believer in the a la carte model that has evolved, I’m also a firm believer that the airlines have screwed up its implementation at every turn. Had there been anyone with long term vision at the airlines, this would have been done in a much more customer-friendly way.
The most important thing I can convey here is that I think the hard and soft product that’s offered today is fine. Yes, there is still an evolution going on and improvements can (and should) be made as a normal part of doing business. But I’m not writing to suggest that any massive overhaul is needed. This is about how the product is marketed and presented to the traveling public. Think about how things have gone over the last 15 years and then imagine how they could have gone differently.
Looking Back and Shaking My Head The airlines sort of stumbled into this idea of charging for ancillary services. Think back to the late 1990s when airlines were trying to best each other. United created Economy Plus with extra legroom, but it wouldn’t actually sell it. It was more of a perk for elite members and those who bought the highest fares. American, meanwhile, thought it best to try to just put extra legroom in the entire coach cabin. Talk about a bad idea. What American didn’t realize is that different people want different things. Some will pay more for legroom, but not all will. Giving the choice is what matters.
Soon after this rollout, the industry tanked and the airlines took turns in bankruptcy. Over the first decade of the 2000s, amenities included in the coach fare went out the window. Free meals disappeared in favor of buy-on-board food. A fee for checking a second bag was added. Then as oil peaked in 2008, a fee for the first checked bag was added as well. Free snacks were removed. US Airways even tried to sell soda, though that was a step too far. It backed off.
While this was going on, United finally came to the realization that it could actually sell Economy Plus seating to everyone. This was a big success, but when the Continental merger occurred, the arrogant group from Houston didn’t believe it. It took multiple efforts before the Continental folks finally realized it was a good plan. It continues to be a huge success. Of course, United wasn’t the only one to see this, and just about everyone else in the US has caught on. We have Delta with Comfort+, American with Main Cabin Extra, JetBlue with Even More Space, and Alaska recently announced its own extra legroom product.
Once extra legroom options were added, that allowed airlines to further cut the traditional coach product down to size. They didn’t have to worry about angering the elites who would sit in the extra legroom section, and those penny-pinchers in the back would be fine with less room if it meant keeping fares down. Slimline seats meant more seats could be added to airplanes without hugely impacting legroom. (Some were certainly way better than others.) Galleys and lavs were shrunk down too. In a game of pennies, reducing unit costs was key.
The extra legroom sections continued to thrive. Some airlines (Delta) added free entertainment, snacks, and drinks as the section became more differentiated. But in the cheap seats, the airlines found they weren’t cheap enough. Delta in particular felt it needed something to compete with the ultra low cost carriers, so it introduced Basic Economy. The seat was the same, but these tickets were highly restricted. They were meant for only the most price-sensitive of travelers. American and United have both shown interest in doing the same.
So it was that we had this new “basic” economy at the low end, regular economy just above, and then the extra legroom section above that. In the traveler’s eyes, coach was coach but it was worse than it used to be. (Yes we’ve seen snacks added back… little improvements.) Extra legroom sections were an upsell. That is not how this should have gone.
How This Should Have Gone Think about the product offering Delta has built now. Comfort+ looks a lot like coach used to look, just with a couple more inches of legroom. No, it doesn’t have exactly the same amenities, but the point is clear. If someone cares about the experience more than just price, Delta has that option available. For those who really care about price more than anything, there are other options available. And this is where the airlines screwed up. They took what was coach and degraded it, then reintroducing those features as upsells.
Instead what should have happened is along these lines. I wasn’t sure the best way to explain it, so I went with a VH-1 Behind the Music kind of thing.
Unicorn Airlines realized early-on that people liked its coach product, but it wasn’t what everyone wanted. There was a larger group out there that really cared about price more than anything, and Unicorn’s costs weren’t low enough to compete. Understanding the different motivations, Unicorn set out to create distinct offerings that would appeal to both types of people. Unicorn maintained its quality coach product and even added a couple extra inches of legroom to make it best-in-class. Those caring about having a good experience at a fair price were thrilled. For those who cared about price above all, however, Unicorn introduced Value Class. To create Value Class, Unicorn stripped down the coach product and kept only the basics; a way to get somewhere safely and with as little cash outlay as possible. The back half of the airplane, formerly coach, was remade to Value Class standards. New “slimline” seats were introduced to allow Unicorn to put more people in that space. Yes, these seats were less comfortable than before, but the fare reduction made it a worthwhile trade-off for those who needed the price to be as low as possible. To get fares down even further, non-essential items were pulled out of the base fare and charged as separate add-ons. That included pillows and blankets, snacks, meals, and even checked bags. That would have been enough to satisfy many of the low fare-seekers, but Unicorn went even further. Though the physical onboard product remained the same, Unicorn rolled out Super Value fares to be even lower. Those fares stripped out things that were more core to the product. If anyone wanted seat assignments or carry-on bags, an extra fee had to be paid. Change fees were double the standard amount. This product was so barebones that it allowed Unicorn to sell tickets to a whole group of people who wouldn’t be able to afford them otherwise.
You can see how this would have gone better. Coach could have gotten better while new classes were created to create a lower level of onboard product. People can understand that and would accept it. Remember how fares tanked in the mid-2000s as the economy imploded? That would have been perfect timing. Coach fares could have stayed higher, but in Value Class, fares would have dropped.
Why This Didn’t Happen There are, of course, several reasons why this didn’t happen. Most importantly, airlines effectively stumbled into this way of doing business. They just kept hacking over the last decade or more, trying to find a sustainable business strategy as the red ink flowed. They went bankrupt trying, but eventually they got to a decent place with a business model that worked. They pissed off a whole lot of people along the way, but it didn’t have to go like that. If anyone actually had a true vision of the end state, then this could have been done so much better.
It’s taken a long time, but we’re finally getting to a place where this alternate development strategy starts to converge with the hack method that was employed. Still, mistakes continue to be made. When Delta decided to go through a cabin rebranding last year, it blew its chance to simply make Comfort+ into coach. Everything else could have been Value Class, or something with a more suitable name.
Maybe this transformation isn’t done yet, and we’ll see an airline employ this kind of strategy… but probably not. Hindsight is 20/20, but it’s always tough to look back and see how things went wrong when it didn’t have to be that way.