Originally Posted by
Tranquility
They don’t necessarily need to, but not doing so would erode their margins. For us, it’s easier to disperse a higher fuel cost per aircraft because of our seat density. For a legacy, which sells 10% (total guess, I have no idea) basic economy fares, its harder to disperse that increase in cost. As oil gets more expensive, basic economy makes less and less sense for a legacy.
I agree.
Capacity remains high but as fuel and labor goes up, it squeezes their margins more and more.
Now they are trying to find ancillary revenue sources like Basic Economy which they actually like. UAL said in their financial call that they like the basic economy because most passengers who buy the basic economy actually "upgrade" to items when going through the ticket process (sound familiar?) like bags, boarding, seats etc....
NBC news had a thing last night showing how Legacy basic economy fares have been resulting in passengers paying more overall for their ticket, when adding things, versus buying a standard coach ticket in the first place. The government even came out with guidance warning consumers about this.
https://www.theverge.com/2018/1/24/1...-international
Is a fare war coming? United sparks worries among investors - Jan. 24, 2018
So they want a war of the basic economy.