JULY 2018 107
Air New Zealand has used Seats
to Suit across the Tasman for
years, but new codesharing
partner Qantas seems unlikely
to follow suit.I
t seems like every month or so
another full-fare, full-service airline
announces that it is launching a
“basic economy” fare product to
compete with the rise of low-cost
carriers, especially the new breed
of low-cost, long-haul airlines like
Jetstar’s 787 operation, Singapore
Airlines’ Scoot, Norwegian Air Shuttle,
and so on.
Locally, Air New Zealand has been
offering a basic economy model on its
Australia and Pacific Island network
under the Seats to Suit branding since
2010, with four initial categories of
travel on its all-economy Airbus A320
international aircraft: Seat, Seat + Bag,
The Works (adding movies, a doggy-
dish airline meal and seat selection),
and Works Deluxe (adding a free
middle seat, an extra bag and priority
ground handling).
The airline later rolled out Seats to
Suit on the domestic network in 2011,
but doesn’t offer Works Deluxe there- and has fiddled with the premium
end of its pricing on widebody trans-
Tasman services from Auckland
too, adding premium economy and
business fares as options on those
flights, although it hasn’t gone basic
economy on long-haul services.
Even Qantas has been mooting the
idea via a survey, highlighting its trans-
Tasman network as a potential target,
taking the temperature of an advisory
panel on whether passengers fancy
“unbundling” the Qantas economy
experience: notionally paying less for
their basic ticket but adding on “extras”
like luggage, meals, movies, seat
selection and so on for an extra fee.
(That “notionally” is in there
because, as a general rule, the airlines
overseas that have introduced basic
economy fares only reduced fares at
the very start of their basic economy
experiment, lifting them to the old
regular economy pricing after people
stopped paying attention, and then
trousering the price differential
between basic and regular economy.)
In other words, as Air New Zealand
put it when introducing domestic
Seats to Suit fares in 2011: “In the vast
majority of markets our lead-in fares
will be reduced with the introduction of
a Seat fare level”.
This strategy has worked well for US
airlines in particular, with American,
Delta and United all firmly entrenched
in the world of basic economy. Not only
do they get to pocket the “upgrade” fee
to what passengers used to expect as a
minimum, but it also helps them in the
race to the bottom of the fare barrel on
flight price comparison websites, which
have been slow to make it clear exactly
what passengers are buying, and where
the cheapest comes first.
Basic economy helps when filling up
planes too. Clearly, there are passengers
whose priority is getting the absolute
lowest fare: that much is clear from the
low-cost carrier competition. If full-
service airlines can serve this market
with the less desirable middle seats at
the back of their aircraft – while at the
same time making the experience of
passengers willing to pay a little more
for a little more service a little better by
giving them more chance to secure a
window or aisle – that’s all for the good.
But it seems that the market isn’t
so hot on having an unbundled Qantas
experience after all. “We have no
intention on unbundling our fares,”
said a Qantas spokesperson.
The wider context in the passenger
experience world is that more
passengers are flying on budget
airlines, driving prices down and
making passengers ask, entirely
reasonably, what they get for their
money. The Asia Pacific region is filled
with low-cost carriers offering a fair
service for a fair price, with less-nimble
established flag carriers struggling to
keep up with the pricing Joneses – notto mention the Fernandeses (AirAsia),
Kiranas (Lion Air) and Gangwals
(IndiGo) – and often the convenience
factor as well.
The rise of the independent
contractor economy, where more
passengers are paying for their own
work travel, and the fall in the number
of larger companies that see business
class as a good investment, plus the fact
that low-cost carriers often operate a
very tight ship in terms of schedules,
have also meant that they are becoming
increasingly attractive to business
travellers.
Moreover, beyond the rise of the
long-haul, low-cost carriers, the
airlines formerly seen as beyond-the-
pale budget cattle-trucks by many
experience-sensitive passengers
are no longer quite so unpalatable.
Internationally, some of them, like
AirAsia X, WestJet and Eurowings,
even offer business class seats
competitive or superior to the products
on full-service carriers.
At the end of the day, full-service
airlines have created their own
problems in many ways. Qantas’s
dual-branding strategy, while effective,
has meant that many Australians’
primary (or even only) Qantas Group
option is on Jetstar. If airlines make the
no-frills, nothing-included experience
people’s default expectation, then
they can’t turn around and complain
that passengers aren’t willing to pay
for what used to be the base-level of
passenger comfort and amenities.‘This strategy
has worked
well for US
airlines in
particular.’
Economy basics
Qantas declines no-frills tickets... for now
CABIN PRESSURE
JOHN WA LT ON
@thatjohn