United: Basic Economy fares will start soon in Minneapolis

United Airlines hopes to debut its Basic Economy fares in Minneapolis and they could go on sale as soon as the first quarter of this year, according to company president Scott Kirby.

“We’re still working through the final – making sure everything is done, everything works right,” Kirby told reporters on a quarterly earnings call Wednesday. “Coming soon.”

Minneapolis/St. Paul was chosen because United's flights from there connect to the rest its hubs. And workers there are familiar with rolling out new products, Kirby said.

“We’re going to roll it out there to make sure everything works,” he said.

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Minneapolis/St. Paul is also an airport that has seen recent expansions by “ultra low-cost” rivals that Basic Economy fares were designed to compete against. In particular, Spirit has ramped up its presence in Minneapolis in recent years. It now offers at least seasonal service to more than a dozen destinations from the airport. Also of note: Delta, the first big airline to roll out Basic Economy fares, operates a major hub at Minneapolis.

As for United, once its Basic Economy fares debut at Minneapolis/St. Paul, Kirby said they’ll likely expand to the rest of United's domestic system and to its Caribbean flights. They also could wind up on long-haul flights after that, though Kirby said that remains to be seen.

“We expect to have it in the rest of the domestic system in not too distant system,” Kirby said. “We don’t have a plan one way or another on that (long-haul flights). We expect to get it rolled out across the entire domestic and near-haul international system not too long after we launch it, assuming it’s going well.”

Flight attendants won’t be expected to police what passengers put in the overhead bins. United hopes to catch most of the larger carry-on bags at check-in, but then would charge a baggage fee and a service fee for checking at the gate.

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“That’s absolutely true that we’re not going to ask flight attendants to monitor,” Kirby said. “What we’ll do is collect the bags, the size of carry-on bags like a rollerboard, we will collect those at the gate.”

“We think we’ll be able to get the bags at the lobby,” he added. “They won’t be on the airplane with the bag. There’s nothing for the flight attendant to monitor.

But if a Basic Economy passenger puts a small personal item in the overhead bin – one that would otherwise fit under the seat in front – Kirby said that’s how it goes.

“We’re not going to ask the flight attendants to monitor anything,” he said.

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United expects to generate $250 million this year from seat segmentation such as Basic Economy, $500 million next year and $1 billion by 2020.

“This year it’s mostly about Basic Economy. But moving forward it’s also about having Premium Economy,” Kirby said. “Once you’ve got more products, I think you’ll have more customers buy – actually pay for – first-class tickets because they’ve got the option of Basic Economy, main cabin, Premium Economy, first class. The first-class price now looks a whole lot more like Premium Economy.

“There’s a bunch involved in our number that’s not just Basic Economy," he added.

United became the second of the USA’s three big airlines to confirm plans for a Basic Economy fare. Delta was first, making the fares permanent after experimenting with them mid-decade. And, on Wednesday (Jan. 18), American formally unveiled its long-expected plan to sell Basic Economy fares.

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American’s Basic Economy restrictions closely mirror those enacted by United, including a restriction that limits Basic Economy fliers only to a carry-on that can fit underneath the seat in front of them. Bags that must be stowed in overhead bins will not be allowed, and fliers will be asked to check them – and pay the related fees – if they bring them to the gate.

The new Basic Economy fares now in place at the USA's three biggest airlines have been developed as a weapon to battle a new breed of budget carriers rapidly expanding at major hubs. 
Those airlines – notably “ultra low-cost carriers” such as Spirit, Frontier and Allegiant – are known for charging rock-bottom base fares but adding fees for everything from seat assignments to water. They also charge a fee for using their overhead bins. But, even with their fee-heavy structures, those budget outfits often compare favorably to major "full-service" airlines in online fare searches.

The bigger airlines view the new Basic Economy fares as something that can help them combat that in an age where many customers will simply book on an airline with a cheaper fare – even the savings is as little as $1.

Contributing: Ben Mutzabaugh, USA TODAY

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