Is “Last Class” A Class By Itself?

That’s the question that was posed to me by the folks at Fox News’ Happening Now this morning.  They invited me on the air today to talk about the continued rollback of benefits by some of the Big 3 carriers in an effort to compete with the likes of Spirit, Allegiant and Frontier.  You can see a clip of my appearance below:

 

Watch the latest video at video.foxnews.com

For those that aren’t familiar with the term “Last Class” it’s a cute way of describing fares from the Big 3 carriers that strip out normal benefits like seat selection and the ability to change your fare or get a complimentary upgrade.

Delta was the first to head down this rabbit hole in a bigger way, rolling out what they termed Basic Economy fares.  Those tickets can’t be changed or refunded, don’t allow seat selection until check-in, and don’t allow paid or complimentary upgrades for elite members.  They recently started rolling these out on international flights where before you’d only encounter these options on domestic US flights.

American Airlines has announced their intention to roll out a similar product so they can continue to compete with the likes of Spirit (who they compete with on many non-stop routes), but they haven’t announced what the structure of those fares will be.  If the me-too nature of the Big 3 over the past 10-20 years is any indication, I expect that their product will look quite similar to Delta’s offering.  United hasn’t really moved in this direction but I doubt it will be long before they do.  They don’t have quite the competition with Spirit but they do have Frontier to contend with on a number of routes out of their Denver hub.

This Huffington Post article talks about the positives of “Last Class”, saying that they’re a boon for travelers, even going so far as to say:

The discussion included suggestions that major airlines now offering cheaper tickets with less perks are treating passengers “like cattle” in a class “worse than coach.”

This, fellow travelers, is simply not true. In fact, those new “last class” tickets are probably one of the greatest things happening in air travel right now. Here’s why.

Suffice it to say that the author and I disagree quite a bit, even if there are some positive aspects to the proliferation of these types of fares.  The plus side?

These types of fares should encourage Delta and American (and maybe United in the future) to match more fares from their ultra-low cost competitors.

The biggest positive here is the size and breadth of the networks run by the Big 3 compared to someone like Spirit.  On a route like NYC-LAX, Spirit operates 1 flight a day.  United offers as many as 13 flights a day between Newark and LAX.  If there’s a problem with one flight on Spirit, you’re likely waiting a long time to get where you’re going, whereas in this example, you’ve got a much greater chance United can find a way to accommodate you, either on a non-stop or a connecting flight through one of their hubs.

The big guys feel like they have to compete on price when it comes to these non-stop flights.

Heck, Scott Kirby, President of American Airlines, was adamant about American aggressively matching the prices of Spirit.  He just feels like they can get away with offering less benefits to customers when they’re matching those fares.  I don’t see a positive long-term outlook in an industry where competing on price continues to increase, but it’s great for the flying public and their wallets.  With all the consolidation that has happened in the US airline market, those low-cost carriers are the last line of defense against higher fares.

So, Last Class fares are great, right?

Let’s not start handing out awards just yet.  While these tickets can save you and your family a bunch of cash when traveling, there are some key points you need to consider when booking a Last Class ticket.

The next wave of “unbundling”

The airlines have been talking about unbundling fares for years. They talk about how much better it is for customers not to have to pay for services they’re not using.  While airline tickets haven’t seen huge increases in pricing (in some historical context, they’ve gone down for certain periods of time), there are plenty of new fees, and some are quite high.  Note:  Spirit actually charges LESS for a checked bag in many instances than AA, Delta and United.

No changes really means NO CHANGES

It may sound reasonable to say, “there’s no way I’m changing this trip”, but life happens.  And, while a $200 change fee may sound high, it’s better than losing the entire value of a $500 ticket because you can’t fly it.  Last Class really creates a new level of buyer beware when it comes to buying an airline ticket, especially on more expensive routes.  

The Spirit ticket I booked a few weeks ago was less than $100 and saved my company about $400.  But, in many of those situations, when something goes wrong and you HAVE to be somewhere, buying the last-minute replacement ticket is a very painful experience.  I had a backup plan, which was essentially to throw away the Spirit ticket and buy the $400 walk-up fare on United.  If you absolutely have to be somewhere, make sure you know your options.  And, don’t count on the airlines to solve it for you.

When irregular operations happen (bad weather, broken planes), the airlines may say they treat all customers the same, but that’s just not how the world works.  Elite members and those on fully refundable tickets (read, more expensive) will get accommodated first, plain and simple.  So, if punctuality is key, plan appropriately. 

Does Last Class make it better for elites traveling on regular fares?

That HuffPo article above would have you believe that Last Class is actually meant to help the business traveler:

Business travelers, for example, often book last-minute trips and thus wind up with less-than-savory aisle seats. Delta’s basic economy fares are meant to fix this: Preventing basic economy passengers from choosing their seats until flight day gives business passengers (or anyone wanting a window seat at the last minute) more time to book a regularly-priced ticket and choose an open seat of their liking, Delta’s managing director of merchandising Andrew Wingrove told HuffPost. Under this system, the business passenger (who pays more) gets a prime window seat for a typical price, and the basic economy passenger (who pays less) gets their pick of the leftovers — which could include a window seat but might not — for a cheaper price.

That’s just hogwash.  For starters, the airlines aren’t offering a ton of these deeply discounted fares.  Couple that with very full planes and there aren’t a whole lot of seats left for those last-minute reservations.  And, what Delta isn’t telling you above is that there’s already a section of preferred seats on most planes reserved for elites.  They generally have more legroom and can be selected by top elites at the time of booking.  Lower level elites and those without status can’t book those seats without paying a fee, so some of those seats are already available.  It’s just not realistic to paint Last Class as this gateway that opens up better seats for last-minute business travelers.

Consider your alternatives

Before you book a Last Class ticket, be sure you know what you’re buying (and not buying).  And, you also need to think about other resources that might get you a cheaper overall trip.

Some of the fees that the airlines charge can be avoided by carrying the airline’s credit card, which can nullify some of the difference in cost between a regular coach ticket and a Last Class ticket.

If someone is looking for lower prices but needs the flexibility to potentially change their ticket, they might consider a service like Flyr.  For a fee, they’ll essentially guarantee to hold the price of an airline ticket for some period of time.