United looks to cut costs with new basic economy fare

United looks to cut costs with new basic economy fare

United Airlines has unveiled plans to combat US budget carriers with a new ‘basic economy’ fare.

Passengers will be assigned seats on the day of departure, be limited to taking only one carry-on bag and will board the aircraft last.

However, the airline says they will still receive the same standard economy service, including food, drink, Wi-Fi and entertainment via personal devices.

The new fare type was unveiled as part of a wider plan to cut expenditure by $1 billion by 2017-18 alongside a $4.8 billion earnings improvement by 2020.

No details about the cost of the new fare was disclosed or where it will apply, other than in “select markets which are subject to change”.

United will continue to offer economy, Economy Plus and domestic first class in addition to the new basic tariff.

The airline also “remains on track to introduce its reimagined international premium travel experience, United Polaris, on December 1”.

The carrier added that it is evaluating a new premium economy for domestic and international markets.

Chief commercial officer Julia Haywood said: “Customers have told us that they want more choice and Basic Economy delivers just that.

“By offering low fares while also offering the experience of travelling on our outstanding network, with a variety of onboard amenities and great customer service, we are giving our customers an additional travel option from what United offers today.”

Other initiatives include improving United’s yield management system to more accurately forecast demand to better maximise profitability per flight, with a focus on key hubs at Chicago, Houston and Newark.

United’s mobile strategy is being accelerated, including next steps for its mobile app, which has more than 14 million downloads, expanding the types of transactions passengers can make throughout their journey, including managing documentation for international travel and expanded re-booking options.

The carrier is modifying its narrow body aircraft fleet plans by converting an original order for 65 Boeing 737-700s into four 737-800s for delivery next year while the remainder will be converted into orders for new generation 737 MAX aircraft with delivery dates yet to be determined.

“These changes will allow United to take advantage of the superior fuel efficiency of the MAX aircraft while also reducing capital expenditures by approximately $1.6 billion through 2018,” the airline said.


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