What United’s ‘Basic Economy’ Tells Us About The Future Of Passenger Flights

Senior Contributor
12.08.16

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United’s newly announced “Basic Economy” tickets seem, on the face of it, like the next ridiculous step in the ongoing Kafkaesque adventure that flying has become. You get assigned your seat the day of, you’ll have to pay extra to use the overhead bins, and you get to enjoy all this amid shrinking seats, seemingly endless stories of racism and stupidity in the air, and no end in sight. But you also might someday be able to get across the planet for less than the cost of a good dinner…so there’s that.

Which begs the question: What the heck is happening with passenger flying?

The answer is the economics of flying as a passenger are complicated, and only getting messier. At root, there’s a simple task to complete: Airlines need to get a certain amount of weight aloft, and over a certain distance, at a profit. The heavier the plane is and the further it goes, the more costly it gets just to take off and land, forget make money on the enterprise. Domestic airlines, in 2015, spent $19 billion on 10 billion gallons of jet fuel alone. That said, that’s a substantial improvement; in 2015, fuel consumption dropped by a third, average fares dropped to the lowest level since 2010, and airlines posted $25.6 billion in profit, largely thanks to low oil prices.

That, however, obscures the industry’s long-term problems. Even as fares dropped by 50% between 1983 and 2013, the airline industry collectively lost $51 billion between 2001 and 2011 and in the twenty years before that, was profitable and not profitable like clockwork, with every other year being a loss. Believe it or not, this was the fallout of deregulation: Before 1978, the government controlled almost everything about air travel until Jimmy Carter passed the Airline Deregulation Act Of 1978, something the airlines at the time were against.

They had good reason to be. United’s decision to make overhead bins premium is part of an ongoing price war over the last forty years to drive air travel fares ever lower, in the hopes of getting one more butt in one more seat. What United is trying to do is make being heavier, in terms of luggage, more expensive, so they can save a few precious dollars on fuel. And this is far from over. Ryanair’s CEO — head of a company that once considered installing pay toilets on airplanes — thinks that in the future, the flying will be free, a draw to get people to the airport to buy overpriced food.

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