American Airlines will tweak its basic economy product to allow free carry-on baggage in an effort to make the product more competitive.
American’s basic economy currently allows for just one personal item. Despite being clearly indicated by the airline, the restriction has caught customers by surprise and angered many when hit with a $US25 surcharge at the gate.
Competitor Delta Air Lines also allows basic economy passengers to take carry-on for free.
The US carrier said the change would be effective from September 5 for tickets purchased or flown that day. The existing rules would apply until then.
“Basic Economy is working well in the markets where we offer it, and we continue to see more than 60 percent of customers buy up to main cabin when offered a choice,” American president Robert Isom said.
“But the carry-on bag restriction left us uncompetitive from a product attribute perspective in some markets and total incremental revenue from basic economy has fallen short of our original expectations.
“Removing the bag restriction will make Basic Economy more competitive, allowing us to offer this low-fare product to more customers.”
READ: Airfares would triple if passengers continue to ignore carry-on safety directions.
Ipson also noted the airline’s premium economy retrofit program would be complete by the Summer of 2019, giving it 124 aircraft with the product at that stage.
The basic economy change was announced with American’s second-quarter earnings, which produced a net profit for the quarter of $US566m in what chief executive Doug Parker described as possibly the most challenging quarter since the merger with US Airways in 2013.
“We had an operational disruption at our PSA Airlines subsidiary that was extremely trying for our customers and our team members; higher fuel prices increased our expenses by more than $US700 million versus last year; and our revenues, while increasing, have begun to trail the rate of increase at our largest competitors for the first time since early 2016,” Parker said.
“Because fuel expenses are expected to increase by more than $2 billion this year, we expect 2018 earnings to be lower than last year.”
The US giant confirmed the deferral of 22 Airbus A321neo deliveries from 2019, 2020 and 2021.
The changes are expected to reduce planned capital expenditure by about $US1.2 billion over the next three years and the company will now take the first of the deferred aircraft in 2024.
However, the company says it will still receive its first A321neo in early 2019.
