Are Basic Economy fares hurting business travelers?

I should say up front that I’m doing fine in the brave new world of basic economy fares. I work for a tiny company, which means that we have some flexibility around our company travel policies. The policy now is basically “do it for cheap, within reason.” In practice, that means the company will reimburse the cost of an economy ticket, so even if I decide to fly first class, I’ll only need to pay the difference. (Instead of the receipt, I just submit what an economy ticket would have cost, and that’s what gets reimbursed.) Same deal if I pay with miles (which can work out pretty well, since I’ll end up getting cash back). It’s one of the reasons I like working for my current company: the upper management (which includes me – although that’s not much of a brag in a 5-person company) tends to follow reason and common sense.

I can’t say that for all companies, unfortunately. The last place I worked was a mid-size business with offices on the east and west coasts, meaning there was a lot of travel between the two. The rule was to find the lowest cost flight at all times – anything else got zero reimbursement. Paying for first class meant you get nothing. I usually would buy extra legroom seats on my own dime, although that meant that I could only fly airlines that sold extra legroom as a separate buy-up option. Virgin America only sells it as part of Main Cabin Select, which (as a separate fare class) wouldn’t get reimbursed at all. Delta Comfort+ would be the same under those rules, although C+ wasn’t a separate fare class while I worked there.

Policies like this aren’t uncommon, since most accounting departments will only reimburse expenses that match an actual receipt. Flying in a premium cabin produces a receipt that isn’t reimbursable, and based on the accounting department’s rules, they can’t reimburse part of the flight. (Despite making sense on paper, policies like this make me crazy with their inflexibility, which is why I was so happy to quit and go work for a smaller company where people acted like humans instead of robots.)

However, with the advent of basic economy, rigid travel policies like this are worse than ever. Under that policy, since basic economy is the cheapest option (except on United when it’s not), it’s the only one that qualifies for reimbursement. Whereas the company used to cover a fare that included seat assignments and carry-on bags, now the employees would have to pay for those extras out of their own pockets. (In fairness to my prior employer, I don’t know that they have handled the rollout of basic economy this way, although it fits with how they handled employee travel in general.) If I still worked there, there’s a good chance I would have spent a not-insignificant chunk of my own money to cover extras that used to be included in economy, unless I wanted to be stuck in the middle seat of the back row on 5-6 hour flights every couple months.

Has anyone dealt with anything like this? It seems like an unintended consequence of basic economy – providing more choice for consumers who only want the lowest fare while unintentionally enabling corporate travel policies to shift the cost of travel onto their employees (unless the employees want to be miserable every time they travel for work).

1 Comment

  1. Better By Design says:

    Absolutely this is becoming a problem as Basic Economy is getting rolled out wider, for some of the reasons you bring up.

    An additional problem is that the travel services/portals that businesses use are also contributing – even if employers allow the purchase of Economy (over Basic Economy) that doesn’t mean that the company travel service/portal can even display the difference – they may just be showing the LOWEST FARE POSSIBLE, without the pesky details of things like fare class and whether you can choose a seat, have to pay for carry on bags, etcetera.

    The increased “Consumer Choice” is not necessarily lining up with the ability of the airlines legacy IT ecosystem to effectively market this to businesses… which you’d think would kind of be a big deal?

    Of course, it will hopefully get dealt with.

    As an example, a LOT of corporate hotel contracts include not only discounted rates, but exclusions from things like paying for wifi, same day of travel cancellation etcetera, that are (shock!) important to business travel, and don’t cost the hotel company much, compared to what they’re gaining.

    Corporate rental car agreements often remove costs like one way drop charges, late cancellation, over hours charges, extra driver fees, in compensation for gaining business and avoiding couponing consumer vacationers.

    I’m assuming airline discount contracts will *eventually* get written to exclude Basic Economy, if for no other reason than that folks traveling for business don’t need to be fussing with crap like carry on bag charges and seat selection fees, and companies don’t want to deal with having to see them file expense reports for piddly crap like that in the end anyways.

    But yep, sure, complexity is a bitch, and the airlines keep cranking it up in their ongoing battle to shake more moolah out of the average flier.

    Liked by 2 people

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