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United expanding cabin segmentation to international markets

United Airlines will continue to expand its cabin segmentation initiatives, with plans to bring no frills fares to Latin American and European flights later this year.

The Star Alliance carrier plans to expand its basic economy fares, which lack attributes of standard economy fares like advanced seat assignments and carry-on bags and come with additional restrictions, to the two international geographies later in 2018, says United president Scott Kirby at the JP Morgan Aviation, Transportation and Industrials conference on 13 March.

The expanded fare offerings coupled with the roll out of a new premium economy cabin on select international routes in the fourth quarter are part of United's drive to generate roughly $1 billion in incremental revenue from segmentation by 2020.

"Segmentation is in the very early innings at United Airlines," says Kirby.

Basic economy fares are designed to boost revenues while also enabling mainline carriers to better compete with low-cost carriers, like Spirit Airlines in the USA and Norwegian across the Atlantic.

American Airlines will begin offering its basic economy fares on select transatlantic routes from April, and Delta Air Lines has offered them in the market since 2017.

United unveiled basic economy in domestic markets last year. However, it recorded a roughly $100 million hit from an overambitious roll out in the third quarter, citing the fact that its competitor American continued to offer standard economy fares, which prompted passengers to book away.

Kirby says those initial hiccups are in the past and United only sees upside from basic economy and its other cabin segmentation initiatives, going forward.

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