Travel cheap, but travel light: American Airlines launches Basic Economy class
American Airlines (NASDAQ: AAL) is rolling out a new Basic Economy fare to let travelers see more of the country for less.
The new fares will launch in 10 markets on domestic routes in February, according to an American Airlines spokesman.
The new fares are expected to be lower than the airline's Main Cabin fares "in the same way that Main Cabin fares are lower than Business Class," the Fort Worth-based carrier said in a statement. The number of available Basic Economy seats will vary depending on the flight.
The main caveat? Travel light. The new service only allows for one personal carry-on item — and it must fit under the seat. No overhead bin luggage is allowed, and luggage like rollaboards will be checked for a fee. The service also does not assign seats until check-in, making it harder to travel together with others. Basic Economy will also restrict upgrades, reservation changes and is nonrefundable. The new fares will offer customers the same seats, snacks and amenities as Main Cabin fares.
"This new fare product also gives American the ability to compete more effectively with the growing number of ultra low-cost carriers," said American Airlines President Robert Isom in a statement.
United Airlines (NYSE: UAL) offers a low-cost fare class called Basic Economy that also limits carry-on items and restricts scheduling and seat assignments. Delta (NYSE: DAL) offers a similar fare tier, Basic Economy, that allows overhead storage but does not assign seats.
Incumbent carriers around the world are facing increased competition from cheap, no-frills airline services, typically called ultra low-cost carriers. JetBlue (NASDAQ: JBLU) and Southwest (NYSE: LUV) distinguish themselves through their rock-bottom rates.
The service will not be offered on every flight but may expand to other markets based on demand, a spokesman for American Airlines said in an email to CNBC.
Correction: This story has been revised to correct that American Airlines is headquartered in Fort Worth, Texas.
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