United Just Nerfed Polaris Business Class — Cheapest Fares Restrict Lounge Access, Seat Selection And Changes
United has been telling us for a year that they’ve been planning to downgrade their cheapest business class fares so that you’d pay coach-style fees for business class perks.
Today they announced that they’ve nerfed Polaris business class. They’ve also added restrictions to premium economy.
Premium economy fares: The cheapest fares will come with a fee for seat selection, no changes, and no upgrades to business class.
Business class fares:: The cheapest fares will come with a fee for seat selection, no changes, and no access to Polaris lounges (access will still be provided to United Clubs).
This is being framed as new ‘fare families’ but all that’s really new is the introduction of ‘basic premium economy’ and ‘basic business class’ to match basic economy. The other fares aren’t really changing or being made better, which is surprising (I’d have expected at least some more miles to tell the story of ‘good, better, best’ between the fare types).
United Polaris Lounge San Francisco
United’s Basic Business Could Have Been Worse
They haven’t eliminated miles or elite status credit, or restricted access to business class check-in, priority boarding, or premium security. They still included a checked bag with these business class fares. In other words, they didn’t go ‘all the way’ like they did with basic economy. United, which doesn’t let passengers bring on an actuall carry-on bag, has the most draconian basic economy fare of the major airlines.
United Polaris Business Class
This Won’t Mean New Lower Fares
Whenever you see fares like this reported, you’ll read headlines about business class getting cheaper. That’s not what to expect. These are new attributes (restrictions) for the lowest fares, not new lower fares.
If fares fall, that’s not because of basic business class – it’s either because
- airlines have been adding premium seats to planes – United’s new 787-9 has 64 business class seats – increasing supply
- demand is declining, which you expect if the economy shrinks (high oil prices may trigger)
What it might change is when United is willing to offer its lowest business class fares. They might be willing to offer them closer to departure, figuring that doing so won’t trade off with last minute sales to full fare passengers.
United Polaris Lounge Newark
What United Is Trying To Accomplish
United needs to discount business class to fill seats, but they don’t want to discount it for passengers who would pay more. This is about customer segmentation.
We’ve seen airlines offering different prices for business class for many years. For instance, a decade ago the primary method might have been 50- or 90-day advance purchase ‘Z fares’ with big change fees. You wouldn’t have business travelers making their long haul business class travel plans that far in advance so it was a good way of differentiating leisure passengers (maybe flying to take a cruise) from business fares.
But this didn’t work as well as airlines would like. They want to wait until late in the game to decide how many seats to discount. They might know they’ll need to do some discounting, and offer limited availability of these Z fares, but when the seats haven’t sold at the last minute is when they actually want to sell them cheap. Plus many leisure travelers now are increasingly last minute bookers.
So they need a way to say, here are the price-sensitive customers who will buy a business class fare at the lowest price, and these are the customers who will pay what we ask – and avoid offering those customers the cheaper fare. And they don’t want to face the choice of do we let the seats go empty to maintain high fares, or do we let people pay less than they’re willing to in order to offer low fares and fill seats?
United Polaris Business Class
Basic Business Doesn’t Work As Well As Basic Economy
Basic economy was a tool to make the cheapest product worse in order to compete with low cost carriers. The major airlines had to price match Spirit and Frontier, or else they’d lose passengers. But when they offered Spirit-level fares, people who would have paid higher prices just paid less. So matching those fares was costing them a lot of revenue.
Delta, and then American and then United (followed eventually by others like JetBlue and Alaska) introduced basic economy fares that were much more restrictive. They might not earn miles, get full status benefits, allow seat assignments at time of booking or – in United’s case – even allow a customer to bring a carry-on onto the plane.
That way when they price-matched Frontier and Spirit, they offered a similar product to Spirit and Frontier – one that their traditional customers did not buy. They could offer low fares to avoid losing passengers, without their existing customers paying less.
But there’s no real analog for business class.
- Spirit has its ‘Big Front Seat’ that they now call first class, not in a separate cabin and with no lounges or hot meals (and it’s still Spirit) and Frontier is promising first class, but there’s really very little that’s similar for long haul international business class that basic businessis competing with.
- Zipair out of Tokyo sells business class as ‘just the seat’ with add-ons, and a few international full service airlines have started selling basic business for about 10% less (like Finnair, Qatar and Emirates). But true ultra-low cost carrier long haul business isn’t a competitive threat.
United Polaris Business Class
This is just about trying to fill the plane with leisure passengers at the last minute without offering lower fares to business travelers, but not significant discounting like a price match to Spirit entails.
So there’s a case for it, and a real cost to doing it, but it’s not going to be as significant for the airline’s business as basic economy was – unless airlines wind up with tons of excess business class inventory because they’ve misjudged the market and added far too many seats for demand.
The restrictions won’t actually help that much, too, because they may not come with with significantly lower pricing. And when people value the seat most of all they just aren’t giving up very much by choosing the ‘basic’ option.
- Non-refundable is not as big a deal on a last minute purchase
- You can give up lounge access and just show up close to departure, not 3 hours early and spend time in the lounge. Polaris lounges aren’t really worth paying much extra for.
- You might get a middle seat in business class, but often that’s all that’s left at the last minute anyway. And you can pay for that seat assignment, too, buying the services you want a la carte.
United Polaris Business Class
If the price of basic business isn’t significantly lower, it’s not really segmenting customers. And if the price of basic business is low enough, even many companies are going to be willing to say just buy basic business. The employee gets to fly business, they’ll deal with not also having paid access to the better lounge.
This Gives Delta and American and Advantage
At the same price, American Airlines and Delta (and JetBlue, Alaska, etc.) represent a better value than United. Their fares do not currently come with the same restrictions.
Delta has said they’re going to do this also, but hasn’t said what restrictions will come with their basic business fares. However, if they see share shift away from United in markets where they compete such as New York and Los Angeles, Delta could reconsider. If they’re winning business because customers prefer the better value of Delta’s business class, they’d be foolish to change.
More likely than not, though, Delta goes through with its planned changes. They, too, want to fill empty business class seats without cannibalizing the higher fares customers pay. And customers may not differentiate between the better and lesser values – at least initially.
People do tend to be shown schedule and price and may not understand the nuance of fare rule differences. British Airways started charging most customers extra for business class seat selection in 2009, and passengers are still surprised by the fee after they’ve purchased their tickets.
American Airlines Business Class
However smart consumers should make sure they understand the difference in fare rules – and when prices are the same consider booking away from United Airlines basic business, at least as long as other airlines aren’t imposing the same restrictions. After all, United’s business class seat isn’t better than Delta’s except on Delta 767s. And it isn’t better than American’s on any widebody aircraft. American’s food is even better! Delta’s business class lounges are better than United’s!
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