Business

U.S. airlines offer low-cost fares banning carry-on bags. Will Canada follow?

Both American and United Airlines will soon be offering a bare bones "basic economy" fare that excludes access to the overhead bin for carry-on. The same deal will soon be offered by major Canadian airlines, predicts one expert.

American and United Airlines set to offer a fare with no overhead bin access

With a basic economy fare the price may be right, but you won't have access to the overhead bin for carry-on luggage. (Carlo Allegri/Reuters)

Just when you thought economy air travel couldn't get any more basic, some major U.S. airlines have found a way to make it even less appealing. 

Both American and United Airlines will soon be offering a bare-bones "basic economy" fare.

For a generally lower price, customers will lose what few perks are left in economy class, including access to the overhead bin. Instead, they'll only be allowed to bring on board a personal bag small enough to fit under the seat in front of them. 

Larger carry-on luggage will have to be checked for $25 US.

It's a growing trend in the airline industry, where customers are offered more fare options and previously free services now come at a cost.

"If you want to have the privilege of bringing on a carry-on, then you pay a little extra," says airline analyst Fred Lazar.

The York University professor also predicts a similar discount fare that limits carry-on perks will also soon be offered by the major Canadian airlines.

"It's inevitable," he says. 

Pack light

Delta Airlines was the first to introduce a "basic economy" fare in 2012. Passengers typically pay a lower price, but they get no say in their seat assignment, are last to board the plane, and their tickets can't be changed or refunded.

American Airlines in February and United sometime this quarter plan to follow with a similar fare that will also include the carry-on restriction.

The aim is to compete with low-cost carriers that offer bargain basement prices but charge for all the extras — including carry-on luggage. 

"It's another choice that we're giving our customers," says United spokesman Jonathan Guerin, who is based in Chicago.

He says the basic fare will appeal to frugal passengers who are travelling light. 

"There's some price-sensitive travellers out there who can get by with buying a ticket and going away for the weekend with just a backpack."

Of course, it won't be a winner for passengers hoping to sit next to a family member. 

"If you're taking your three kids on a trip to see grandma over the weekend, it may not be the right one, because you will probably not get seats together."

Guerin says basic economy passengers will be flagged at check-in to ensure they're only carrying a small bag that fits under a seat. Those travellers will be allowed access to the overhead bin if there's any room left, he says. 

Both United and American Airlines will introduce the fare on select routes and plan to expand the offering in the future. 

Bare bones fare coming to Canada?

CBC News asked major Canadian airlines WestJet and Air Canada if they were considering a basic economy fare. Both gave no indication that they would be moving in that direction.

Air Canada and WestJet both introduced a $25 fee for the first checked bag for many economy fares in 2014, after numerous U.S. carriers had adopted the charge.

And Lazar believes both airlines will adopt the basic fare option as the industry moves more toward a model where customers get a bevy of choices at different prices.

It's like buying tickets to a hockey game, he says. "It's not a case of one price and first come first serve. You pay different prices, you get access to different seats in different parts of the arena."

Lazar adds that the major Canadian airlines may expedite the launch of a bare-bones fare if they feel threatened by incoming low-cost carriers. 

Budget flight company NewLeaf launched in Canada this summer, and it charges extra for carry-on bags. (NewLeaf)

Discount airline New Leaf, which launched in Canada in the summer, charges for carry-on bags. A second low-cost competitor, Jetlines is hoping to soon take flight in this country.

"If any of them really start gaining some market share and look as if they're going to survive, then I can see WestJet and Air Canada introducing this type of [basic] fare," says Lazar.

He also believes the offering will be good for consumers because they will have more options.

"I applaud the [U.S.] airlines for doing this," he says.

Travel blogger and frequent flyer Jeffrey Kwok says the basic fare is not an option he would ever consider. 

Kwok, who lives in Vancouver, predicts that if he were to purchase a low-cost ticket, he would end up paying more, because of all the things it doesn't include, such as the option to change your flight or room for carry-on luggage. 

"There's no way I'm going to be buying these tickets," he says.

About the Author

Sophia Harris

Business reporter

Sophia Harris has worked as a CBC video journalist across the country, covering everything from the start of the annual lobster fishery in Yarmouth, N.S., to farming in Saskatchewan. She now has found a good home at the business unit in Toronto. Contact: sophia.harris@cbc.ca

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