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The economics behind "Basic Economy" – A masterclass in price discrimination

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Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#11

Post by gruez »

joe_the_user wrote: post #2

I just got back from a week-long vacation where I flew Southwest. It was my first Southwest flight in a while and I will now not fly any other airlines. The rise of "basic economy" seems a lot like the general phenomena of "enshitification" and has a similar motive - degrade your product to squeeze the last drop out of the consumer. And it seems logical that charging by the "degree of shit" in a product means every l…

>The rise of "basic economy" seems a lot like the general phenomena of "enshitification" and has a similar motive - degrade your product to squeeze the last drop out of the consumer. And it seems logical that charging by the "degree of shit" in a product means every level is going to be shit actually.

How do you draw the line between "cutting frills that nobody really cares about" and "enshitification"? Prior to airline deregulation air travel was luxurious[1]:

>BERAS: But it's not just that the planes were more spacious. Back then, the airlines would go out of their way to compete with each other on amenities.

>MALONE: Right. Like, the plane we're on, it had a lounge in the back. You might get a six-course meal or a fancy cocktail included.

>BERAS: Plus, all kinds of other perks, like custom playing cards delivered in a fancy case, shaving kits delivered in a fancy case, cigarettes delivered in a fancy case.

>MALONE: Yeah. And, you know, as we get into the '70s, the amenities got ridiculous. Airlines even had meat carving stations, so flight attendants would roll the meat right up to you and carve it up right there in front of you at your seat.

>BERAS: But perhaps the pinnacle of all amenities was...

>VAN DER LINDEN: They had a piano bar, an honest-to-God piano.

But air fares dropped after deregulation, after much of these perks were reduced[2]. Of course, people who wanted those amenities would rather than they be bundled, because they'd be paying for it anyways and airlines could benefit from economies of scale for offering those amenities. They might even call it "enshitification", if the word was around back then. But most people would rather that their experience be a little crappier but save a few hundred bucks on airfare instead.

[1] https://www.npr.org/transcripts/1197960905

[2] https://cdn.theatlantic.com/assets/media/img/3rdparty/2013/2...

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#12

Post by Henchman21 »

joe_the_user wrote: post #2

I just got back from a week-long vacation where I flew Southwest. It was my first Southwest flight in a while and I will now not fly any other airlines. The rise of "basic economy" seems a lot like the general phenomena of "enshitification" and has a similar motive - degrade your product to squeeze the last drop out of the consumer. And it seems logical that charging by the "degree of shit" in a product means every l…

I frequently wonder if these folks attempting to squeeze the very life out of the “consumer” (I prefer the phrase “citizen & voter”) ever stop and wonder what will happen when there’s nothing left to squeeze? Because that day is coming sooner rather than later. Its my suspicion that it will end with blood. Rather a lot of it.

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#13

Post by tonyedgecombe »

ggm wrote: post #6
esafak wrote: post #3

I prefer airlines that don't nickel and dime. In fact, I prefer to fly less since the experience has consistently deteriorated over decades. If you travel internationally you get the added fun of dealing with border agents. And even they have discovered price discrimination, with their VIP lines. All told, is all this chicanery benefiting airlines?

> All told, is all this chicanery benefiting airlines? I am pretty comfortable it contributes to revenue and profit outcomes the board likes.

It feels like competitive pressures in some markets drive away all the profits leaving corporations with no choice but to engage in underhand tactics.

Car rentals and printer inks are a couple of examples of the same process leading to really shitty behaviour on the suppliers part.

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#14

Post by redczar »

onlyrealcuzzo wrote: post #9
esafak wrote: post #3

I prefer airlines that don't nickel and dime. In fact, I prefer to fly less since the experience has consistently deteriorated over decades. If you travel internationally you get the added fun of dealing with border agents. And even they have discovered price discrimination, with their VIP lines. All told, is all this chicanery benefiting airlines?

It's made it so that relatively poor people can afford to regularly fly all over the world, which is a relatively new thing. Lowe middle income people in lower middle income countries can afford to fly somewhat regularly, and even internationally, too. Flying used to be just for the rich only as far back as the 60s, and for nobody as far back as 200 years...

The vast majority of the world’s population can’t afford to fly. The relatively poor part of your comment is weird. Flying is still for the rich.

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#17

Post by gruez »

ggm wrote: post #4

It's already a regulated market. If we want to stop fare practices we do not agree with then mandating specific bundling in luggage, legroom, food and credit/rebook is available as a regulation. And of course the economic arguments against it, and legal/philosophical.

>If we want to stop fare practices we do not agree with then mandating specific bundling in luggage, legroom, food and credit/rebook is available as a regulation.

Let's take the one of the items as an example: I rarely rebook, so I'm presumably benefiting from this price discrimination. Why should I support that it be forcibly bundled? I might be sympathetic to having some sort of baseline fare for advertising purposes, so it's not a race to the bottom to get the lowest sticker price, but I can't see how it's justified to limit consumer choice by disallowing the sale of restricted fares.

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#19

Post by pasquinelli »

onlyrealcuzzo wrote: post #9
esafak wrote: post #3

I prefer airlines that don't nickel and dime. In fact, I prefer to fly less since the experience has consistently deteriorated over decades. If you travel internationally you get the added fun of dealing with border agents. And even they have discovered price discrimination, with their VIP lines. All told, is all this chicanery benefiting airlines?

It's made it so that relatively poor people can afford to regularly fly all over the world, which is a relatively new thing. Lowe middle income people in lower middle income countries can afford to fly somewhat regularly, and even internationally, too. Flying used to be just for the rich only as far back as the 60s, and for nobody as far back as 200 years...

> It's made it so that relatively poor people can afford to regularly fly all over the world, which is a relatively new thing.

has _it_? do what is _it_ again?

>> All told, is all this chicanery benefiting airlines?

i'm really curious how screwing passengers has done these things.

Re: The economics behind "Basic Economy" – A masterclass in price discrimination

#20

Post by bobthepanda »

hooverd wrote: post #7
Zak wrote: post #5

Earlier quoted context omitted.

Southwest just started charging for checked bags after over a decade of being the airline that doesn't do that.

SW seems to be steadily removing everything that differentiated them as a carrier. There's no reason to choose them other than pure price for a route now.

They were able to resist enshittification for a long time because they were actually one of the most profitable airlines and were able to keep their unique culture.

Then they had a flight meltdown, lost a bunch of money, and got targeted by activist investors.

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