United plans coach class with premium airfares

Bloomberg

United Continental Holdings Inc. is looking to create a more varied economy class with offerings for budget travellers, bigger spenders and those in between.
The airline will begin selling its ‘basic economy’ fare in January, wooing passengers who want the cheapest tickets and are willing to forgo most other privileges. Those fliers will board last and won’t be allowed to store a bag in the overhead bins. United is also exploring a premium economy product providing bigger seats and more perks.
United and its US rivals are trying to appeal to more customers by “segmenting” their planes, creating distinctions in what was once the egalitarian coach cabin. In a presentation to investors, Chicago-based United said such efforts would help it boost annual earnings by $1 billion in the next few years. “This is about customer choice, and the airline industry has historically been far behind in customer choice,” Chief Commercial Officer Julia Haywood said in a telephone interview.

Baggage Restrictions
United said passengers buying the fare would only be permitted a small personal item that fits under the seats. Any bigger items would go in checked baggage.
The policy differs from a similar low-fare offering at Delta Air Lines Inc., which allows purchasers to bring a roll-aboard bag into the cabin.
The new fare category is intended to make United more competitive against ultra-low-cost carriers such as Spirit Airlines Inc., which appeal to people who buy on price, as well as speeding up the boarding process. Passengers checking bags at the gate tend to slow things down, Haywood said. The basic economy fares should also reduce some of the congestion in overhead bins, which should alleviate some of the need for checking bags at the gate, she said.
United is still in the early stages of evaluating a ‘premium economy’ product. While it doesn’t yet know what it would offer, “I’d say we’re fairly committed to the idea that we need to do something in this space,” Haywood said.
Delta and American Airlines Group Inc. are each preparing premium economy cabins for some of their long-haul international jets. United is evaluating the idea for both overseas and domestic travel, Haywood said. Questions include whether it wants to use wider seats, as in typical premium economy sections, or just pair a traditional coach seat with more amenities and services, she said.
“No one on in the U.S. has this domestically yet,” she said. “We know we need to have other product offerings.”