Delta and United basic business class fares test corporate travel policies
Companies are weighing Delta and United’s cheaper premium tickets against change fees, lost perks and the cost of disrupted trips.
By Theo Nakamura · Staff Writer
· 3 min read
Basic business class fares from Delta Air Lines and United Airlines are forcing companies to reconsider how they book premium travel. The lowest headline price can look attractive, but corporate travel managers say an itinerary that cannot be changed cheaply may create a larger bill when a work trip moves.
Delta joined United last month in selling stripped-down business-class tickets on certain flights, according to CNBC. The carriers are extending to premium cabins an approach already familiar in economy: separate the seat from services that had often been included in the fare.
For investors following the airlines, the strategy gives carriers another way to offer a lower entry price while charging separately for flexibility and airport benefits. For employers, the calculation is less about cabin comfort than the total cost if an employee’s schedule changes.
Why are companies wary of basic business class fares?
Business trips can be rescheduled or cut short with little notice. A restrictive ticket can require a change fee, a payment for any increase in the new fare, or potentially the purchase of another flight. That means an upfront saving may not be a saving after a disruption.
Jackie Carlon, senior vice president of marketing and communications at aircraft leasing and maintenance company AerSale, told CNBC that her company probably would not ban the cheapest premium options across the board. But she said the tickets would not work for many of AerSale’s hundreds of travelers, describing the extra cost of flexibility as a form of insurance.
Corporate responses are not uniform. Two travel managers at public companies told CNBC at the Global Business Travel Association convention in Chicago that they would likely try to block the fares. Dane Molter, a senior vice president at Navan Group Travel Marketplace, said clients are asking for more detailed controls over the fare products employees can book.
What do the cheaper fares leave out?
CNBC reported that the cheapest long-haul business tickets may not include free advance seat selection, airport-lounge entry or flexible changes. Delta said its basic-business change fees range from zero to $400 by route, while cancellation fees range from $99 to $500.
United’s least-expensive Polaris fare does not include access to its Polaris lounge or complimentary advance seat selection, CNBC reported. Changes are not permitted, though a traveler can cancel for a fee. A United spokeswoman said those fees vary and are not publicly disclosed.
A CNBC fare search for Newark to London Heathrow, departing Oct. 1 and returning Oct. 8, showed base Polaris at $4,490, standard Polaris at $4,890 and a flexible refundable fare at $5,390. That is a $400 gap from base to standard and a $900 gap from base to flexible, illustrating the immediate price trade-off rather than a universal break-even point.
Delta said its corporate customers can decide which fare products are available under their own travel policies and business objectives, and said demand for premium travel remains strong. Airlines including Lufthansa and Etihad had already introduced pared-back business-class fares, CNBC reported.
The practical policy question is which trips can absorb the restrictions. Companies broadly limited basic-economy bookings about a decade ago because employees could be stranded without the ability to change flights, according to CNBC. Premium tickets now present the same cost-control question at a much higher price level.
This story draws on original reporting from CNBC.
