- United Airlines announced a plan to begin charging an extra fee for passengers to reserve economy seats near the front of the plane.
- A reserve fee of this type is already practiced by others in the industry, notably American Airlines and Delta Air Lines.
- Separating the costs of various travel services into their own fee group is an industry practice known as “unbundling.”
- Unbundling has been around since the 2000s, and has been embraced by the entire airline industry.
United Airlines announced this week a plan to begin charging extra for passengers to reserve economy seats near the front of the plane, a reserve fee already practiced by others in the industry, notably American Airlines and Delta Air Lines.
According to USA Today, United announced the new policy which will allow passengers the option to pay more for basic seats that offer the convenience of being closer to the front of the plane. These seats, which will be just behind their Economy Plus row, will be available for purchase by the public, but certain United Corporate Preferred clients can reserve them for free and certain elite-level frequent fliers can reserve them without a fee.
These are not seats with any extra leg-room or perks like those economy seats in United’s Economy Plus rows, Delta’s Comfort+ rows, or American’s Main Cabin Extra. They are simply closer to the front of the plane to offer passengers the convenience of boarding and exiting without having to wait in a longer line.
In a statement to Business Insider, United Airlines spokesperson Maddie King said, “If these seats are not filled, they will be opened for all customers to select at check-in, free of charge. These preferred seats will be available for purchase for all other customers at time of booking.”
The USA Today reported United plans to incorporate the practice before the end of the year, but did not give an exact start date or what the cost for reserving a select economy seat would be.
This is not the first instance of airlines charging fees for optional passenger conveniences. In fact, this is actually standard industry practice and is known by a name: unbundling.
Unbundling first began in the late 2000s when airlines recognised the necessity of gaining extra revenue to counteract the higher price of crude oil, which had hit $US132 a barrel in the summer of 2008. Unbundling is the practice of separating various costs of services like baggage check, security check, seat assignments, meals, wi-fi use, and early boarding into their own price points. In short, charging little fees for different elements of travel.
According to Bob Mann, President of RW Mann & Company, an airline analysis firm with over 40 years of experience in the industry, American Airlines was the first to charge $US20 for a baggage check.
“With that out of the box pretty much everybody else did it,” Mann said. “It was the first big gasp of how to get unbundling started.”
Things took off. By 2011, unbundling was embraced by the entire airline industry. What’s more, Mann said these ancillary fees are not subject to the 7.5% Federal Excise Tax, which applies only to domestic airline tickets sold in the U.S. This loophole gives the industry even more reason to charge these fees.
“It gives them a huge incentive to do it,” Mann said, adding that this is not regulated by the Department of Transportation. “You can give away the airfare and then charge everybody for every other element.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.