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

Enshittification, Southwest, and Investor Pressure

• Several commenters frame “basic economy” as part of broader “enshittification”: deliberate degradation of the base product to extract more revenue.
• Southwest is cited as a case study: once differentiated by no bag fees and a distinct culture, it’s now seen as converging toward legacy carriers after its software meltdown and activist investor pressure.
• Activist investors are portrayed by some as short‑term players chasing a single “good quarter,” even at the expense of the practices that made a company durable and profitable.

Is Basic Economy Expanding Access or Just Squeezing?

• One camp argues unbundling and tight seating have made flying affordable to lower‑middle‑income travelers, including in developing countries.
• Others respond that most of the world still can’t fly; quality has collapsed, and basic fares often haven’t truly fallen once fees and “optional” costs are included.
• Some would happily fly less or pay more for a less hostile experience.

Airline Profitability, Margins, and Loyalty Programs

• Multiple comments stress airlines are structurally low‑margin; many go bankrupt despite these tactics.
• Frequent‑flyer programs and co‑branded credit cards are described as major profit centers, sometimes valued higher than the airline operations themselves.
• There’s disagreement whether US carriers are an “abusive oligopoly” with excessive profits or barely scraping by; both PRASM data and survivorship bias are invoked.

Regulation, Bundling, and Public-Good Framing

• One thread debates whether regulators should mandate bundled fares (bags, rebooking, food) versus allowing granular add‑ons.
• Analogies to public health and schools are used to argue for some community‑wide standards; skeptics say cheap restricted fares mostly help leisure/vacation travelers and aren’t a clear public good.
• A compromise view favors “all‑in” price transparency rules over banning unbundling.

Price Discrimination: Efficient Matching or Artificial Misery?

• Some see price discrimination as socially useful: richer or time‑poor travelers subsidize cheaper seats; everyone chooses their own tradeoffs.
• Others object to “artificially worse” products—extra hoops, bad default options, scary UX copy—designed solely to push upgrades, not to save underlying costs.
• Concerns extend to “everything is for sale” norms like paid priority lines, viewed as corrosive to egalitarian norms.

Corporate Behavior, Goodwill, and Exploiting Irrationality

• Commenters connect airline practices to a broader shift away from valuing goodwill toward pure extraction, especially in public and private‑equity‑owned firms.
• Sophisticated pricing algorithms, dark patterns, and intentionally noisy fare fluctuations are seen as exploiting human irrationality rather than improving core products.
• Some blame financialization and weak antitrust enforcement for creating incentives where treating customers well rarely pays.

System-Level Issues: Alternatives and Externalities

• Several note that focusing on fare games distracts from larger questions: lack of US high‑speed rail, airport slot regimes, delays/cancellations, and environmental and noise externalities.
• Examples from Asian low‑cost carriers illustrate how lower labor and operational costs, plus different regulatory and infrastructure contexts, can deliver cheap, tolerable service—highlighting what’s structural versus optional “enshittification.”

Meta: Article Quality and “AI-Generated” Accusations

• A side discussion questions whether the linked article itself is AI‑written or content‑marketing fluff, citing repetitive structure and stylistic tics.
• Others push back, noting inconsistencies that current LLMs usually avoid, and arguing that “AI” is becoming a generic insult for low‑quality writing.