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Delta Air Lines reports revenue uptick from no-frills tickets

Delta Air Lines

A passenger walks past a Delta Airlines 747 aircraft at Detroit Metropolitan Wayne County Airport in Romulus, Mich. Delta is reporting an increase in revenue from the sale of “basic economy” tickets. 

(Paul Sancya / AP)

The idea of a no-frills airline ticket that can’t be changed or upgraded and probably lands you in a cramped middle seat may sound unappealing, but it is making Delta Air Lines executives happy.

The carrier launched the so-called basic economy fare in 2012 and later expanded it to about 1,650 of Delta’s roughly 20,000 domestic routes. It was created to compete with low-cost carriers such as Spirit Airlines and Frontier Airlines, which are threatening to steal budget-minded fliers away from the big carriers.

The airline announced recently that the no-frills ticket has generated $20 million in incremental revenue in the first three months of 2016, and Delta’s executives plan to expand the bare-bones ticket to more routes.

“So if you’re shopping for just solely price, we want to have a product that can compete effectively and provide the best services against carriers who are providing a much lower quality of service,” Glen W. Hauenstein, Delta’s chief revenue officer, told analysts. “And I think that’s what this is designed for.”

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Hoping to cash in on the same fliers, American Airlines and United Airlines will introduce later this year a class of ticket that is cheaper and offers even fewer amenities than the regular economy section seats.

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James Compton, chief revenue officer for United Continental Holdings, the parent company for United Airlines, told analysts that the new ticket will complement higher-priced tickets that include food, drinks and entertainment but instead “will appeal to the purely price-sensitive customer.”

To read more about travel, tourism and the airline industry, follow me on Twitter at @hugomartin.

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