United airlines

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On Tuesday, United Airlines announced the introduction its new “Basic Economy” service designed to take on growing competition from low cost carriers. 

“Customers have told us that they want more choice and Basic Economy delivers just that,” United Airlines CCO Julia Haywood said in a statement.

“By offering low fares while also offering the experience of traveling on our outstanding network, with a variety of onboard amenities and great customer service, we are giving our customers an additional travel option from what United offers today.”

While the the prospect of cheaper flights with United is certainly enticing, the low cost comes with a price. 

Expected to make the biggest waves will be the changes United made to its baggage policy. Basic Economy ticket holders will no longer be allowed to bring on-board a carry-on bag plus a personal item. Instead, United will limit Basic Economy fare holders to just a personal item.

“You’re allowed to bring a small personal item on board, such as a shoulder bag, backpack, laptop bag or other small item that is 9 inches x 10 inches x 17 inches (22 cm x 25 cm x 43 cm) or less,” United wrote on its website.

“Full-size carry-on bags are not allowed unless you’re a Premier member, a primary cardmember of a qualifying MileagePlus credit card, or a Star Alliance Gold member.”

In addition, Basic Economy passengers will not be allowed to preselect seating, make post purchase changes to their tickets, or upgrade to higher ticket classes. Further, Basic Economy passengers will be the last passengers allowed to board the aircraft. 

However, those holding the lowest fare class will still be offered food and drinks, inflight entertainment, and WI-FI, when available. 

The Basic Economy announcement is part of United’s initiative to cut costs and boost profit margins. In addition to the introduction of the new fare class, the Chicago-based airline also announced a modification of its order for 66 Boeing 737-700 aircraft. 

With these, and other cost cutting measures, United expects to cut capital expenditures by $ 1 billion over the next year or so and unlock $ 4.8 billion in value by 2020.

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Business Insider » Finance

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