New airfares target the cheapest flights

The big airlines have jumped into the 'basic economy” market, competing with the super-cheap airlines that cater to the most frugal passengers.

Within hours of each other, American and United announced that they had begun selling basic economy fares that push down the price of a ticket. The lower price can come with caveats, however, including having to pay extra for space in the overhead bin, boarding last and not having the option to pre-select seats when booking the tickets.

Analysts said the big airlines are going after the low-priced market more aggressively after watching the upstarts become so successful.

'The Spirits and Frontiers have gotten so much bigger,” said Kris Kelley, an analyst at Janus Capital Group. 'Now they are formidable competition that the big three carriers (American, United Continental, Delta) have to somehow deal with in their markets.”

Low-priced Spirit, Allegiant and Frontier airlines have corralled a big chunk of the low-cost travelers by emphasizing prices that historically are less than what the cheapest major airlines can offer.

The low-cost competitors have thrived by reducing frills to a minimum, packing in more seats, reducing time at the gate and keeping the planes in the air longer than their larger counterparts.

'American, United and Delta now realize there's a big percentage of the population that just wants to get there cheaply and safely, and they are no longer willing to watch all that business go to airlines like Spirit,” said Seth Kaplan, editor of Airline Weekly, which follows the industry.

American and United are following Delta, which previously had said it would enter the basic economy game.

American announced early Tuesday that super-cheap fares would begin on 10 routes from its hub airports in Dallas, Miami, Philadelphia and Charlotte, according to the Associated Press. United is selling reduced fares on certain flights from Minneapolis to seven hub cities, including New York, Chicago and Los Angeles, starting in April.

Cheaper fuel has allowed the major carriers to reduce some fares to the level of the economy airlines with enough of a margin to still make money.