< PrevNext > Airline Fares & Class Segmentation May Prompt Buyers to Reexamine Their Policies By Michael B. Baker / January 27, 2017 / Contact Reporter Share Airlines will ratchet up segmentation strategies this year, leaving buyers with more options and, in some cases, more policy headaches.United Airlines' Basic Economy fare hits distribution channels soon. For several years, Delta has had its own Basic Economy fare that restricts travelers from seat selection and flight changes, but United took it a step further by restricting Basic Economy passengers to one personal item, eliminating their use of overhead storage space, in other words. American Airlines will introduce a Basic Economy fare similar to United's in February.While these restrictions might seem a nuisance for the business travel industry, corporate travelers are not the target audience. Rather, airlines are looking to compete directly with low-cost carriers that fly the same routes. Delta executives have said travel buyers by and large block Basic Economy fares from corporate booking tools, which no doubt will be the case for United's and American's fares, as well.On the other end of the economy class spectrum, both Alaska Airlines and American Airlines now offer premium economy cabins on select flights rather than offering extra-legroom seats within the standard economy section. Delta's premium economy cabin will appear on select international flights later this year, and JetBlue will expand its premium Mint offering with new aircraft this year.These offerings appear largely on long-haul flights, and the option to bump travelers up from economy at a much lower price point than business or first class, provides buyers an opportunity to reevaluate premium travel policies.Airlines are not likely to slow down segmentation this year, either. United is exploring a premium economy offering, and an announcement could come in the first months of this year. Southwest Airlines is switching to a new reservations system this year that increases its ability to sell ancillary products and services, meaning it can explore segmentation.Outside the U.S., segmenting is allowing carriers to take on rivals. Air France, for example, is creating a company to compete with Gulf carriers on long-haul flights and plans to operate 10 long-haul aircraft by 2020. Whether this model of increasing segmentation is sustainable, of course, is another matter entirely. Tony Fernandes, founder and CEO of low-cost carrier AirAsia, said at the Association of Corporate Travel Executives Global Summit in Amsterdam that eventually, airlines either will go the low-cost route or will focus on full-service travelers. "It's amazing to me to see what is being built and being done for service, but airlines trying to do everything—those days are numbered," he said. "That's going to be one of the major changes over the next 10 years."