Airlines are trumpeting the benefits of Basic Economy when they don’t have to sell the bargain-basement fares. Legacy airlines developed the so-called "Basic Economy" fare as an offering to compete against ultra-low-cost carriers such as Frontier and Spirit. The fare covers the seat, but little else. Fliers who want overhead storage of a carry-on bag or an advanced seat assignment have to buy a more expensive fare. But the legacy airlines are finding that offering bare-bones pricing has yielded the pleasant result that passengers want more amenities. Half of the American Airlines customers who take a look at Basic Economy wind up with something pricier. “Performance has been in line with expectations, with about 50% of customers who received a basic offer choosing to buy up to the main cabin product,” American President Robert Isom said Thursday. American had rolled out Basic Economy across its entire domestic system by Sept. 5. The airline didn’t reveal a revenue figure for Basic Economy in its conference call with investors to discuss third-quarter earnings. But Donald Casey, American’s senior vice president of revenue management, said Basic Economy is boosting yields. Before offering the option, about 3% of the airline's total revenue came from fares marked down to compete with ultra-low-cost carriers, Casey said. After passengers explored Basic Economy and chose something else, revenue generated by the cheapest fares dropped to 1.5% of total system revenue, Casey said. “Right now, 50% of the people that were buying these fares before are now going to be paying more,” Casey said. “So that's the increased yields.”<br/>
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Airport privatization has been a failure that mostly leads to higher fares for airlines but no service benefits, a study soon to be released by IATA finds. IATA has conducted what it says is an extensive study of airport privatization and expects to release it in the next few days. IATA director general and CEO Alexandre de Juniac said that as governments struggle to fund infrastructure investments—particularly for airports—many see privatization as the solution. “We have no issue with injecting private sector mentality into the operation of an airport. But our message to governments on infrastructure is that airports perform better in public hands. That is the conclusion of three decades of largely disappointing experiences with airport privatization. The primary focus of airports should be to support local and national prosperity as an economic catalyst. But in private hands, shareholder returns take top priority. And we struggle with costs at privatized airports as far flung as Paris, Sydney and Santiago... To date, we have not seen any long-term success stories. Our message to governments on airport privatization is to be cautious and to consult the industry before making any decisions.”<br/>
Business is so strong for aircraft builder Boeing that it is temporarily rehiring “several hundred” retired mechanics in Washington State to help it meet production demands. Also, the manufacturer is looking to hire new employees as it struggles to meet commercial aircraft orders that have been piling up. On Wednesday, Boeing announced a record 202 commercial airplane deliveries in the third quarter, up from 188 aircraft delivered in the year-ago quarter. The latest quarter included delivery of 24 of the 737-MAXs, even as engine issues have been an ongoing challenge. According to Boeing, the production rate on the 737 aircraft programme increased from 42 to 47 planes per month, and it confirmed plans to ramp up the 787 Dreamliner rate from 12 to 14 aircraft per month in 2019. Analysts say Boeing’s order book on its 787 Dreamliner and 737-MAX jets are strong as airlines move to replace older planes with more efficient models and expand routes. “To help meet near-term airplane production requirements, we are doing some modest hiring across manufacturing skills and contacting recently-retired mechanics with certain skills to offer up to six-month re-employment that could start as soon as this month,” Boeing spokesman Paul Bergman said Tuesday. According to company official, “Bringing in experienced mechanics will also allow us to hire and train new employees during this period.” The company didn’t release the exact number it plans to rehire for the short term but said it was “several hundred.” The local machinists union signed off on the temporary rehire plan.<br/>