On many Delta domestic flights, passengers can now choose from four different fare classes, each with unique amenities: basic economy, main cabin economy, comfort+, and first class. At first blush, it’s difficult to see how a further degradation of airline service can enhance profits and attract customers. But in fact, rolling out a lower-priced, no-frills version is a powerful strategy that can deliver benefits to both companies and consumers in the following four ways: Defensive precision discounting A lesson all companies can learn from basic economy is that employing a stripped-down version can combat discount rivals. It’s common for discount upstarts to enter well-established markets. Their value proposition is typically along the lines of, “We don’t have all of the frills of incumbents, but we’ll save you money.” This has been occurring in the airline industry for decades (Southwest was founded in 1967), but the discount segment has increased recently, as Spirit and Frontier have been siphoning price-sensitive customers from established carriers. Get the full story at Harvard Business Review