Airlines whip out the bubbly and ice cream—yes, in coach—as competitors offer $99 fares

Key Points
  • Delta is offering free Prosecco on international flights.
  • U.S. carriers like Delta and American brought back free meals.
  • Several low-cost European carriers are expanding service from the U.S.
  • Transatlantic fares on low-cost airlines start below $100 one way.
Airlines whip out the bubbly and ice cream-yes, in coach-as competitors offer $99 fares
Airlines whip out the bubbly and ice cream-yes, in coach-as competitors offer $99 fares

Long fodder for comedians, major U.S. airlines are beefing up their menus, an attempt to stand out against a growing sea of low-cost carriers that advertise fares less than $100 for a flight across the Atlantic Ocean.

Delta Air Lines announced earlier this month that it is serving free Prosecco on international flights in all cabins, just a few weeks after it unveiled new transatlantic routes for next year that include nonstops from Los Angeles to Paris and Amsterdam, New York to Lagos, and Atlanta to Lisbon.

"People love bubbles," said Lisa Bauer, vice president at Delta's onboard services.

(Delta was careful with its wording. A traveler sued a Canadian airline for advertising Champagne after he received sparkling wine.)

By the end of next year, Delta's first, business and premium-economy passengers will be able to preselect their meals before boarding. Delta is rolling out its first premium economy product, which for about 50 percent more than a regular coach ticket, gives travelers a bigger seat, more legroom, and an amenities kit.

American Airlines launched nonstop service from Dallas to Rome earlier this year, and offers passengers in coach free ice cream in the middle of the westbound return flight, a treat it also offers on other U.S.-bound European routes. American also added Voodoo Ranger IPA from Fort Collins, Colorado-based New Belgium Brewing to its beverage cart on some flights.

Jeffrey Greenberg | UIG | Getty Images

Behind the bubbly and dessert is a strategy that aims to stand out, particularly on lucrative international routes. Delta and United Airlines have recently unveiled new business-class cabins, but this latest battle is for coach passengers, as these low-cost upstarts go after cost-conscious travelers, looking for little more than a seat and safe arrival.

Primera Air is one of those airlines. The Iceland-backed airline is planning to start flying this April from Newark and Boston to Paris, London and Birmingham, England, advertising fares as low as $99.

The airline is one of several no-frills airlines that charge passengers more for food, to check luggage and to select a seat.

"Seat comfort is more important than anything else," Primera Air's CEO Hrafn Thorgeirsson told CNBC. "A lot of passengers are willing to pay a little more for extra legroom without getting the five-star restaurant meal."

Primera Air isn't alone. Over the summer, Icelandic budget airline WOW Air added routes from four Midwest U.S. cities to Reykjavik, bringing its service to a total of 13 U.S. airports. Norwegian Air Shuttle has also expanded routes in the U.S. with service to Paris and London. The carrier earlier this month touted a 14 percent increase in traffic. British Airways' parent, International Airlines Group, debuted a low-cost airline called Level with service from Oakland to Barcelona.

Big U.S. airlines dominate travel with in the United States. Following a wave of mergers over the past decade, the biggest four — American, Delta, Southwest Airlines and United — accounted for about 70 percent of air travel within the U.S. last year, according to the U.S. Department of Transportation.

In the domestic market, Delta and American have brought back free meals on some domestic routes. Large carriers did away with free domestic meals after the the Sept. 11, 2001, attacks, which hurt demand for flights.

But that has changed as fuel prices plunged and record-breaking numbers of passengers take to the skies, keeping airlines profitable. Now they are trying to wring more money from passengers by taking a page from the low-cost carrier playbook and charging more for services that were once free, like seat selection. American and Delta say about half of passengers will pay more to avoid that class of service, and Delta plans to expand it worldwide next year.

So far, the battle over the cheap seats has been for passengers in the domestic market. That's changed with the rise of these international budget airlines.

These low-cost airlines from oversees that advertise eye-popping fares also require passengers to pay more if they want to pick their seat or check a piece of luggage.

But Primera Air's Thorgeirsson is confident the airline will be able to fill planes, no frills and all. The carrier will be a small player in the New York-area market but added "it's a big pie."

"We're in guerrilla warfare," he said. "I'm from the peaceful island of Iceland but we use this as a metaphor."

WATCH: The rise of Prosecco and why Champagne hasn't lost its sparkle

The rise of Prosecco and why Champagne hasn't lost its sparkle
The rise of Prosecco and why Champagne hasn't lost its sparkle