Are airline change fees, as they currently stand, penny-wise but pound-foolish for airlines?
For purposes of this discussion, my focus will be on U.S. legacy carriers American, Delta, and United. I note that Southwest has no change fees and Alaska and JetBlue have more innovate change fees.
Think about the imbalance. You book a trip eight months in advance and find out your plans must change. Unless you bought a ridiculously-priced unrestricted ticket (which is highly unlikely if you are buying so far in advance), you’re going to be hit with a change fee of at least $200. Even if the price on your new date is identical and even if both flights are wide open, it does not matter. The change fee is the change fee. That’s what we’ve been programmed to accept.
But what happens if an airline changes its schedule? You might suddenly find yourself leaving hours or earlier or arriving hours later. You might find yourself on a connecting flight after originally being confirmed on a non-stop flight. Heck, you might find yourself downgraded from a spacious mainline aircraft to a tiny regional jet. And while you might be able to find an agent willing to issue a refund, you’re at the mercy of the airline. Any change is at their discretion. Any refund is at their discretion.
Do you see the problem?
And airlines wonder why passenger loyalty continues to drop. While many consumers have always been driven by price, never before have I seen such a “free agent” environment. Part of the reason is that major U.S. airlines simply do not offer a level playing field when it comes to change fees.
A Solution: Pre-Greed Alaska Airlines or Annual Subscription?
I don’t think the Southwest model is realistic for legacy carriers. The ancillary fees from changes and cancellations are too lucrative. But could a middle ground actually increase revenue in the bigger picture?
Alaska Airlines tried this for a time. All changes beyond 60 days from travel were free, while changes within 60 days of travel cost $125. To me, that seemed like the perfect compromise. It still penalized changes/cancellations, but recognized that if you cancel more than two months from travel it will not be too difficult to re-sell your seat, likely at a higher price.
But last May Alaska abandoned this model, re-introducing a $125 cancellation fee no matter when the trip occurs. The change fee (beyond 60 days) still does not apply to Alaska MVP Golds and MVP Gold 75Ks. And I do think that is an important distinction that actually recognizes loyalty in a meaningful way.
Scott McCartney of the Wall Street Journal suggests another potential solution: change fee subscriptions. What if airlines charged a flat fee, say somewhere between $400-800/year, for the chance to make changes on restricted tickets? This would not be a free-for-all, as any difference in fare would still be charged. Just no change fee.
Imagine the loyalty this would bring to an airline. If I essentially pre-paid $600 to United in order to make changes to my tickets, you can bet I am going to be booking my trips on United in order to derive the maximum benefit from that subscription.
CONCLUSION
Could it be that by reducing its change fees airline could actually end up making more money? The Alaska Airlines example suggests the reality is no, but I find the concept of a change fee subscription intriguing and worthy of consideration.
What do you think about airline change fees?
$600 to United for waved change fees? Yes sir, sign me up!
This surely would not make sense for everyone, but I changed at least 5 tickets last year…
Now, since we are dreaming… Can that $600 count towards EQD? LOL
I would propose a third – reduce change fees in order to upsell from Basic Economy. If a ticket is $200 for BE and $250 for main cabin, being ‘changable’ means jack squat and I wouldn’t care less that basic economy is set in stone. If the change fee was $50-$100 for main cabin, then I will more likely consider that feature when debating an upsell.
One other I would like to see (but never will): Regulations that airline change policies match whether it is the airline or customer that changes it. Airline changes the schedule or scheduled route is cancelled? $200 change fee to each pax.
Ironically (?) Frontier is the only carrier with a sensible policy on this as they retain the free changes outside of 90 days beforehand.
I am not convinced free changes are necessarily fair – but a nominal fee, $10 perhaps per change 90+ dates out does make sense and would provide a substantial competitive advantage at very little cost to revenue.
Change fees are an integral part of fare structures. The whole point of deeply discounted tickets, from the airline’s point of view, is to segment leisure travellers (who are cost conscious) from business travellers (who are more focused on schedule). Remove the change fee and you will have many more business travellers replacing (expensive) changeable fares with cheaper fares.
And, certainly on UA, if there’s a schedule change, they do let you change.
The % of business travellers who book, and then want to make changes over 90 days out is vanishingly slim.
The whole change fee is ridiculous. There is no cost to the airline if I change my date. I pay the difference in tbe fare, they still sell a seat that might otherwise be unsold, and no loss is had. Basically this is just a way for the airlines to further pad their bottom line and nothing more. I would never prepay for the right to change my ticket. Its impossible to be certain that my travel plans will change. If there was a chance my plans will change why would I book?
Change fees should be illegal. What other service or product does one purchase with such restrictions.
I’m sure change fees paid by business travelers is a huge cash machine for the airlines. When I worked for a large corporation, it was nothing to make changes to itineraries and rack up $200 change fees without blinking an eye. I can’t imagine anyone biting on an annual subscription for waiving change fees except small companies without rigid travel policies or the one-off frequent flyer who is well informed. There’s no way a large corporation could administer subscriptions like that on a person-by-person basis. Who gets it? What’s the threshold for one employee needing it vs another?
Personally, change fees actually discourage me from impulse-buying a good fare unless I am 100% sure I will take that exact flight. Often this drives me to booking with award miles instead, which have better cancellation or change policies in general. I feel like in general if there were no change fees, I would probably travel more because I’d be more driven to book good fares to random places when I see them.
The increasing change fees have had a particular impact on me — I now fly exclusively Southwest Airlines if they fly to my destination. Since SWA now flies out of all three Washington DC airports, I can get most places on Southwest. That way if my schedule changes, it doesn’t cost my nonprofit organization an arm and a leg (it’s not just leisure travelers who are cost-conscious).